Mutual Pools & Staff Pty Limited v The Commonwealth of Australia

[1993] HCATrans 16

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl47 of 1992

B e t w e e n -

MUTUAL POOLS & STAFF PTY

LIMITED

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Case stated pursuant to

section 18 of the Judiciary

Act 1903

MASON CJ
BRENNAN J
DEANE J
DAWSON J

TOOHEY J
GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 10 FEBRUARY 1993, AT 10.21 AM

Copyright in the High Court of Australia

Mutual 1 10/2/93

MR D.H. BLOOM, QC:  May it please the Court, in that matter

I appear with DR G.A. FLICK for the plaintiff.

(instructed by Roger Williams)

MR D.J. ROSE, QC: If the Court pleases, I appear with my

learned friends, MR A.H. SLATER, QC and

MR G.R. KENNETT, for the Commonwealth. (instructed

by Australian Government Solicitor)

MR- J.J. DOYLE, QC, Solicitor-General for South Australia:

If the Court pleases, I appear with MR B.M. SELWAY for the Attorney-General for the State of South Australia to intervene on behalf of that State in the interests of the respondent. (instructed by the Crown Solicitor for South Australia)

Can I indicate, at least negatively, we are not putting submissions on the issue of just terms.

Our submissions go to other matters, and I think

Your Honours already have our outline and may have

had an opportunity to see what area we are

covering.

MASON CJ: Yes, we do, thank you. Yes, Mr Bloom.

MR BLOOM:  Thank you, Your Honour. May I hand to the Court

our outline of submissions.

MASON CJ:  Thank you. Yes, Mr Bloom.

MR BLOOM:	Your Honours, may I start at the very end of our submissions and tell Your Honours that it is
conceded, we are told, by the defendant that the first question in the case stated should be
answered in the affirmative.  So it is conceded
that the first question which goes to the existence of the contractual liability pre the Refund Act
should be answered in the affirmative. That
question appears at page 12 of the case stated. So it is conceded that if the said amount of $1522 was
paid pursuant to the SPASA agreement, then the
defendant was legally obliged before the Refund Act was enacted to repay us.

Your Honours, in the first Mutual Pools case,

as Your Honours know, this Court held that what

have come to be known as the in situ pool tax

provisions of the sales tax legislation were of no

effect because their inclusion in the Assessment

Act contravened section 55 of the Constitution.

The Court referred to the provisions of section 55

of the Constitution variously as an injunction or

requirement or restriction. We will, for the

purpose of this case as Your Honours see, adopt all

three of those emphasizing, however, the word

ttrestrictiontt upon the basis that the requirements

Mutual 10/2/93

of section 55 are a restriction on legislative

power.

But the result of the Mutual Pools decision is

that the in situ pool tax provisions were never a

law with respect to taxation or anything else. The

plaintiff in this case is the pool builder. It is

the beneficiary of the contractual promise pursuant
to the agreement referred to in paragraph 6 of the

case stated.

If I could take Your Honours to that in the

appeal ·book at pages 9 to 10, it was an agreement

which was subject to a condition and one condition

only, namely that the Court decide as it did in

Mutual Pools No 1. The Court so decided, the

contract then became freed of the only condition to

which it was subject and became an unconditional

contract. It is now accepted by the Commonwealth
that they are liable to repay us pursuant to it.

It also could not be an issue, in our submission, that the plaintiff's rights under that

agreement constitute a chose in action, an

assignable chose in action, a species of property well known to law, and it.cannot also be an issue that the agreement is a refund agreement as defined

in the Swimming Pools Tax Refund Act 1992. Indeed,

as we would understand it, the agreement is the

only agreement which is capable of corning within

that term.

Your Honours, the Refund Act is hinged upon

the existence of the antecedent legal liability to

repay. If Your Honours go to section 4(1) of the

Refund Act, it says:

Except as provided by this section, the

Commonwealth is not liable to make any in situ

pool tax refund payment.

That term is defined in section 3: 

"in situ pool tax refund payment means any payment that the Commonwealth is liable to

make.

So, section 4 says the Commonwealth, except as

otherwise here provided, is not liable to make a

payment which the Commonwealth is liable to make,

apart from the section.

The other relevant definition in section 3 is

right at the top of page 2 of the legislation:

"in situ pool tax payment" means an amount

paid to the Commissioner in purported

Mutual 10/2/93

compliance with the requirements of the law

relating to sales tax, or under an agreement,

to pay in situ pool tax.

And if I could just go back to "in situ pool tax

refund payment", the definition there encompasses

payments which the Commonwealth was liable to make

by way of refund, whether the liability arose as a

result of the refund agreement or otherwise.

Now, in place of its pre-existing it had

admitted liability the Commonwealth becomes liable

to something different, and that is by virtue of

the subsections following in section 4. So, on to

subsection (2) if, within certain times, the

plaintiff as a builder makes a declaration:

(a) that a specified amount ..... was not passed

on -

or that an amount having been passed on "has been

refunded ..... then the Commonwealth is" liable and

the legislature uses the terms "is only liable" to

pay to the extent to which the builder can, in

effect, prove that he has not passed on or,

alternatively, has refunded what he has passed on.

So, in essence, the liability to make payment to

the builder, which is conceded, is replaced with a

liability conditional upon the builder either

having not passed that amount on or, alternatively,

if he wants to get the amount back, as in this

case, he has to first refund that amount, make the

payment of that amount to the pool owner. So there

is a condition imposed upon him not previously

there which subjects the Commonwealth, in effect,

to an entirely different liability to that which it

was subjected to previously. Previous liability

was subject to no such condition.

Likewise, there is provision for the pool

owner to apply to the Commonwealth again by

appropriate declarations to obtain payment to him
of the amount in question.	And that, of course, is

not a right which was previously given to him and

is not a right which is given to the pool builder.

Your Honours, section 8 also does the same

thing in relation to interest. Your Honours will

recall that under the agreement, the Commonwealth

was liable to pay, not only the amount of pool tax

that had been paid to it, but it was liable also to

pay interest under the Interest On Overpayments

Act. Section 8 of the Refund Act says:

If, apart from this Act, the Commonwealth

would be liable, on the basis of a refund agreement or otherwise, to pay interest -

Mutual 4 10/2/93

and it is accepted they are here liable - then the

Commonwealth is not so liable, says section 8.

Your Honours, it is our submission the

Refund Act assumes the existence of antecedent

legal liability, both with regard to what we may

call principal and interest, and fastens upon that

liability to repay and makes it nugatory, replaces

it with something entirely different.

It is our submission that such a law is not a

law with respect to taxation, within the ordinary

meaning of that term, in section Sl(ii) of the Constitution. It does not, using the terms in

Fairfax v Commissioner of Taxation. It does not

raise revenue, it does not impose a liability to

tax, and its true character is not on any view, a

law with respect to taxation. To adopt the

description given to taxes ever since

Matthews v The Chicory Marketing Board, it could

hardly be said that there is a compulsory exaction

of money for public purposes.

It is our submission that a law which takes

away the right to be restored to what the

Commonwealth has unlawfully received, is not itself

a law with respect to taxation.

DEANE J: Are you approaching this on the basis that we

should assume that the Commonwealth is liable to

make the refund apart from the Act or that it is

common ground that the Commonwealth is liable to

make the refund apart from the Act?

MR BLOOM:  Both, Your Honour.

DEANE J: Well if it is the latter, we do not have to talk

about assumptions?

MR BLOOM: No. Certainly, but

DEANE J: So, what you are saying is we approach it on the

basis that it is common ground that the starting

point is that the Commonwealth is, apart from this

Act, liable to make a refund to your client?

MR BLOOM:	Yes, Your Honour, we would.
DEANE J:	And that we do not need to go beyond that?

MR BLOOM:  No. We would see ourselves as happier in that

position with that concession, yes, Your Honour.

DEANE J: Well, that answers my question.

MASON CJ:	Mr Rose, do you accept that?
Mutual	10/2/93
MR ROSE:	Yes, we do, if

DAWSON J: That is, that the liability to make the refund is

a liability to your client - - -

MR BLOOM:	Yes, Your Honour.
DAWSON J:	- - - to Mutual Pools, and not just to make a

refund to the appropriate person.	The agreement is
ambiguous.

MR BLOOM:  The concession is, as we understand it,

Your Honour, that question 1 in the case stated,

which appears at page 12, should be answered "yes",

and that is limited, of course, to an assumption,

namely that the $1522 in issue in these

proceedings, was paid pursuant to the agreement.

Then it is conceded that the defendant was legally

obliged, if that be right, before the Refund Act

was enacted to repay.

MASON CJ:  Mr Rose, do you accept that? That by agreement,

question 1 would be answered "yes"?

MR ROSE:  On the assumption at the beginning of question 1,

Your Honour:

If the said said amount ..... was paid pursuant

to the SPASA agreement -

then we accept that the Commonwealth was liable.

MR BLOOM: But, we also point out, of course, that the

Refund Act hinges itself upon that assumption.

MASON CJ:  Mr Rose, is there a dispute about whether the

amount was paid pursuant to the agreement?

MR ROSE:  Yes, if it please Your Honour. The Commonwealth

did not agree to the proposition that the amounts
were paid pursuant to the agreement.	The

Commonwealth did not know, and was not prepared to

concede that as a fact.

MASON CJ: Is prepared?

MR ROSE: Is not.

MASON CJ: Is not prepared to concede that as a fact.

MR ROSE:  As far as the Commonwealth is concerned, that

assumption at the beginning of question 1 remains,

but on that assumption the Commonwealth would accept that it is liable under the agreement.

Mutual 6 10/2/93

BRENNAN J:	I do not understand, then, the framing of question 1 which refers, inter alia, to the facts
and matters referred to in paragraph 8.
Paragraph 8 says that it was paid:

in respect of the construction of the said

swimming pool pursuant to the Chaplin

Agreement.

The Chaplin Agreement goes back to paragraph 7, then we go back to paragraph 6, which is referred

to also in 5 and 6, which is referred to in

question 1, and I understood that the whole purpose

of this was to put forward a case that, on those

facts, the Commonwealth was liable under the

agreement made between the plaintiff, or the

association on its behalf, and the Commonwealth.

MR ROSE:  If Your Honour pleases, paragraph 14 of the case

stated, the plaintiff alleges and the defendant
does not admit that the amount was paid pursuant to
the agreement, certainly the earlier

facts ..... terms set out there.

The earlier paragraphs refer to the fact that

the money was paid but do not go to that further

question, whether it was paid pursuant to the

agreement or on some other basis.

McHUGH J: Paragraph 8 says:

Thereafter the Plaintiff paid -

MR ROSE:  In paragraph 8, where it has got the expression:

pursuant to the Chaplin Agreement -

it is talking about the construction of the pool,

pursuant to the Chaplin Agreement. That was the

agreement between the pool builder and the pool

owner, not the agreement of the Commonwealth as to

the refund of the money.

MASON CJ: Yes, thank you, Mr Rose. Mr Bloom.

MR BLOOM:	Thank you, Your Honours.
DAWSON J:	What you are claiming is that the pool builder is entitled to recover the amount of the tax paid
even if that was passed on to the pool owner?

MR BLOOM:  Yes, Your Honour. And then what he does with it

is a matter within his discretion. He is under no

legal obligation to refund it to the pool owner.

Mutual 10/2/93

DEANE J: That is a live statement. The principles of

unjust enrichment might well put him under an

obligation.

MR BLOOM: Vis-a-vis the pool owner?

DEANE J: Yes, if he has passed on the tax.

MR BLOOM:  Yes, well, Your Honour, between himself and the

pool owner that may well be the case, but between

himself and the Commonwealth it is, in our

submission, not the case, with respect.	I should
have made that clear.

Your Honours, we do point out, even

independently of the concession which is made as to

how question 1 should be answered, the manner in

which the Refund Act is framed. It is framed upon

the assumption that the Commonwealth was liable and

then says "that which it was liable to repay it is

no longer liable to repay". That comes from

section 4(1) and the definition of "in situ pool
tax refund payment" in section 3.

We say it is not a law with respect to taxation, it is not a law which can be supported

under the incidental power in relation to the

taxation power. Now, it may not be put that way

today but certainly in the case stated that is the

way it seems to be put.

DAWSON J:  Why not? Why is it not incidental?

MR BLOOM:  Because the original provisions were invalid and

that is -

DAWSON J: But they were provisions which purported to

impose a tax.

MR BLOOM:  But they did not do so; they were of no effect

ab initio.

DAWSON J: Therefore it was a tax which was validly imposed.

Why is not a law dealing with the repayment of the

money a law dealing with something that is

incidental to taxation?

MR BLOOM: It was not taxation, Your Honour - invalid

provisions.

DAWSON J: It was taxation, it was ineffective.

MR BLOOM:  Your Honour, what we say, with respect, is this,

that something which is invalid ab initio is not a

law, not a law with respect to taxation or anything

else. There is just no valid antecedent

Mutual 10/2/93

legislation at all. You cannot describe such a law

as a law with respect to taxation because it is not

a law. It fails from its very inception to qualify

as a law with respect to anything.

GAUDRON J:  But the money having been received, it would

come, would it not, within the express incidental

power anyway?

MR BLOOM: Section 61?

GAUDRON J:  No, Sl(xxxix).

MR BLOOM: Sl(xxxix) and 61, perhaps, we anticipate is the

way it will be put. It is not yet put. We assume

it will be put that way. Really, we do not need,

for the purposes of our case, to cavil with that.

If there is power under 78, or power under 61 and

Sl(xxxix), we can assume that without conceding for

the purpose of these provisions. We would still

say that the exercise of those powers is subject to

Sl(xxxi) of the Constitution.

DAWSON J: But when the Commissioner exacts money from

someone purporting to exercise his powers under

taxing legislation but acting outside those powers,

surely the provisions which enable the taxpayer to

have a remedy and to recover the amount, are laws

relating to - incidental to the taxation power.

MR BLOOM:  We say no, with respect, Your Honour. We can see

an argument that says - indeed there is an earlier

case on succession duty that I will get

Your Honours the reference to, and it says this,

but we can see a case that says that the entry into

such a contract is an exercise of the executive

power under section 61. Subsequently the enactment

of this legislation might be sought to be supported

under Sl(xxxix) in relation to that earlier

section 61 exercise of power. But it was not an

exercise of the power of taxation when the

Commissioner entered into that contract any more

than the exercise by the government - - -

DAWSON:	But we are talking about the incidental power.	It
is incidental to the power to tax to be able to
make the provision for the return of moneys which
were purportedly exacted under the taxation power
that turn out not to be.

MR BLOOM: Well, Your Honour, Mr Justice Starke said

something to that effect in Werrin's case - a case no doubt which the defendant will rely upon - but,

of course, he was talking there about a valid

statute and about moneys that were collected on the

basis of a misconstruction of that statute; he was

Mutual 9 10/2/93

not talking about what we are talking about here,

which is an invalid statute.

DAWSON J: Yes, but in this case, what you did have was an

effort to tax; it was just procedurally it was done

the wrong way.	The damage was not that it was not
a tax.

MR BLOOM:  Your Honour, it may be in one sense correct to

say that it was only a matter of procedure, but
with respect, the Constitution says that thou shalt

not do this thing.

DAWSON J: Well then, you put it this way: this was a tax

which the Commonwealth did not validly exact.

MR BLOOM:	And therefore it should follow, in our submission
DAWSON J:	And therefore something has to be done with the

money which it purported to exact by way of

taxation and the law which deals with what is to

happen to the money is a law incidental to

taxation. Now that is the way you would put it.

MR BLOOM: Well, Your Honour, we would still say it is

subject to section Sl(xxxi) at the end of the day,

if we are only looking at the incidental power.

DAWSON J:  Oh yes.

MR BLOOM: But, bearing in mind what Your Honour says, I do

not put it as forcefully, but it seems to us, with

respect, that if the original Act is invalid, and

we are talking here of course principally about a

contract that has been entered into, and the
obligation to repay springs from the contract, not

from the invalidity specifically. The obligation

to repay comes about because the Commonwealth made

a contract promising to do just that, in the event

that this Court held, as it did, that the
legislation was invalid.	So the obligation to

repay springs from the contract, not from the

general law effect of invalidity of a tax statute.

I do not know if that satisfactorily answers

Your Honour, but we would still put, with respect,

that it is better to perhaps regard it, if within

power, as section 61 and section Sl(xxxix) rather

than section Sl(xxxix) in relation to

section Sl(ii).

The succession duty case, Your Honour, is

Queensland Trustees Limited v Fowles,

(1910) 12 CLR 111. So we are prepared, for the

purposes of our two principal following

submissions, to assume that the Commonwealth has

power to enact the Refund Act or an Act such as the

Mutual 10 10/2/93

Refund Act, either pursuant to section 78 or pursuant to section 5l(xxxix) and section 61, but

we still submit that there are two reasons that it

is bad: the first is a general proposition, and

that is when one looks at the Refund Act, it

purports to abolish generally all liability of the

Commonwealth arising from the invalidity directly

or indirectly. So it purports to abolish

liabilities that arose, if one goes to the

definition of "in situ pool tax refund payment":

whether the liability arose as a result of a

refund agreement or otherwise;

Now, our first proposition is this, Your Honours: a

law which purports to do that is as bad as the

original law, because it in effect says,

notwithstanding the invalidity of the original

statute, the consequences are reversed entirely,

whatever they may be, and that, in our submission,
is as bad as the original provisions were
themselves.

Antill Ranger is the case that says that in relation to section 92 of the Constitution; it may

be true, let me confess, that section 92 and

section 55, in some respects, are not the same sort

of provision, and I will come to that; it may also

be said against us that in Antill Ranger the

legislation was absolute barring legislation, gave

no remedies whatsoever, whereas this supplants the

pre-existing rights with some other sorts of
rights, but in our submission those two
distinctions are not sufficient to save this
legislation from the same fate as the State of

New South Wales legislation suffered in

Antill Ranger.

DEANE J:  Can I just take you back, Mr Bloom, to the earlier

point that Justice Dawson was raising with you.

MR BLOOM:  Yes, Your Honour.

DEANE J: Is there not a bit of a problem from your point of

view in the assumption that the SPASA agreement was

valid and within Commonwealth power in that if the

Commonwealth had executive power to make that

agreement, it may be that it has no legislative

power to relieve itself from liability under it,

putting aside compensation questions? But it is a very devious path to get to that result. In other

words, to say that the Commonwealth has executive

powers to put itself under a liability to make
payments of this kind, but has no legislative power

to legislate with relation to its liability to make

payments of this kind.

Mutual 11 10/2/93

MR BLOOM:  Your Honour, it is probably for that reason that

we do not wish to contest the legislative power to

make this Act either under 78 or 61 and 5l(xxxix).

DEANE J: Well, I did not quite follow that we were not

concerned at all with that.

MR BLOOM:  We do not wish to agitate that issue,

Your Honour. We do not see it as necessary to get

where we are going because we say if there is

power, either 61 and 5l(xxxix) or 5l(xxxix) alone

or 78, they must be read subject to 51(xxxi), so

that - - -

DEANE J: If there is not going to be argument on it, I

prefer to approach it on the basis - well, no you

cannot. It seems to me to be an assumption that

there is power. Unless you make that assumption it

is difficult to see that the SPASA agreement would

be valid.

MR BLOOM:  Your Honour, in the statement of claim upon which

the case stated is based, the contract and all that

flows from it essentially is admitted by the

Commonwealth, and we are not concerned to know

under what section of the Constitution they make

that admission. We are content to accept it.

Therefore, it is really perhaps for Mr Rose to tell

Your Honour what sections he relies upon for

support of the legislation, relevant perhaps to

section 61 in its first instance, but the only

section identified in the case stated is

section 78. There is a very live issue as to

whether section 78 does enable the Commonwealth to

extinguish liabilities, at least of the kind that

fall within section 75 but, Your Honour, we really

do not need to get into that. We just assume if it

is valid otherwise that section 5l(xxxi), if

breached, will override.

McHUGH J:  I must say I have difficulty in understanding or

working out how you can determine whether the

Refund Act is invalid in its application to the

circumstances of this case unless you understand

the basis of the legal liability of the

Commonwealth to repay the money. As I understand

it, you eschewed any reliance on doctrines of

unjust enrichments. You seem to have put yourself

fair and square on contract.

MR BLOOM:  Yes, Your Honour. We are here as a person

seeking to enforce a contract. But my section 55

point is just a broad point that says that if you

have a piece of legislation that says all

liability, however arising, that flows from the

invalid provisions is reversed, that Act, on the

face of it, is bad, without the need to go further

Mutual 12 10/2/93

,

into an examination of the kinds of liability that

might arise, whatever they are.

McHUGH J:  But it is a second question asked whether it is

invalid in its application to the circumstances of

this particular case.

MR BLOOM:  Yes, Your Honour. If I could make good that

section 55 proposition it is invalid and must, in

our respectful submission, be invalid in the

circumstances of this case. The second principal

point that we seek to make is the 5l(xxxi) point,

and that is specifically in relation to the

contractual right. But we are here as someone who

has a contract and therefore we would see locus to

challenge the general validity of the statute under

section 55.

We say in very broad terms what the statute

purports to do is to say, "Look, whatever liability

existed of whatever nature, it's simply reversed~

it's gone out of existence." If it does that, then

Antill Ranger provides authority, provided we can

make good our position vis-a-vis Antill Ranger, it
makes good the case that the statute is as bad as

the original statute was.

I do not seek to get into questions of

remedies existing in favour of my client or any

other pool builder independently of the contractual

remedy. We do not need to, as we see it, because

the statute says "All remedies - it does not matter

what kind they are - all remedies are hereby

abolished, and in place there is this new statutory

regime."

Your Honours, Antill Ranger concerned, as

Your Honours will recall, an attempt by the State

of New South Wales to bar recovery of moneys paid

under the legislation that was held invalid in

Hughes & Vale, 93 CLR 83. If I may take

Your Honours firstly to the joint judgment at

page 99, the first full paragraph on that page:

The cause of action to which the

plaintiff thus became entitled is not for

infringement of some right given to him by

s 92. "Juristically it is doubtless true that
s 92 does not confer private rights upon

individuals -

This Court has recently reaffirmed that, of course, that 92 does not confer individual rights in Barley

Marketing Board v Norman

It may perhaps also be true that its purpose

is not the protection of the individual

Mutual 13 10/2/93

trader. But it assumes that without

governmental interference trade, commerce and

intercourse would be carried on by the people

of Australia across State lines, and its

purpose is to disable the governments from

preventing or hampering that activity. In

delivering the judgment of the Privy Council

in The Commonwealth v Bank of New South

Wales ( 3) Lord Porter said:  "It is true, as

has been said more than once in the High

Court, thats 92 does not create any new

juristic rights, but it does give the citizen

of State or Commonwealth, as the case may be,

the right to ignore, and, if necessary, to

call on the judicial power to help him to

resist, legislative or executive action which

offends against the section". The plaintiff's

cause of action is in this sense the

consequence of s 92, although it is given by

the common law.

The taking of the money from the

plaintiff was not merely against his will and

wrongful. It was done in opposition to the

constitutional guarantee of freedom the

enjoyment of which he was asserting. The

statute now in question does not give him some

other remedy by which he may regain the money

or obtain reparation. It does not impose a

limitation of time or require affirmative

proof of the justice of the claim. It simply

extinguishes the liability altogether, not

only the liability of the officers of the

State but of the State itself. The effect is

to leave the plaintiff in the same position as

if the exaction of the tax or charge had been

lawful under the Constitution.

Then over at page 101 at about point 7 of the page,

there is a sentence commencing:

Yet that is what is done by the statute now in

question. It takes the operation of the
vehicle in the course of inter-State trade or
for the purpose thereof. It takes the
collection of the money under the purported

authorities to which it refers, authorities

pro tanto invalid because the vehicle was

operating in the course of or for the purposes of inter-State trade. It assumes that a cause

of action thereupon arose. On that basis it

extinguishes every cause of action so arising

and bars the remedy. It leaves the

inter-State trader with no means of reparation

and in exactly the same condition as he would
occupy had there been an antecedent valid

legal authority for the exaction. One of the

Mutual 14 10/2/93

effects of s. 92 is that legislation cannot

impose a burden on inter-State trade. If the

executive authority takes his money and the

legislature says it may keep it, that surely

amounts to a burden. It would defeats. 92 to

allow validity to such a statute. Section 3

cannot consistently withs. 92 operate to

extinguish the plaintiff's supposed cause of

action ands. 4 cannot operate to bar the

remedy.

Now, Your Honours, it may be said that there are

two differences between this case and Antill

Ranger's. The first is that Antill Ranger was

concerned with section 92 which is, undoubtedly, a

constitutional guarantee and this case concerned

section 55 which Justice Deane has recently said is

not a constitutional guarantee.

It is our submission, however, that in this

context that distinction is not a relevant one. individual rights than does section 55 and that is

clear from Barley Marketing Board and, indeed, from

Antill itself. What it does is it operates as a

constitutional restriction on the legislative power

and, in that sense, is like section 92. There is a

constitutional restriction on the legislative power

and, in that case, section 55 is to be regarded as

no different from section 92.

DAWSON J:  But surely it is. It does not place an embargo

upon the imposition of tax, it just says you have

to do it in a certain way. In other words, you can

do what you wanted to do, you can do it again and

do it properly the next time.

MR BLOOM:  Your Honour, the word "restriction" is in

Your Honours' joint judgment in Mutual Pools, that

section 55 imposes a restriction, and we accept

that, with respect, that it does, that is what it

does. It restricts the right to include certain

certain things in certain kinds of money or taxing

statutes, and it is a very important provision in

terms of the relationship between the Senate and

the House of Representatives. So much was said by

Sir John Latham in Cadbury Fry Pascall v The

Commissioner, 70 CLR 362.

DAWSON J: Yes, but what you are saying here - your argument

would here be, "Look, you have got it wrong the

first time. You can do it again and get it right",

and you look at this Act and see whether you are

doing it again and getting it right or not.	But in
terms of power that is more - - -

Mutual 15 10/2/93

MR BLOOM:  Quite so, Your Honour. We do not put and we

cannot put that there was never power to enact a tax on in-ground swimming pools. There was and,

certainly, that is a difference. But the

injunctions or requirements or restrictions of the

Constitution are restrictions on the power to

legislate and they must be obeyed, and the

restriction perhaps could be overcome by

legislation which now said, "We tax in-ground

pools", even retrospectively perhaps. But that is

not what has been done. What has been done is to

say, "We want to reverse the consequences that flow

from our original breach of the Constitution".

DAWSON J:	But you can do that by simply passing an Act in the proper form.
MR BLOOM:	But that is not this Act, Your Honour, we say with respect.

DAWSON J: Well, that may be, but the argument is a

different argument to that which you can apply when

there is a prohibition in the Constitution.

MR BLOOM:  I could not put this argument in relation to a

piece of retrospective legislation presumably that

sought to impose tax on in-ground swimming pools.

But I put it in relation to a piece of legislation

that says, we got it wrong and it was invalid and

what we do is abolish the consequences of that

invalidity.

McHUGH J: Well, supposing an Act which complied with

section 55 was enacted in the same terms as the

original legislation, but operated from an earlier

time, and provided that any moneys already paid

could be set off against the tax imposed by the new

Act, would that be invalid?

MR BLOOM:  Not because it retrospectively imposed the tax.

One would have to see the other provisions,

Your Honour, to see just what they said, but the

mere retrospective imposition of the tax would not

be a problem.

McHUGH J: Is it a question of form?

MR BLOOM:  No, Your Honour. The proposition we get from

Antill is simply this, that if you enact invalid

legislation you cannot cure the invalidity by

abolishing the consequences.

McHUGH J: That is because section 92 says something about

the Act which seeks to avoid the consequences, or

at least so Antill holds, and section 55 does not

have that operation, does it?

Mutual 16 10/2/93

MR BLOOM: Section 55, in fact, in relation to the

requirement or restriction with which we are

concerned, says nothing about invalidity or

otherwise. In the early part of section 55 there
is a reference to tacking provisions being of no

effect, but in relation to the second and third

requirements, it spells out no consequences at all.

The real question is simply this. I have to

concede that the Commonwealth had, at all times,

power to validly impose a tax upon in-ground

swimming pools, but it did not choose to do that.

It exercised its power in an invalid way, which

contravened a constitutional restriction and it is

our submission, it cannot get around that invalid

exercise by simply abolishing the consequences of the invalid exercise. That is not the proper way

of getting round it. But I do not deny there was

power originally to do it properly, and there
probably still is if retrospective legislation is

considered politically expedient.

Your Honours, the second distinction arguably

between this case and Antill is that in Antill

there was complete bar to recovery, complete bar to

recovery. There was no replacement with some sort

of alternative contractual regime under which the

person who had paid the moneys might get moneys or

pay them to someone else, the sort of the thing

that is here. We say, again, that is not a valid

distinction in the context because here the

section, section 4, clearly intends to abolish all

possible pre-existing rights and all pre-existing

liability of the Commonwealth, upon whatever basis;

that is everything that would flow from invalidity,

whether contractual rights or common law rights, or

anything else. The Act takes, in effect, what are

unconditional rights to repayment and replaces them
with conditional rights to payments in certain
limited circumstances, and the conditions are not

insignificant or mechanical, or indeed, procedural.

BRENNAN J: That is not quite accurate, is it? I mean the

structure of 4(2) is to qualify the liability,

would mean the liability referred to in the

definition of in situ pool tax refund payment. It

does not create any new liability. It qualifies an

existing liability.

MR BLOOM: That may be so, Your Honour, yes. It restricts

an existing liability.

BRENNAN J: Restricts an existing liability.

MR BLOOM: Yes, I accept that, Your Honour. But, in placing

a condition upon it, or in restricting it, it

changes it fundamentally from an unconditional, an

Mutual 17 10/2/93

unlimited and unrestricted obligation to repay, and

that is our point, Your Honour.

If, Your Honours, we turn from section 55 on

to, perhaps, what is our stronger ground in section

5l(xxxi), it is our submission that the

Commonwealth cannot validly exercise a power under

section 5l(xxxix), and/or section 61 and/or

section 78 if, in so doing, it offends the express

constitutional guarantee upon which the power in

section 5l(xxxi) is conditioned.

If I could take Your Honours firstly to

Clunies-Ross v The Commonwealth, 155 CLR 193, in

the judgment of the Court, right at the very

bottom of page 201, last sentence:

In contrast, the plenary grant of legislative

power contained ins. Sl(xxxi) has assumed the

status of a constitutional guarantee of just

terms ..... and is to be given the liberal

construction appropriate to such a

constitutional provision:

So, there is a constitutional guarantee of just

terms.

Schmidt, 105 CLR 361, contains, in

Sir Owen Dixon's judgment at page 370 and

following, a statement of the purpose of

section 5l(xxxi). About six lines from the bottom

of page 370 Sir Owen, speaking of section 5l(xxxi),

says:

That provision was much discussed in Bank of

NSW v The Commonwealth; the following passage

may perhaps be quoted as introductory or

descriptive generally of the nature of the

question. ~section 5l(xxxi) serves a double

purpose. It provides the Commonwealth Parliament with a legislative power of

acquiring property: at the same time as a

condition upon the exercise of the power it

provides the individual or the State affected
with a protection against governmental

interferences with his proprietary rights

without just recompense. In both aspects

consistency with the principles upon which

constitutional provisions are interpreted and

applied demands that the paragraph should be

given as full and flexible an operation as

will cover the objects it was designed to
effect. Moreover, when a constitution

undertakes to forbid or restrain some

legislative course, there can be no

prohibition to which it is more proper to apply the principle embodied in the maxim

Mutual 18 10/2/93

quando aliquid prohibetur, prohibetur et omne

per quod devenitur ad illud. In requiring

just terms s. Sl(xxxi) fetters the legislative

power by forbidding laws with respect to

acquisition on any terms that are not

just" ..... The decisions of this Court show
that if par. (xxxi) had been absent from the

Constitution many of the paragraphs of s. 51,

either alone or with the aid of par. (xxxix),

would have been interpreted as extending to

legislation for the acquisition of land or
other property for use in carrying out or

giving effect to legislation enacted under

such powers. The same decisions, however,

show that in the presence in s.51 of

par. (xxxi) those paragraphs should not be so
interpreted but should be read as depending

for the acquisition of a property for such a purpose upon the legislative power conferred by par. (xxxi) subject, as it is, to the

condition that the acquisition must be on just

terms. In Minister of State for the Army v

Dalziel (2) Starke J. puts the point
succinctly, although doubtless too absolutely

(3): "That section" (s. Sl(xxxi) "confers

upon the Commonwealth power to make laws with

respect to the acquisition of property upon

just terms from any State or person for any

purpose in respect of which the Parliament has

power to make laws. And the decisions of this

Court construe this power as a limitation upon

the legislative power of the Commonwealth to

acquire property except upon the terms

mentioned ..... It is hardly necessary to say

that when you have, as you do in par. (xxxi),

an express power, subject to a safeguard,

restriction or qualification, to legislate on

a particular subject or to a particular

effect, it is in accordance with the soundest

principles of interpretation to treat that as

inconsistent with any construction of other

mean that they included the same subject or powers conferred in the context which would	produced the same effect and so authorized the
same kind of legislation but without the
safeguard, restriction or qualification.

And then, Your Honours, in Trade Practices

Commission v Tooth & Co, 142 CLR 397, there is a

passage to the same effect at page 403 in the

judgment of Sir Garfield Barwick, the second full

paragraph on page 403:

It has been decided, and in my respectful

opinion quite correctly, that the presence of

section Sl(xxxi) in the Constitution means

Mutual 19 10/2/93

that no other head of power, including the

incidental power, would support a law for the

acquisition of property.	And the reason is
plain.	The constitutional purpose is to

ensure that in no circumstances will a law of

the Commonwealth provide for the acquisition

of property except upon just terms.

Section 5l(xxxi) is a very great

constitutional safeguard, not confined to the

protection of the citizen from confiscation of his property by the State. It ensures that no

one may, by virtue of a Commonwealth statutory

provision, acquire his property except upon

just terms.

Your Honours, it is our submission that we satisfy

the terms of section 5l(xxxi). In the first place

it is quite clear that a chose in action is

property within section 5l(xxxi) and if

assignability was once a problem with choses in
action, Your Honours know that the assignability of

a debt owed by the Crown never encountered any such

problem and certainly assignability is not a

problem today, and we would doubt, with respect,

whether it would be contended to the contrary.

In Dalziel, 68 CLR 261, the judgment of

Mr Justice Rich at page 285, fourth line on page 285:

The meaning of property in such a connection -

he is talking about section 5l(xxxi) -

must be determined upon general principles of

jurisprudence, not by the artificial

refinements of any particular legal system or

by reference to Sheppard's Touchstone. The

language used is perfectly general. It says

the acquisition of property. It is not

restricted to acquisition by particular

methods or of particular types of interests,

or to particular types of property. It
extends to any acquisition of any interest in
any property. It authorizes such acquisition,
but it expressly imposes two conditions on

every such acquisition. It must be upon just

terms, and it must be for a purpose in respect

of which the Parliament has power to make

laws.

At page 290, Mr Justice Starke, in the first full

paragraph on that page, second sentence:

Property, it has been said, is nomen

generalissimum and extends to every species of

valuable right and interest including real and

Mutual 20 10/2/93

personal property, incorporeal hereditaments
such as rents and services, rights of way,

rights of profit or use in land of another,

and choses in action.

And at page 295, Mr Justice McTiernan, third

paragraph on the page:

The word "property" in section 5l(xxxi) is a general term. It means any tangible or intangible thing which the law protects under

the name of property.

Your Honour Justice Dawson recently also dealt

with this in the Australian Capital Television

case, 66 ALJR 695. The passage is at page 728E,

left-hand column. If I just may read the whole of

that passage because it supports the other

propositions for which we contend.

Section 51(xxxi) provides that the Parliament

may make laws with respect to "the acquisition

of property on just terms from any State or

person for any purpose in respect of which the

Parliament has power to make laws". It is

established thats 5l(xxxi) must be treated

"as abstracting from other heads of power

(including the incidental power) all content

which would otherwise have enabled the

compulsory acquisition of property, and as

subjecting the power with respect to the

acquisition to an obligation to provide just

terms"

Thus the paragraph ensures that whenever

property is compulsorily acquired pursuant to

a law of the Commonwealth just terms must be

provided. Further, s 5l(xxxi) extends to laws
for the acquisition of property by persons

other than the Commonwealth or an agency of

the Commonwealth. The term "property" ins 5l(xxxi) is not

to be narrowly construed. As Dixon J said in

Bank of NSW v The Commonwealth (1948) 76 CLR

at 349:

"I take Minister of State for the Anny v

Dalziel to mean thats 5l(xxxi) is not to be

confined pedantically to the taking of title

by the Commonwealth to some specific estate or

interest in land recognised at law or in

equity and to some specific form of property

in a chattel or chose in action similarly

recognised, but that it extends to innominate

and anomalous interests and includes the

Mutual 21 10/2/93

assumption and indefinite continuance of

exclusive possession and control for the

purposes of the Commonwealth of any subject of
property. Section Sl(xxxi) serves a double

purpose. It provides the Commonwealth Parliament with a legislative power of

acquiring property: at the same time as a

condition upon the exercise of the power it

provides the individual or the State affected

with a protection against governmental

interferences with his proprietary rights

without just recompense. In both aspects

consistency with the principles upon which

constitutional provisions are interpreted and

applied demands that the paragraph should be

given as full and flexible an operation as

will cover the objects it was designed to

effect."

But there must nevertheless be the acquisition

of something of a proprietary nature before

s Sl(xxxi) can have any application.

Your Honours, we say it is quite clear, with

respect, that there is property. The next question

is: is there within Sl(xxxi) an acquisition? We

submit that there is an acquisition and that that

is a matter which must be looked at as a matter of

substance and not as a matter of form. We have

given Your Honours a reference to Bank of New South

Wales v The Commonwealth, 76 CLR 1 and occupying

most of that report, if not all of it.	The
relevant passage is in the judgment of
Sir Owen Dixon at 348 to 349.

His Honour had earlier dealt with the manner

in which there was by the legislation in question a
taking over of control and administration of the
bank's businesses, including the power of disposal

of the assets of that business. His Honour held

that that should be regarded as an acquisition

within section Sl(xxxi) of those assets and,

because there were no just terms, the acquisition

was not authorized.

At page 348 he sets out the limited nature of the taking over, limited in the sense that it was

not a full taking over of the assets, and at about

the middle of page 349 he says:

Upon consideration I have reached the

conclusion that this is but a circuitous

device to acquire indirectly the substance of

a proprietary interest without at once

providing the just terms guaranteed bys

Sl(xxxi) of the Constitution when that is

done.

Mutual 22 10/2/93

And then there is the passage which was referred to

by Your Honour Justice Dawson in the ACTV case.

But that was so notwithstanding that the

shareholders of the bank were left in place and

they were to remain entitled as contributaries, and
that there was no actual confiscation of the assets
themselves. It was the incidence of ownership that

went across and that, in the Court's opinion, was

an acquisition within 5l(xxxi).

Again in Trade Practices Commission v Tooth &

Co Ltd, 142 CLR 397, Sir Harry Gibbs, in the last

paragraph on page 407, affirmed that it should be

fully accepted -

that the powers given by the other paragraphs

of s 51 do not authorize legislation for the

acquisition of property -

nor will the Court -

permit the adoption of "a circuitous device to
acquire indirectly the substance of a
proprietary interest without at once providing
the just terms guaranteed bys 5l(xxxi) of the

Constitution.

In the Tasmanian Dam case, 158 CLR 1, Your Honour

Justice Deane at page 283 - perhaps if Your Honours

look first at the bottom of page 282:

In Bank of NSW v The Commonwealth,

Dixon J pointed out thats 5l(xxxi) is "not to

be confined pedantically to the taking of

title ... to some specific estate or interest in

land recognized at law or in equity ... ,

but ... extends to innominate and anomalous

interests and includes the assumption and

indefinite continuance of exclusive possession
and control for the purposes of the

Commonwealth of any subject of property". In

emphasize that the Constitution did not permit	the same judgment, his Honour was at pains to
the Parliament to achieve by indirect or
devious means whats 51 did not allow to be
done directly.

Then if Your Honours drop down to after the

reference to Belfast Corporation v O.D. Cars Ltd:

The mere extinguishment or deprivation of

rights in relation to property does not

involve acquisition.

Difficult questions can arise when one

passes from the area of mere prohibition or

regulation into the area where one can

Mutual 23 10/2/93

identify some benefit flowing to the

Commonwealth or elsewhere as a result of the

prohibition or regulation. Where the benefit

involved represents no more than the

adjustment of competing claims between

citizens in a field which needs to be

regulated in the common interest, such as

zoning under a local government statute, it

will be apparent that no question of

acquisition of property for a purpose of the

Commonwealth is involved. Where, however, the

effect of prohibition or regulation is to

confer upon the Commonwealth or another an

identifiable and measurable advantage or is

akin to applying the property, either totally

or partially, for a purpose of the

Commonwealth, it is possible that an

acquisition for the purposes of s Sl(xxxi) is

involved.

Again, in Street v Queensland Bar Association,

168 CLR 461, Your Honour Justice Deane had

something to say about substance versus form in

relation to constitutional guarantees, in that case

in relation to section 117. At page 527 in the

first full paragraph after the reference to Reg v

Coldham:

In particular, a constitutional guarantee,

such as that contained ins 117, calls for "a generous interpretation ... suitable to give to

individuals the full measure of the

fundamental rights and freedoms referred to".

A "close and literal construction deprives

such guarantees of half their efficacy, and

leads to gradual depreciation of the right, as
if it consisted more in sound than in
substance". That general principle of

construction precludes the substitution of a

rigid and artificial, formula for a

constitutional provision such ass 117 and	requires that regard be had to substance
rather than mere form both in the construction
of such a provision and in its application to the facts of a particular case. If authority
in this Court be required for that
last-mentioned proposition, the above-mentioned cases of Cole v Whitfield and
Philip Morris supply it. In my view, neither
the "sole basis" formula nor the disregard of
substance which it involves should be allowed
to survive those two cases. To the contrary, the provision of s 117 should, in accordance
with settled principle, "be construed with all
the generality which the words used admit" and
with regard being had to substance rather than
mere form.

Mutual 24 10/2/93

We take those words, with respect, to be in

relation to all constitutional guarantees, and

certainly in relation to section 5l(xxxi) equally

apposite.

Lastly, the Court had something to say on

substance and form in Deputy Commissioner of

Taxation v State Bank of NSW, 174 CLR 219 at

page 227 talking about a tax on property and

section 114 of the Constitution. In the first

paragraph on that page, the fourth sentence:

A tax framed as a tax on transactions may in

some circumstances amount to a tax on

property. Such a tax, though it may take the

form of a tax on transactions, may yet be in

truth and substance a tax on property. If it
were otherwise, the constitutional immunity

would be little more than an empty shell,

easily circumvented by framing the tax as a

tax on transactions, though upon analysis the tax is tantamount to a tax upon the ownership or holding of property.

Your Honours, we say that the extinction of

liability here, to the extent to which liability if

extinguished by the person who owes that liability

is tantamount to, and indeed, constitutes within

section 5l(xxxi) acquisition of what is
extinguished to the extent to which it is

extinguished, it is exactly the same as if the

Commonwealth had taken a formal assignment of that,

or that part of it, the plaintiff chose in action

because it really operates, if one views it perhaps

as a balance sheet situation, whether assets of

$100,000 and liabilities of $50,000, and hence with

net assets of $50,000, if one abolishes the
liability of 50, the net assets go immediately to
$100,000. That is the effect of the abolition by a
debtor of the debt that he owes to his creditor.

That is the effect of what happens here.

In Commissioner of Stamp Duties v Bone, that

is explained and accepted as it was in the High

Court in relation to the appointment of the debtor

as executor, leaving aside the equitable

obligations that he may have to others, it was
pointed out that the appointment of the debtor as

executor at common law extinguishes the debt. That

is at 135 CLR 227, last paragraph:

The appointment of a debtor as executor

has undoubtedly the effect at law that the

cause of action in debt is extinguished: the

liability of the debtor as such is

extinguished, granted that the executor proves

the will, with effect from the death. The

Mutual 25 10/2/93

reason is that at law the executor cannot sue

himself:

And so here the extinction of the

Commonwealth's liability on the debt is the same as

if it was assigned to the Commonwealth because that

would work likewise in extinction.

Your Honours, there is a case, a decision of the Privy Council on appeal from the Supreme Court

of Mauritius. It is (1985) 2 WLR 114 - - -

BRENNAN J: Is-it in the Appeal Cases, do you know?

MR BLOOM:	No, Your Honour, we were not able to find it in the Appeal Cases. It is Societe United Docks v
Government of Mauritius and it concerns section 3
of the Constitution of Mauritius which appears at
page 118 in the speech of Lord Templeman, second
paragraph of His Lordship's reasons:

Section 3 is in these terms:

"Fundamental rights and freedoms of the

individual. It is hereby recognised and

declared that in Mauritius there have existed

and shall continue to exist without

discrimination by reason of race, place of

origin, political opinions, colour, creed or

sex, but subject to respect for the rights and

freedoms of others and for the public

interest, each and all of the following human

rights and fundamental freedoms, namely -

..... (c) the right of the individual to
protection for the privacy of his home and
other property and from deprivation of

property without compensation -

And at page 123, and the only passage that we

would emphasize here, opposite the letter C, two

lines above that:

A Constitution concerned to protect the

fundamental rights and freedoms of the

individual should not be narrowly construed in

a manner which produces anomalies and
inexplicable inconsistences. Loss caused by

deprivation and destruction is the same in

quality and effect as loss caused by

compulsory acquisition.

Your Honours, we also submit, with respect, that

there have not been provided to the plaintiff,

within the terms of section Sl(xxxi) and as

guaranteed, just terms. The plaintiff is the

entity whose property has been acquired within

section Sl(xxxi). It is the plaintiff who must be

Mutual 26 10/2/93

given just terms, just being computed by looking at

its position vis-a-vis the Commonwealth.

DAWSON J:	Why?
MR BLOOM:	Your Honour, in the first place because the cases

say so, and we would want to rely upon what they

say.

DAWSON J: Well, you can take us to that, but why should you

not look at the whole picture and say, "Well it is

just terms", if you are given back at part of the

value of the chose in action which is taken to

which you are just and entitled, but you are not

just and entitled to an amount which you have

already been paid because you took it from the pool

owner.

MR BLOOM:  Your Honour, suppose that that were proper in

relation to this case, how far then does it extend.

Does it mean that if it were decided to acquire the

property of a wealthy section of the public and to

donate it to a poorer section - that being seen as

obviously a matter of social justice - that would

constitute just terms within section Sl(xxxi) of

the Constitution. It is our submission that such

a - - -

DAWSON J: That might be going too far, but why is it going

too far to say, "You should not get back what you

have already been reimbursed for", and it is just

that that amount should go to the person who really

paid it, namely, the pool owners?

MR BLOOM: Your Honour, it really seeks to substitute, it

seems to us with respect, what is a matter of

commercial morality with a legal obligation, and

the Commonwealth cannot, in our submission, in

acquiring our property, delve into the

circumstances in which we came by that property and

say it provides just terms to us to require us to

give it to somebody else, or to overcome the

perceived injustice in which we came into the

property in the first place.

McHUGH J: Supposing the Commonwealth took the view that a

bank had charged excessive interest to its

customers and required the bank to repay the

excessive amount back to the consumer, would that

be an acquisition of property?

MR BLOOM:  On unjust terms?

McHUGH J: It is not an acquisition by the Commonwealth, I

suppose, that is the first problem.

Mutual 27 10/2/93

MR BLOOM: There is a suggestion in Justice Deane's judgment

in Tasmanian Dams, that it may be if you required

payment to another that that would still be in

contravention of section Sl(xxxi) and we would not

wish to resile from that, particularly, with

respect, it is correct as we would submit. But

this whole concept of redistributing, based on the

commercial propriety with which somebody obtained

something, seems to us, with respect, to be out of
the proper province of the legislature.

There are many things which may be regarded in the market-place as commercially proper and

commercially moral but which would not be regarded as ordinarily moral, but they cannot be changed by

a legal sanction. ·

DAWSON J:  Why not? Do you say that it is just that if this

money was paid, that this tax was in fact paid by

the pool owner, he should not get the refund but

that you should be able to get the refund and

retain it. Do you say that is just?

MR BLOOM:	What I say is just, Your Honour, is this.
DAWSON J:	Do you or do you not?
MR BLOOM:	Yes.
DAWSON J:	You say that is just?
MR BLOOM:	Yes I do, I have to.  And I say that it is just

because I have got the contractual right. Now,

whether the Commonwealth was sensible or not

sensible in entering into a contract with me is not

to the point, but the Commonwealth entered into a

contract with me, and it promised me that it would

repay me this sum of money.

DAWSON J:  I do not think it did, actually, but if you look

at the terms of agreement as they are set out, but

it seems to be agreed between the parties that that

is what -

MR BLOOM:  I think that is conceded and admitted on the pleadings, so it has promised. Now, it may be at

that stage that one could look at the common sense

of the Commonwealth having entered into that, but

once it did that it gave me, my client I prefer to

say, a contractual right. Now, it seeks to take

away that contractual right, and it seeks to do it

by reference to matters going to the wisdom of

whether it should have conferred the contractual

right on us in the first place.	And that is, with
respect, the difference.

Mutual 28 10/2/93

There was an old - well, not so old, 1960s,

tax case in the House of Lords called Abbott v

Philbin which concerned a taxpayer who received

certain options to acquire shares and later on he

exercised those options and, as a result, received quite a large amount of money. The inland revenue sought to include the large amount of money in his

income as a perquisite of his office, but the House

of Lords held, and it has been followed in many
cases since, that the perquisite of office was the

options, and it was the options which had to be

valued and brought into the income back at that

point in time. But what he got, following upon the

exercise of options, was because he was the option

holder.	Now, with respect, what we have, vis-a-vis
the Commonwealth, is a contractual right.	Now it

may be that back at the point of time when the

contractual right was given to us, questions arose

as to the proprietary of our getting the

contractual right. But the other point is that it

was given to us, and it is now at a stage where, in
discharge of the Commonwealth's contractual

obligation to us, we are seeking the money.

It is our submission that the Commonwealth,

cannot, in that context, acquire the contractual

right which is ours, upon just terms to us, by

requiring payment to somebody else. That looks

behind the contract, and looks at the circumstances
Commonwealth is bound to repay

in which we became entitled to agree with the point in time, the

us in discharge of its obligation, and it concedes

that that is so.

GAUDRON J:  Can one ignore general principles of unjust

enrichment in this area, though? If it is the

fact, as Justice Deane I think suggested to you

earlier, that perhaps this money does have to go

back to the pool owners, as a matter of ordinary

principle, then is the situation the same? Does

the justice change somewhat?

MR BLOOM:  Your Honour, we say, with respect, that one

cannot get into that. Where the dispute is between

the plaintiff, as here, and the Commonwealth, as
the two parties to a contract, no question of

unjust enrichment arises in construing whether the

Commonwealth is obliged to repay.

GAUDRON J:  I am not too sure about that. The substance of

Boehm issue is not all one way, of course.	Can we
see the substance of what is going on here?

MR BLOOM:  But how far down the line can one go?

Mutual 29 10/2/93

GAUDRON J:  One does not have to go very far in this case,

one step.

MR BLOOM:  But one may have acquired a piece of property, a

piece of real estate, in commercially reprehensible

circumstances and others having no cause of action

in relation to that, or perhaps some cause of

action in equity, may have been disenfranchised.

That sort of thing no doubt does go on. I am not

suggesting that is this case because I do want to

say something else about that, Your Honours.

It is not appropriate, with respect, for the

Commonwealth in exercising its power of acquisition to in effect do a Robin Hood, to say, "Well, we're

going to take it from you and we're going to give it back to somebody else." That is not providing just terms to the person from whom the property is

taken.

GAUDRON J: Perhaps the question is: is it acquiring

anything from you?

MR BLOOM:  A contractual right, Your Honour, an admitted

contractual right, a chose in action. That is our

property. We have that vis-a-vis the Commonwealth.

What other action may be able to be brought by the

pool owner against the pool builder is not to the

point. When the contest is between the

Commonwealth and the pool builder over the contract

made between those two parties wherein the

Commonwealth promises to repay to the builder, not

to the builder or someone else, that is the

contractual promise and they cannot, with respect,

resile from it and they cannot take it from us

without providing just terms, looked at in that

limited context.

It is our submission it is not permissible to

go beyond the situation existing between the two

parties to the contract. It is our rights that are

being acquired and we must be given just terms

vis-a-vis the Commonwealth in relation to those

rights. That must mean that we, according to the

cases, are given the exact value, properly

computed, of what is taken from us.

The first of those cases, Your Honours, is

Grace Brothers Pty Ltd, 72 CLR 269 at page 290 in

the judgment of Sir Owen Dixon, the second full

paragraph:

The legislative power given bys Sl(xxxi)

is to make laws with respect to a compound

conception, namely,
"acquisition-on-just-terms." "Just terms"

doubtless forms a part of the definition of

Mutual 30 10/2/93

the subject matter, and in that sense amounts

to a condition which the law must satisfy.

But the question for the Court when validity

is in issue is whether the legislation answers

the description of a law with respect to

acquisition upon just terms ..... Under that

paragraph the validity of any general law

cannot, I think, be tested by inquiring

whether it will be certain to operate in every

individual case to place the owner in a

situation in which in all respects he will be

as well off as if the acquisition had not

taken place. The inquiry rather must be

whether the law amounts to a true attempt to

provide fair and just standards of

compensating or rehabilitating the individual

considered as an owner of property, fair and

just as between him and the government of the

country.

So that is where the inquiry stops. Likewise, in

Bank of New South Wales v The Commonwealth, 76 CLR,

Mr Justice Starke said at page 300:

And "just terms" require .that a party

whose property is acquired shall have the

pecuniary equivalent of the property acquired.

So it is as between him and the government. That

is at about the middle of page 300, fourth

paragraph. That is the contest, with respect,

Your Honours.	It is between the builder and the
government.	The builder's rights under the
contract have been taken.	He must be compensated

for what is taken from him and it is not

permissible for the Commonwealth to require him in

that context to pay somebody else, to require him

as a matter in effect of legal precondition to the

entitlement to that to which he was otherwise

entitled.

Your Honours, I should say this in the

interests of my clients: Your Honours should not

assume that in every case the pool tax was passed

on and has not been refunded. There will be cases
where it is not passed on, there will be cases
where it has been passed on but refunded, there

will be cases where the tax has been computed and

then, after an overall price has been reached,

there has been some reduction in the price
calculated overall.

So it should not be assumed that this case is illustrative of all cases and that the pejoration

that may attach to the particular facts of this

particular instance, which are intended obviously

Mutual 31 10/2/93

to put it at its worst from our perspective vis-a-

vis the legislation, but it should not be thought

that that is indeed all cases.

Your Honours, finally we say that

section Sl(xxxi) has another limitation in it; it
only authorizes acquisition for a purpose in
respect of which the Parliament has power to make

laws. That proposition, of course, is clear on the

face of the section itself, and if our earlier

submission on section 55 is correct, then there is

no purpose with which Parliament can make laws in

this case. If Your Honours please, those are our

submissions.

MASON CJ: Yes, thank you, Mr Bloom. Mr Rose.

MR ROSE:	If the Court please, may I hand up our outlines.
MASON CJ:	Thank you.
MR ROSE:	I must apologize to the Court; it is in two parts,

the reason being that the supplementary outline

concerns arguments which we were not sure that we

would have to meet, and after last week's case on

trial by jury, I did not think I should come here

and launch myself into arguments that I might not

have put against me, but as it has turned out, the

supplementary outline does cover points that are

relevant.

MASON CJ: Yes, Mr Rose.

MR ROSE:  If the Court pleases. The main outline, as

Your Honours will have seen, deals with the

section 55 and section 5l(xxxi) points; the

supplementary outline with those issues as to the

source of the Commonwealth power to enact the learned friend's submissions as to the proposition

whether it could be ascribed to section 5l(ii), the

taxation power.

What we have done in the supplementary outline

is to make three submissions as to the sources of

power: the first is a wide basis, which is not

limited to moneys received by way of supposed tax

moneys; the second basis, in paragraphs 4 and 5, is
the taxation power coupled with the incidental
power in section 5l(xxxix); and the third basis is
mentioned in paragraph 6, that is section 78 of the
Constitution. In our submission, there is clearly
a wide power in the Commonwealth in relation to the

distribution of moneys received by it, which is not

properly payable to it. This wide power would

extend to money that may have been received in

circumstances in which the Commonwealth had no

Mutual 32 10/2/93

legislative power whatsoever in relation to those

circumstances. Take a hypothetical case where
somebody intending to pay local rates might pay
them to the Commonwealth instead of the local

municipality. In any such situation, whatever be the source of the erroneous payment, we would say

that the Commonwealth has a legislative power,

within limits of course, to provide for the

distribution of that money, primarily of course

back to the persons who paid it, but there may be
circumstances in which it is appropriate and

reasonable for the Commonwealth to make some other

disposition of it.

DAWSON J:	Where do you find that legislative power?
MR ROSE:	In our submission, Your Honour, it would be a

power inherent in any government to deal with, or

in any parliament to deal with moneys that have

come into the hands of the government of that

jurisdiction and to make appropriate provision for

its disposal.

DAWSON J:  What is it, the incidental power coupled with the executive power? ·

MR ROSE: There would be the incidental power,

section 5l(xxxix), in association with section 61,

but perhaps it could be put on an even wider basis,

that it is simply a power inherent in the structure

of any parliament and government that receives

money. But, perhaps for present purposes, it would

be sufficient to rest it on section 61 in

association with section 5l(xxxix). In any case,

as I have said, there must be limits to it, and

those limits could be derived from the judgments of this Court in relation to the incidental power, and so the terms of the legislative disposition, or

distribution of the money, must have a sufficient

connection, and in the judgments of some of

Your Honours, a reasonable proportionality, so to

speak, having regard to the circumstances in which

the Commonwealth received the money.

DEANE J:  Mr Rose, what has happened to the old view that

even if there was a liability on the part of the

Commonwealth, a payment could not be made except

pursuant to a law appropriating the moneys for it,

either generally or specifically? Has that gone

out the window, or if it has not, is that relevant

to this case?

MR ROSE: Well, there certainly has to be an appropriation

before the money can be paid out. But, in our

submission, there can be legislation creating the

liabilities and creating rights.

Mutual 33 10/2/93

DEANE J:  It used to be thought of as quite an interesting

problem as to the nature of a legal liability on

the part of the Commonwealth, in the absence of any

applicable appropriation legislation, and one used

to have statements such as ''it is unthinkable", and

so on. As I say, is that gone, or - - -?

MR ROSE: No, indeed, Your Honour. It is unthinkable that

the money should be paid out?

DEANE J:  No. It is unthinkable that you would ever have to

come to consider that problem because, if there was

a liability on the part of the Commonwealth, one

can assume that there would be appropriation

legislation.

MR ROSE:  If Your Honour pleases, could see that the

Commonwealth has power to create valid liabilities

in itself, for example, to pay money. Those

liabilities can be created even though there is no

existing appropriation at the time. Those

liabilities could be pursued by claimants against

the Commonwealth to the point of judgment, but the

problem arises that a judgment could not be

satisfied unless at that stage there is an

appropriation of the money so that the payment can

be made.

DEANE J: Well, here, the moneys have presumably gone into

consolidated revenue.

MR ROSE:  Yes, indeed.

DEANE J: Well, assume in the absence of this Act,

proceedings were brought against the Commonwealth,

and a verdict obtained. Does one need to look at,

or find some applicable appropriation legislation

before the moneys can actually be paid?

MR ROSE: Well, they can actually be paid, yes, Your Honour,

but judgment could be given against the

Commonwealth on the basis of the liabilities, even

though at that stage there is no appropriation.

DEANE J: Is the need for appropriation legislation relevant

to the nature of the legislative power, in this

case?

MR ROSE:  I would submit, no, Your Honour, the Commonwealth

could legislate in relation to its liability to

make payments of this kind and whether there is an

appropriation or not to satisfy a judgment in due
course, or to enable the Commonwealth to pay it
out, if it considered it was liable, the existence

of the appropriation is an entirely separate matter

from the issues that we need to discuss here as

regards the creation of the liability.

Mutual 10/2/93

DEANE J:  In other words, you do not rely on the general

Commonwealth power in relation to moneys that have

gone into consolidated funds and the need for

appropriation legislation as a basis for

legislative power here?

MR ROSE:  If the alternative sources did not exist, then we

could rely on what is sometimes called the

appropriations power to justify the provision for

the payments out to the pool builders and to the

pool owners, because the payments to the pool

owners are in the nature of a grant to them. There

is no question of any legal liability to the pool

owners. So in making grants to them, one could

rely for the legislative power on the proposition

that the Commonwealth has an unlimited power to

make grants to any person for any purpose that it

likes, so there is no -

DEANE J:  I am not sure where we have gone. I thought you

were rejecting the suggestion that it may be

relevant. Are you or are you not?

MR ROSE:  So far as we are concerned here with the

Commonwealth's extinguishment of the liability of the pool builders where they have passed on the

burden, the legislation cannot rest on the

appropriations power. The appropriations power

would support legislation only in so far as its is

providing for payments out to people.

Extinguishment must rest on another ground.

DEANE J:  I will cease to take up your time after this, but

you see, what is operating in my mind is, assume

there was no applicable appropriation legislation and assume there was a specific Appropriation Act

for the purposes of moneys due under this agreement

and assume that Act was amended to authorize

payment only to those pool builders who met the

requirements set out in this legislation. What

would you say about the legislative bases, or the

validity of that?

MR ROSE:  So far as the legislation is providing for

payments out to the pool builders who qualify or to

the pool owners, one can rest it on the so-called

appropriations power. But one needs more than that

to sustain the Commonwealth legislation in so far

as it seeks to bar the Commonwealth liability to

the other pool builders, namely, those who have

passed on the burden.

McHUGH J:  Mr Rose, how does section 66 of the Judiciary Act

fit in with appropriation? That provides that:

Mutual 35 10/2/93

On receipt of the certificate of a judgment

against the Commonwealth or a State the

Minister for finance ..... shall -

pay the other moneys legally available. Is that

understood to mean any moneys that are there or is

it understood to refer to moneys that are legally

available to pay judgment?

MR ROSE:  It is moneys that are the subject or within the

scope of an existing appropriation. So, I could

illustrate it with a case of an action against the

Commonwealth on an ordinary contract. The judgment

could.be obtained against the Commonwealth even

though there has never any appropriation of the

moneys to satisfy the Commonwealth's liability

under the contract. Section 66 means, though, that

a judgment will be useless unless and until the

Parliament appropriates the money. Of course, in

small amounts there is nearly always an

appropriation available by way of the advance to
the Minister for Finance, but for larger moneys
there may be a need, if there is not already one -
there would be a need - to enact a special

appropriation for it. It was back in the 1930s in

Bardolph's case -

McHUGH J:	Bardolph, yes.
MR ROSE:	- - - which, of course, the Court established the

proposition that the existence of an appropriation

is not essential to the creation of contractual

liabilities.

If the Court pleases, in the supplementary

outline, in paragraph 2, in addressing the limits

to the inherent power or the incidental power or

whatever basis that wider power exists, we have the

proposition that the legislative power is not limited simply to providing the machinery for giving effect to common law rights, but within

limits the Commonwealth could legislate for some
other distribution.	I did say earlier that there

must be a sufficient or proportionate connection

with the circumstances. That, obviously, would not

be open to the Commonwealth at large, having

received money from people under circumstances such

as a mistake of law, just to provide that it be

granted to somebody or distributed in some way that

had no rational reasonable connection.

The alternative basis of section Sl(ii), the

taxation power coupled with the incidental power in
section Sl(xxxix), is, in my submission, the basis
on which the legislation, in this particular case,

could be rested, and my submission is that there is

no distinction between legislation of the kind in

Mutual 36 10/2/93

Werrin's case, where the legislation was valid but

mistakes were made as to the scope of it and money

was paid thinking that it was within the terms of

the existing valid Act - it turned out that it was

not, the payments were outside its scope -no

distinction between that situation and what we have

here, payments made under an Act that was a law,

with respect to taxation, but failed for a

procedural reason, namely, of course -

BRENNAN J:  What does that mean, was a law with respect to taxation? Was it a law?

MR ROSE: In the end, because of the procedural problem, no,

Your Honour.

BRENNAN J: In the beginning was it a law?

MR ROSE:  No, I would have to say that it is not a valid

law.

BRENNAN J:	Then we cannot use the imagery, can we?
MR ROSE:	The connection with the taxation power lies in the

grounds of considerations that Justice Starke used

in Werrin's case, 59 CLR 163. That lies in the

taxation and provides for its collection, the

notion that the powers of the Commonwealth

incidental powers extend to situations where what

is being dealt with turns out after the event not

to have been a valid law with respect to taxation.

His comments were, of course, limited to the kind

of situation there, and my submission is that, in

principle, the incidental power should have a

similar reach, that no distinction should be made

between the two situations.

The third basis on which, we submit with

respect, the legislation could be based is

section 78 of the Constitution, and we have listed

have been made to the effect that section 64 of the	in paragraph 6 decisions of the Court where remarks
Judiciary Act which imposes a substantive liability
on the Commonwealth - I say nothing as to its
effect on the States since that is an issue that
does not arise here. But so far as the liability
of the Commonwealth is concerned, section 64 of the Judiciary Act imposes a substantive liability. In
that section, of course, it was a liability
equivalent to that of an ordinary subject but, in my submission, under section 78, the Commonwealth
could impose a lesser degree of liability on the
Commonwealth right down to the point of removing
any right to proceed at all, and it could impose a
greater degree of liability than that imposed upon
an ordinary subject.

Mutual 37 10/2/93

And so here, where section 4(1) of the

Refund Act extinguishes the liability of certain

pool builders, namely those who have passed on the

burden, to put it briefly, that is an exercise of

the power under section 78.

DEANE J:  Mr Rose, perhaps I should mention that the

Chief Justice has pointed out to me that what was

operating at the back of my mind is what is said by

Justice Dixon in Bardolph, 52 CLR 508 to 509 which,

of course, deals with the relationship between

obligations assumed by the executive and the

legislative power of the Parliament.

MR ROSE:  Yes, thank you, Your Honour. In that case there

was no legislation authorizing the contract, as I

understand it - - -

DEANE J: No.

MR ROSE:  - - - it just happened to be within the ordinary

course of administration of the government and it

was objected that the contract was not binding

because there was no appropriation to meet the

expenditure and it was that proposition which did

have some support in some rather old cases.

DEANE J: Well, what I had at the back of my mind was the

extent of legislative power to honour discharge or

modify obligations assumed by the executive without

specific legislative authority.

MR ROSE:  In paragraph 6 of that outline we have included a

submission that if section 78 is a source of the

power then it is a provision that is not subject to

a just terms requirement, since unlike the various

provisions of section 51, section 78 is not

expressed to be subject to the Constitution.

BRENNAN J:  Do you say this is under section 78?

MR ROSE:  The legislation in so far as that it deprives

certain pool builders of their claim against the

Commonwealth.

BRENNAN J: Is under section 78?

MR ROSE:  It is a law concerning the substantive liability

of the Commonwealth, it is removing it in those
cases and, in our submission, even if that were an

acquisition of property - of course I will be

submitting that it is not in any case - but the
present submission is that even if it were an

acquisition of property, it would not be subject in

any way to section 5l(xxxi).

Mutual 38 10/2/93

BRENNAN J:  Is this the proposition that any law which

extinguishes a valid cause of action by a subject
against the Commonwealth is a law falling within

section 78?

MR ROSE:	Yes, Your Honour.
BRENNAN J:	And is not subject to section Sl(xxxi)?

MR ROSE: That is the submission, if Your Honour pleases.

BRENNAN J: Is there any room for section Sl(xxxi) to

operate?

MR ROSE:  Not in relation to laws extinguishing Commonwealth

liability. So that even if on arguments such as

those that my learned friend has put, even if there

is an acquisition of property to be discerned in an

extinguishment of liability, that would not be an

aquisition of property of a kind that falls within

section Sl(xxxi).

BRENNAN J:  So that any cause of action which might arise

otherwise than pursuant to an acquisition of

property, a legislative acquisition of property,

can be extinguished without penalty by the

Commonwealth?

MR ROSE:	Yes, Your Honour.
BRENNAN J:	No contract is worth the paper it is written on.

MR ROSE: Well, Your Honour, in our submission, that would

be a consequence of section 78, which enables the

Commonwealth to deny any right to proceed against

it. It may be a very severe course to take, but

that would be a matter of policy rather than of

law.

BRENNAN J:  Has there ever been an inkling of that

suggestion in any of the judgments of this Court?

MR ROSE:  Not that I am aware of, Your Honour.

BRENNAN J: Is there any argument of principle which could

support it?

MR ROSE:  I have put the

BRENNAN J: Having regard to the language of section 78

which speaks of conferring rights to proceed?

MR ROSE: Conferring rights to proceed and, in my

submission, the Commonwealth can remove them as

well, because if one goes back to the basis for the

Commonwealth being sued, it lies in sections 56 and

64 of the Judiciary Act and what the Commonwealth

Mutual 39 10/2/93

has given in those sections, in my submission, it

could take away.

BRENNAN J: Yes.

MR ROSE:  May I pass now to the major issues which are that

the Refund Act here is not invalid by reason of

section 55 and, in our submission, so far as

section 5l(xxxi) is concerned, we submit that there

is no acquisition of property from any person

within the meaning of section 5l(xxxi), but that

even if there is it is manifestly on just terms.

DAWSON J: If there is an acquisition of property, why is it

not a tax?

MR ROSE: If Your Honour pleases, I suppose it has the same

effect as if a tax were imposed on the pool

builders who are not getting any refund; as if a

tax were imposed and as if that were set off

against what - - -

DAWSON J:  I suppose one answer is it is not for the purpose

of raising revenue.

MR ROSE: Indeed, I was going to proceed to that suggestion.

tis not in the form of a tax. It is not imposed

in the way in which Commonwealth tax legislation is

constructed with an Act that imposes it, and

because of the first paragraph of section 55, of
course, one would need to do this sort of thing in
two separate Acts. One would need to have the tax

upon those pool builders who are not going to get

anything back, and then the provisions for the

grants to the pool owners and the machinery

provisions would need to go in a separate

assessment Act. So the form of this, the whole

language of extinguishing liability, providing

payments to the builders, payments to the owners

and so on, all tells, in my respectful submission,

against it being characterized as some kind of

elliptical imposition of taxation.

Perhaps I might invite Your Honour

Justice Dawson's attention to what Justice Starke

said in Werrin's case, 59 CLR 150, at page 163

where he says in passing, if the section, which was

barring recovery, if this be not a tax - and then

he went on.

DAWSON J: Yes, I had in mind a very broad statement in Air

Caledonie, which suggests that any compulsory

exaction which is not a penalty or by way of

payment for services, is a tax.

MR ROSE:  Yes, as a general proposition, with respect,

Your Honour, we would say that that should be

Mutual 40 10/2/93

applied. But he does talk about ''an exaction", and

I would submit that it is not appropriate to regard

this sort of situation where the Commonwealth

already has the money and is legislating in

relation to barring rights to recover it, and so

on. But that is not the kind of exaction that the

Court had in mind, in my submission, when one reads

the context in Air Caledonie.

If I can turn to the section 55 issue, my

learned friend has relied very substantially on

cases such as Antill Ranger, and I think we have

listed another case there in our outline of a

similar kind, Barton v Commissioner for Road

Transport, 97 CLR 633. But there is a world of

difference, in my submission, between the

legislation in those cases and the legislation

here.

The first difference that I would mention is

that in those cases the later legislation would, in

effect, have continued the burden on interstate

trade, and one can see quite plainly, in my

submission, why the later legislation was

considered to be just as much an infringement of

section 92 as the earlier legislation. But here

the Refund Act seeks to undo the burdens of the

invalid tax by restoring both the builders and the

owners to their pre-tax positions. The builders

get the tax back if they had not passed it on, or

if they have since refunded the money to the

owners. The owners get the money back if they bore

the burden of the tax in the first instance by

having it included it in the price of the swimming

pool.

BRENNAN J:  And if they did not? If the conditions are not

satisfied the money stays where it is under this

Act.

MR ROSE:  If the burden was passed on to the owners, they

get the refund; if it was not passed on the owner,
the builder gets the refund.	So in either case - I

am assuming that people claim what they are

entitled to - there would be no windfall going to

the Commonwealth. The whole purpose of the Act was

to prevent windfall gains to those builders who had

passed it on - - -

BRENNAN J: Whatever the purpose might be, the fact is that

this Act extinguishes the builders' cause of

action, except in the circumstances stated. Now,

where those circumstances are not satisfied, the

builders' cause of action is extinguished.

MR ROSE:  Indeed, Your Honour. That, in my respectful

submission, is consistent with the proposition that

Mutual 41 10/2/93

the effect of the Refund Act is to undo burdens of

the invalid tax.

BRENNAN J:	How does it undo it by refusing any refund?
MR ROSE:	It gives the refund to those builders who bore the

burden.

BRENNAN J: But, to those who did not, how does it undo

their situation? They paid a tax, what was said to

be a tax, under what purported to be a law. They were not liable to pay it, and under this Act the

Commonwealth says, "and we shall keep it, unless".

Now, to the extent to which it says, "and we shall

keep it", how does it undo anything?

MR ROSE:  My submission is that it is undoing the burdens of

the tax. The tax is imposed.

BRENNAN J:	The tax never was imposed.
MR ROSE:	We are talking tax in inverted commas.
BRENNAN J:	You are talking in imagery again; you are not

talking in law, are you? No tax was ever imposed.

MR ROSE:  I will try to avoid talking in imagery. It is

trying to undo the effect that the legislation had,

amongst those who believed it was valid, or those

who, in the situation, made an agreement. The

builders, in some cases, passed on to their clients

the amounts that they were paying to the

Commonwealth. Where they did pass on the burden of

the supposed tax, there is a refund here to the

owners who bore that burden. If the builders were

to obtain a refund here, they would be getting a

windfall if they had not passed on the burden.

BRENNAN J: They would be getting back what they paid under

an exaction which was without substance and your

proposition is this, I take it, that if A is owed

money by the Commonwealth, the Commonwealth can

pass a law saying A shall not have his money unless

he pays his debts or moral obligations to me?

MR ROSE:  We are dealing in a much narrower compass than a

law that would be so wide ranging in its - - -

BRENNAN J: For the moment, I do not see the distinction,

but perhaps you can point to it?

MR ROSE:  Here it is limited to the consequences of this

legislation in terms of what was done by the people

affected by it, and I am seeking to distinguish it

from the Antill Ranger kind of situation where,

plainly, there was a burden under section 92 which

caused the invalidity of the original legislation

Mutual 42 10/2/93

and this later legislation simply maintained that

burden. I am seeking to draw the distinction that

this legislation is not seeking to maintain the

effect of the earlier invalidity.

But, perhaps as an even more significant distinction between the legislation there, in

Antill Ranger, and the legislation here, that is

that the later legislation in Antill Ranger and so

on was just as much opposed to the purposes of the

constitutional prohibition as the original

legislation.

Here, the Refund Act would not be inconsistent

in any way with the purposes of section 55. The

purposes of section 55 is to prevent the tacking of other matters on to an imposition of excise duties, we are dealing with in the last paragraph, which

was the paragraph that led to the invalidity in the

first of the Mutual Pools cases.

The purposes of section 55 are explained, or

stated, in Resch v Federal Commissioner of

Taxation, (1942) 66 CLR, and also in the Air

Caledonie case. Those purposes were completely

fulfilled by declaring the tax invalid. The

purposes of sections 50/55 is not served at all by

invalidating the Refund Act and that is for the

reason that the Bill was fully exposed to amendment

by the Senate. No purpose whatsoever would be

achieved, in terms of section 55, of invalidating

the Refund Act.

Indeed, there is an anomaly that I might mention in relation to the invalidity of the

original legislation. The invalidity of the tax

there was due to the wording of section 55 and the

Court's decision, for example, in Air Caledonie
that one reads the amending Act with the principal

Act to see whether the resulting composite text has

the impermissible combination and then the taxing

provision was struck down.

In the Mutual Pools case, although the

invalidity resulted from the application of those principles, the invalidity itself did not promote

any purposes of section 55 since the provisions in

question were all in an assessment bill and could

have all been amended by the Senate. So in a sense

this is one of those sometimes anomalous cases

where the wording in a statute, in this case the

Constitution, goes rather further than its purposes

strictly require.

But it is not necessary, with respect, perhaps

to develop that point further. It is sufficient to

say that the purposes of section 55 here in

Mutual 43 10/2/93

relation to the Refund Act simply do not lead to a

conclusion that any of it should be invalid because
of section 55. All of its provisions were
amendable by the Senate, totally unlike the later

legislation in Antill Ranger. If the Court

pleases, I have extracts from Quick and Garran on

the purposes of section 55 which might assist the

Court in amplifying the remarks in Resch's case and

Air Caledonie to which I referred. That completes

my submissions on section 55.

If I can move now to the acquisition of

property issues and our submissions that the Refund
Act does not purport to make any kind of

acquisition of property from any person but that

even if it does, it is on just terms. My first

submission in that regard, if the Court pleases, is

that section 5l(xxxi) only applies where there is

an acquisition of property by someone. That issue

was considered by this Court in Australian Capital

Television v The Commonwealth, 108 ALR 577, the

political broadcasting case.

The passages which are relevant to this issue

occur in the judgments of Your Honours

Justices Brennan, Dawson and McHugh; Your Honour

Justice Brennan at page 615, line 13. Your Honour

Justice Brennan refers to the Tasmanian Dam case

and mentioned that Your Honour had pointed out:

that there is no acquisition on which

section 5l(xxxi) may fasten unless the

Commonwealth or some other person acquires a

proprietary right under the impugned law.

Reference is made to Your Honour the Chief

Justice's statement in that case:

The emphasis in section 51(xxxi) is not

on a 'taking' of private property but on the

acquisition of property for purposes of the

Commonwealth.

provision into play it is not enough that To bring the constitutional

legislation adversely affects or terminates a
pre-existing right that an owner enjoys in

relation to his property; there must be an

acquisition whereby the Commonwealth or

another acquires an interest in property,

however slight or insubstantial it may be.

Then Your Honour, at the bottom of 615, and going

over to 616, considered the application of that

principle to the legislation in that case. And at

the top of page 616 said that the denial to the
broadcasters of the right to broadcast what they

wished, or the requirement that broadcasters must use their property to provide election broadcasts

Mutual 44 10/2/93

during free time are not things that either create,

extinguish, or transfer property.

It is immaterial that Pt IIID reduces the

value of a broadcaster's licence for the
beneficiaries of the free time provisions
acquire none of the rights or privileges

conferred by a broadcaster's licence. The

beneficiaries acquire a statutory right to

have their election broadcasts transmitted

free of charge. That is a right to the
services of the broadcaster; it is not a

proprietary right.

Then, to similar effect,

Your Honour Justice Dawson, emphasized at the

bottom of page 640 that there must be the

acquisition of something of a proprietary nature,

although that concept, of course, must be given a

wide meaning as had been stated in Dalziel's case

and other cases. Over the page, pages 641 to 642,

Your Honour Justice Dawson comes to the same

conclusions as to the provisions of that

legislation because there was no property acquired

by anybody. Your Honour Justice McHugh at 678

agreed with the judgment of His Honour

Justice Brennan on that issue.

BRENNAN J: Is the proposition that a debt is not property?

MR ROSE:  No, Your Honour, the proposition is that in

extinguishing a debt the Commonwealth does not
acquire any property. It acquires the benefit, of

course, of not having any further legal liability

to pay it but, in my submission, is a fundamental

distinction between the acquisition of property and

the acquisition of a benefit of that kind which is

not itself property, not a proprietary right, the

debt is simply extinguished.

BRENNAN J:  The difference between acquiring a debt and

extinguishing a debt?

MR ROSE:  Yes, Your Honour. The net effect may often be the

same but, in my submission, limits to the

constitutional language must be set having regard

to the concept as a matter of ordinary language.

Of course, in some instances the extinguishment of

a right can involve an acquisition of a person's

property. That is the extinguishment of a lease -

results in the lessor obtaining all the property

rights, corresponding to those included in the

lease. And an extinguishment of contractual rights

can sometimes be a law with respect to an

acquisition of property.

Mutual 45 10/2/93

An example I might give is a law extinguishing the rights of a seller to payment for goods already

sold. The law doing that would be characterized

quite easily, in my submission, as a law with

respect to the buyer's acquisition of the goods.

But where it is a contract for the provision of

services, although the extinguishment of the

liability to pay for the services is, of course, a

benefit - if it is the Commonwealth involved - to

the Commonwealth, there is no acquisition of
property and no law with respect to the acquisition

of property involved in that.

That result, in my submission, accords with a

number of cases decided by this Court. First I

would refer Your Honours to the case of Reg v

Ludeke, (1985) 159 CLR at page 653. That case

concerned legislation giving the Commonwealth power

in relation to the Builders Labourers' Federation.

At page 653, the third complete paragraph

beginning:

The second main submission made in

challenging the validity of the Act is that
the Act empowers the Minister to acquire

property from the Federation on other than

just terms. There is no substance in this

submission.

The first submission in that regard was:

that the powers given by section 5(l)(b) and

5(2) do not permit the Minister to order the

Federation to hand over its property.

Then there was a further submission:

It is, however, said on behalf of the

prosecutors that the Minister, acting under

section 5, might effectively remove a member

of the Federation from an office which he held

in the Federation and thus terminate existing

contractual rights. However, even if that be

so, there is nothing in the Act that provides
for the acquisition of those rights - they may
be extinguished but not acquired.

In my submission, that decision of the Court

recognizes the fundamental distinction in law

between mere extinguishment of a right and the

acquisition of some proprietary interest.

Next I would refer the Court to Werrin's case,

59 CLR 150, and was an action to seek to recover

from the Commonwealth money paid that had been paid

in the belief that it was due as tax under an

existing sales tax law.

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Two Justices, Chief Justice Latham and

Justice McTiernan disposed of it on the basis of

mistake of law, but three Justices, Justices Rich,

Starke and Dixon, disposed of it on the ground that

Sales Tax case, as one sees from the judgment of

the action was barred by a section of the

Justice Starke at page 163, just before the middle

of the page, starting about a third of the page

down:

It is argued that the provision above set

forth is not a law with respect to taxation or
incidental thereto but a mere confiscation of
the moneys of the subject in respect of which

the Parliament cannot give to the Commonwealth

immunity from suit (Constitution,

secs 5l(xxxi) and 75).

Justice Starke, like the other two Justices I

mentioned, upheld the legislation, quite plainly did not consider it a breach of section 5l(xxxi).

Justice Rich upheld the legislation without any

express reference to section 5l(xxxi), but plainly

that is implied in his decision. Justice Dixon did

not mention section 5l(xxxi) either~ but again it

is implied in his decision.	Page 165 in the middle
of the page, he says:

There is, I think, no constitutional

provision preventing the Parliament from

extinguishing a cause of action against the

Commonwealth, unless implications be

discovered in sec.75 which do so.

Then there is a detailed analysis by His Honour of the question concerning

section 75(iii), and whether the earlier case of

the Commonwealth v New South Wales created an

impediment to that Commonwealth legislation and, of

course, he decided that it did not.

There have been some other cases in the Court

where contractual rights have been extinguished by

Commonwealth legislation or provision has been made

for them to be extinguished. The Peacock v Newton

and Marrickville case, 67 CLR 25, where the

Commonwealth legislation was, in the end, held

invalid for reasons concerning judicial power, but

on the point relevant here four Justices held that

it was a valid exercise of the defence power to

legislate to provide for a tribunal to alter

contracts - in that case a mortgage - by reducing a

party's obligation to pay interest. It was

legislation, of course, enacted to a just

Mutual 47 10/2/93

contractual rights as a result of wartime
conditions.

Section Sl(xxxi) was not mentioned but it must be implicit in the conclusion there that it was not

an impediment, because it may be that if

Their Honours had in mind that it was an

acquisition of property, that it was upheld because

the very nature of the legislation was envisaged
that any changes to the contracts should be made on

a fair and reasonable basis. But I do mention it

as a case where legislation of that kind has been

upheld so far as the positive powers are concerned.

The next case to which I would refer the Court

is the Perpetual Executors and Trustees case,

77 CLR 1. For present purposes, the statement in

the headnote is a sufficient description of the
transactions that were involved. Basically it was

that, contrary to the terms of the Commonwealth's

agreements with bond holders, the Commonwealth had

imposed withholding tax on interest on the bonds.

Chief Justice Latham, at pages 17 to 18, stated the

general principle that the Commonwealth Parliament

had power to legislate to extinguish liabilities;

it had power to override the contract and put an

end to the rights of the bond holders to receive
their money without those deductions, and to a

similar effect Justice Dixon at pages 28 to 29. Those decisions by Their Honours would not have been possible if section Sl(xxxi) had meant that

what was being done there was an acquisition of

property from the other contracting parties.

BRENNAN J: Well, other problems may have arisen there, may

they not, because it was a contract which, as I

understand your description of it, purported to

bind the Parliament in the exercise of its

legislative powers in respect of taxation?

MR ROSE:  I think, if Your Honour pleases, there was

legislation which authorized agreements of that

kind, so I think I would need to come back to

Your Honour - - -

BRENNAN J: There is another dimension in that case; that is

as much as we can say.

MR ROSE:  Yes, there would be, Your Honour, with respect,

yes, that there would have been the objection that the agreement was initially void for inconsistency of the existing - in the context of this

legislation too, although it may be said that the

Commonwealth obtains a benefit from the pool

builder, there is no net benefit to the the pool owner.

Mutual 48 10/2/93

DEANE J:  I am sorry, I did not follow that. Why is there

no net benefit to the Commonwealth?

MR ROSE:  Because the Commonwealth would have to pay out to

the pool owner.

DEANE J: Why?

MR ROSE:  If the pool builder is unable to get a refund

because the pool builder has passed on the burden

to the pool owner, then the pool owner is entitled

to get a refund.

DEANE J: Why?

MR ROSE:  Under the provisions of the -

DEANE J: That is what the Act says, is it?

MR ROSE: Subject, of course, to completing the relevant

declarations and so on. That is in section - - -

DEANE J:  I had missed that bit, I am sorry.

MR ROSE: Perhaps I should take the Court again to

section 4. The scheme of it is not simply that it

is barring the right of certain pool builders. It

provides in section 4(3) that if there is a
declaration made by the pool builder and the pool
purchaser that the pool purchaser bore the burden -

in other words, that the amount -

was passed on to the pool purchaser, has not

been refunded ..... then subsection (4) applies.

And in that case the Commonwealth is liable to make a payment to the pool purchaser instead of to the

pool builder.

DEANE J: That answers my question, thank you. What if, in

a particular case, the tax had been paid but the

purchaser had defaulted? The tax had been passed

on and paid by the purchaser but the purchaser had

defaulted in the last instalment, say, of the

purchase price which exceeded the tax, which could

very well happen.

MR ROSE:  I think it the total situation there, it would be

said that the burden had not been passed on. If it

had not actually been paid by the purchaser, there

would be an issue as to that point, but it may be

that that is a situation where the whole of the tax

had not been passed on but only so much as the

purchaser had in the end paid.

Subsection (5) enables the pool purchaser to

make a declaration by himself or herself if for any

Mutual 49 10/2/93

reason the pool builder cannot be found or has died

or whatever. There is provision for appeal to the decision by the commissioner to allow the purchaser to make a solo declaration and there are important

provisions in the Act - sections 5 and 6 - in which
the Commonwealth is paying interest to the pool

builders and the pool owners for the period in

which they are out of pocket by reason of this

exaction. The interest covers the full period for

which each of them, either or both, is out of

pocket.

There is even a provision in section 7 whereby

the pool builder can get $100 to compensate it for the paperwork and so on involved in joining with a

pool purchaser in making a declaration. The

interest is payable - that is under sections 5(4)
and 6(4) - at the same rate as is applicable under

the Taxation (Interest on Overpayments) Act 1983.

The current regulations set that at 10 per cent.

In any case, I would mention to the Court that that

was the rate of interest specified in the agreement

that was made in this case between the pool

builders association and the Commonwealth.

DEANE J:  Mr Rose, I am finding it very hard to come to

grips with this case in that I would have thought
the starting point would be to identify the

executive power pursuant to which the SPASA

agreement had been made, and then turned to the

extent of the legislative power to say, "No, that

agreement is, in the circumstances, quite

inappropriate.	We override it by applicable
legislation."

Well, now, I have no idea of what the relevant executive power by which this agreement to pay

moneys that had been received into consolidated

revenue was made, if it is a valid agreement, but

assuming it is a valid agreement, does not this

case really involve the relationship between

executive and legislative powers, in relation to
the distribution of money received into

consolidated revenue?

MR ROSE: With respect, yes, Your Honour. As we conceive

it, one starts with this agreement under which

there is an undertaking to pay the money back to

the persons from whom the Commonwealth obtained it.

We would have no doubt that that was within the

executive power of the Commonwealth under

section 61, and that any legislation providing

simply for payments back to the person from whom

the Commonwealth got it is within the centre of

whatever the power is of the Commonwealth to

provide for redistribution.

Mutual 50 10/2/93

DEANE J:  But does one start with the proposition that any

agreement made by the executive within this area is

in a special way subject to legislative

confirmation, abrogation or variation?

MR ROSE: With respect, Your Honour, any agreement made by

the Commonwealth - and we will assume it is within

an area of a subject-matter in which the

Commonwealth Parliament could legislate - any

executive agreement would be valid.	We refer back
to Bardolph's case for that proposition.	I think

in recent times the suggestion that that executive

power to enter into contracts is limited to matters

in the ordinary administration of a department has

perhaps faded away.

DEANE J: But one would normally, I would have thought, need

to identify the source of executive power. Does

one assume for the purposes of this case that the

relevant executive officer had legislative power or

was authorized by legislation to make this

particular agreement, or does one approach it on

the basis that it was an exercise of executive

power without specific legislative authorization,

because if it is the latter, I would have thought

that the nature of the executive power to make the

agreement may be limited by reference to

legislative authority?

MR ROSE: In our submission, Your Honour, the executive

power to enter into agreements is not limited to

agreements authorized by legislation.

DEANE J:  I was not suggesting it was. I was suggesting

that the rights arising from the agreement might,

of their nature, be seen to be subject to
legislative overriding in a special way, but does

not apply in the case of contractual arrangements

with parties other than the executive of the

Commonwealth.

MR ROSE:  Our submission is that a contract made by the

executive in exercise of executive power that is

not derived from statute, such a contract can be

overridden by Commonwealth legislation, the rights

of the parties can be removed without them being an

acquisition of property.

DAWSON J:  And the legislative power there is the executive

power coupled with the incidental power?

MR ROSE:  The legislative power to override the contract

would be the legislative power covering that

subject-matter of the Commonwealth's activities, so

if it is a Commonwealth contract dealing with

overseas trade the source of the legislative power

to override that contract would be section Sl(i).

Mutual 51 10/2/93

DAWSON J:  Even if you could not find an enumerated power,

do you say you rely on the incidental power coupled

with the executive power, section 61 plus

Sl(xxxix)?

MR ROSE: Normally there would be no need to resort to

section Sl(xxxix). It would often be in the

picture, of course, but if the contract, as I have

said, is one dealing with the subject-matter of

overseas trade, the power under section Sl(i) would

enable the Commonwealth to legislate to override

that contract.

DAWSON J:	Of course, but here you say this is a law with respect to tax, but if that is not right, if you cannot find a new road to power, you would be
reduced to section 61 plus Sl(xxxix).

MR ROSE: Indeed, Your Honour, yes.

DAWSON J:  And the limits on that combination are dealt with

in the AAP case, are they not?

MR ROSE:  The executive power cannot exceed the area of

either the express or the implied or the inherent

legislative powers, and here we are putting it on

the basis that there may be a wide inherent power
but, at the very least, there is the executive

power in section 61 with the incidental power. It

is perfectly adequate to sustain Commonwealth

legislation that overrides a contract in relation

to the disposition of moneys that the Commonwealth

has received.

DEANE J: But, I mean, I do not want to harp on it, but here

we are dealing with a very particular area in that

if you look at this agreement, if it is accurately

summarized, it is not an agreement aimed at

creating legal liabilities, it is an agreement by

the executive for the refund of specific moneys

said to have been or which have been received into

consolidated revenue. Well now, there you are

moving into a very special area in terms of the

relationship between executive and legislative

powers, and we just do not seem to be coming to

grips with that.

MR ROSE: Well, with respect, Your Honour, we would see the

legislation as creating liabilities in the

Commonwealth.

DEANE J: What I am raising is not against you; it is just I am trying to really understand the precise terms of

reference.

MR ROSE:  The agreement, as we see it, creates a contractual

right to pay moneys - obviously it is not going to

Mutual 52 10/2/93

be the same moneys that are returned, it is an

agreement to pay about equal to the amounts that

have been received in that way - if the legislation

was declared invalid. That gave rise to a

contractual right against the Commonwealth and we

say like any other contractual right it can be

overridden by legislation within an area of

Commonwealth power and we have identified -

McHUGH J: But what consideration did the SPASA members give

to the promise of the Commissioner? I mean, they

seem to have done no more than a promise to carry

out what were then perceived to be their legal

obligation.

MR ROSE:  It was an agreement that they would pay the money,

and if the legislation was held invalid, on the

hypothesis that it was invalid, but nobody knew
that until the court so decided, there was no legal

obligation in them to pay that money, but they

undertook a contractual obligation to pay, which

did add something to - in the end, of course, it

plainly was more than they were legally obliged to

do, given the invalidity of the legislation.

MASON CJ:  Mr Rose, we will adjourn now and resume at 2.15.

AT 12.50 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.18 PM:

MASON CJ: Yes, Mr Rose.

MR ROSE: If the Court pleases, before lunch I was concerned

with the concept of an acquisition of property, and

I had referred the Court to a number of cases which

are listed there in paragraph 6 of our main

outline.	One of those cases I touched on briefly,
and that was the Tasmanian Dam case.	I had quoted

from the passage by Your Honour the Chief Justice

which was in turn quoted by Your Honour

Justice Brennan in the Political Broadcasters case,

but I would like to draw the Court's attention to

other statements in the Tasmanian Dam case,

158 CLR 1 - Justice Murphy at page 181, and again

Justice Brennan at 247, and to the passage at

page 283 where Your Honour Justice Deane, in the

middle of the page, said:

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The mere extinguishment or deprivation of

rights in relation to property does not

involve acquisition.

But then Your Honour went on to deal with difficult

questions which can arise, particularly in relation

to land and where one has prohibitions that can, as

Your Honour thought, be seen as analogous to

restrictive covenants, and so on. In my
submissions, those considerations do not apply,

whereas here we simply have the extinguishment of a

contractual right.

In relation to the Mauritius case as mentioned

by my learned friend, Mr Bloom, the Societe United

Docks case, (1985) 2 WLR 114 - my learned friend

has drawn my attention to the fact that it is now

reported in (1985) 1 AC 585. The point I wish to

make in relation to that case, if the Court

pleases, is that the constitutional provision in

that case was expressed not in terms of an

acquisition of property, but it was a right of the

individual to protection from deprivation of

property without compensation. So the analogy

there is not with our Constitution, but with the

United States Constitution with its reference to

"takings" and the distinctions that Your Honour the

Chief Justice made in the Tasmanian Dam case, and

that has been made in other judgments concerning

the essential difference between the United States

provision and the Australian one.

The third point in relation to those cases

listed in paragraph 6 of the outline is in relation

to Thomson's case, that is the Perpetual Executors

and Trustees case, where Your Honour

Justice Brennan raised with me the question that in

that case there would be the further problem that

the contract was void for purporting to fetter the

powers of the Parliament. In fact, the case was

treated on the assumption that the contract was

valid, and the three Justices referred to went on

to say that even if it was valid, the rights under

it had effectively been extinguished by the later

Commonwealth legislation. I draw Your Honours'

attention to 77 CLR first at page 17, where

Chief Justice Latham in the middle of the page

said:

If, on the other hand, the Income Tax

Assessment Act 1936 did impose a tax upon the

bond interest, and the contract to pay

interest without deduction of taxes was valid,

the position is that the 1936 Act destroyed an

exemption which previously existed.

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The position in that respect is even more clearly

or emphatically stated by Justice Dixon at page 25

in the paragraph beginning:

The second question in the case stated

was asked on the assumption that the Court did

so construe the contract -

that is referring back to the earlier case of

Magrath -

and it related to the existence on that

footing -

that is the second question -

of a right in the plaintiff to recover from
the Commonwealth the tax he had paid in

respect of interest either by way of indemnity

or as damages. That question the Court was

relieved from answering by counsel for the

Commonwealth, who informed the Court in effect

that if the bond was interpreted as promising

that the interest would not be included in the

plaintiff's assessable income, the

Commonwealth would honour its promise as so

interpreted.

So the Court proceeded on the assumption that the

agreement made by the Commonwealth was valid and

proceeded from there to say that the rights under

it in respect of the tax undertaking had been

extinguished, and came to that conclusion without

any suggestion that there was an impediment to such

Commonwealth legislation because of

section 5l(xxxi).

BRENNAN J:  Or was that because the problem did not arise?

In other words, given that there was, on that

approach, an acquisition of property, here was the

undertaking by the Commonwealth that it would

honour its promise.

MR ROSE: Well, if Your Honour pleases, there was a contract

by the Commonwealth which was assumed to be binding

and then the later legislation prevented the

Commonwealth from performing that contract.

BRENNAN J: Yes. No, what you say is no doubt right as a

matter of legal analysis; my question was really, was the issue a live one or was it present to the minds of the Justices, having regard to the

concession that was made as recorded on page 25?

MR ROSE: Well they did, with respect, Your Honour, go on to

decide the very issue as to whether the contractual

undertaking had been validly extinguished by the

Mutual 55 10/2/93

later legislation. Now, if Commonwealth

legislation of that kind were within section
51(xxxi), it would not have been valid unless just

terms had been provided, but there was no

suggestion that that later legislation was subject

to any such impediment. So, for that reason,

although section Sl(xxxi) was not mentioned, we

would respectfully submit that it is an instance
where those Justices saw no difficulty in the

validity of that later legislation.

If I may move now to paragraph 8 of the

outline, our submission there is that even if by

some process of analysis one does arrive at the conclusion that the extinguishment of the right

here was an acquisition of property in one sense,

our submission is that it is not an acquisition of

property of a kind to which section Sl(xxxi)
applies and, in that respect, my learned friend, I

think, has already referred the Court to

Trade Practices Commission v Tooth & Co Ltd, but I

would refer to a different passage. It is at

page 408 in 142 CLR, where Justice Gibbs summarizes

the numerous earlier cases, establishing instances

of what would in any ordinary sense be acquisitions
of property, but which nevertheless fell outside

section 5l(xxxi). Some, of course, are very

obvious ones, like laws imposing fines and

penalties. Other examples given, looking from the

top of page 408:

forfeiture of prohibited imports ..... the

application of the property of former enemy

subjects reparations ..... sequestration of the property of a bankrupt or the condemnation of

prize -

et cetera. All instances where Justice Gibbs

pointed out that it is not appropriate to regard

them as the kinds of acquisitions of property that

are envisaged in the Constitution as having to have

just terms.

Our proposition in that respect is that this

legislation here, the Refund Act, is another

example of that class of legislation, and even if

the relationships involved can be analysed as

acquisitions of property, they have to be seen in

the full context of the legislation, which is to

restore the parties to the positions that they had

in fact before the various payments were made

pursuant to the invalid legislation.

The Refund Act is overriding the agreement,

and if that amounts to an aquisition of property,

it is overriding the agreement because the

legislation is designed to achieve a fair result in

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preventing windfall benefits to those pool builders

who had passed on the tax burdens, and in providing

the associated refunds to the pool owners who had

borne the burden.

A case in which that concept may have been

applied, though section 51 was not expressly

mentioned, was the Peacock v Newtown and

Marrickville General Cooperative Building Society

case, which I have already referred to, and it

could be on that basis that the Court thought the

legislation was clearly a valid exercise of the

defence power. Even if it involved acquisitions of

property by way of the extinguishment of the rights

of the bank to the mortgage interest that had been

agreed, even if that was an aquisition of property,

nevertheless it was a kind of legislation which one could, in our submission, justify on the basis that

it is not the kind of aquisition to which

section 51(xxxi) is directed.

I pass now, if the Court pleases, to the issue

as to whether, if section 5l(xxxi) does apply, the

aquisition is on just terms and, in our submission,

the legislation here manifestly does provide just
terms, focusing just on the refunds without the

question of interest and so on for the moment. In

our submission, take case for example, if there had

been no Refund Act and if the pool builder, having

passed on the tax burden to the pool owner, were

then to receive a refund from the Commonwealth

pursuant to this agreement, the pool owner could probably have recovered from the pool builder on

the basis of the mistake of law by the owner in

paying the money to the builder, believing that it

was for a valid tax.

This really would involve the unjust

enrichment of the pool builder if he were able to

outline, pool owner should read pool builder, on	the fifth line, I think of paragraph 9.1 of the keep the refund from the Commonwealth. I see in
page 5 of the outline, if the Court pleases,
paragraph 9.1 line 5, unjust enrichment of the pool
builder. I will come to the authorities in a
moment, if that be the case then the Refund Act merely short cuts that process. The Refund Act achieves the same result of ensuring fairness to
the pool builders who have borne the burden, they get a refund. If they have not borne the burden but the owners have, the owner can get a refund
under section 4(3) or (4).

BRENNAN J:  What is the position if the pool builder took

into account his prospects of recovering the money that he was to pay and adjusted his overall tender price accordingly?

Mutual 57 10/2/93

MR ROSE: It will come down, ultimately, in those sorts of

situations, Your Honour, to whether the burden was

passed on.

BRENNAN J:	How does one determine that?
MR ROSE:	It is a concept that has appeared in the tax

legislation for many, many years and, for example,

the section in Werrin's case involved the concept

of passing on. The typical case would be where the

builder invoices it in terms of the labour and

materials plus sales tax - 10 or 20 per cent,

whatever it was. That would be the clear case. There are going to be many other cases where it

will be a matter of evidence as to whether the
whole or part of the burden was passed on.

With that issue we are not really concerned in this case because the case stated does say that the

tax was passed on.

BRENNAN J:  And just terms, in your submission, are to be

considered, not by reference to the relationship

between Commonwealth and the party from whom
property is acquired, but by reference to the

relationship between the party from whom the

property was acquired and third parties?

MR ROSE: There will be some third party interests that are

properly taken into account, in our submission.	I
will be coming to that shortly. But the
proposition is, as derived from those cases,
Grace Brothers and Nelungaloo and the Dam's case,

in paragraph 9.2 of our outline, that the interests

of the community can be taken into account, not

just the narrow interests as between the

Commonwealth and the person from whom the property

has been acquired, but there must be a fair

settlement as between the Commonwealth, that person

our submission, the legislation, designed to	and other persons whose interests can be considered in deciding what is overall a fair arrangement. In
prevent a windfall to builders we are concerned with, is achieving that very thing. It is not only preventing a windfall to the builder but it is also providing grants to those owners who have,
ultimately, borne the burden. As regards the
builder, in our submission, it is entirely fair to
take into account the fact that the builder would get a windfall if, in fact, he had never borne the
burden of the tax.

That proposition that the Refund Act, in

denying a refund to a pool builder who has passed

on the tax burden, is consistent with the common

law principles that are regarded as just. That

brings me to the recent decision of this Court in

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David Securities but more particularly to the

decision of the House of Lords in the Woolwich

Equitable Building Society case, (1992) 3 WLR 366,

and the point particularly relevant here is at

page 396E, in the judgment of Lord Goff of

Chieveley, half-way between letters E and F:

It will be a matter for consideration whether

the fact that the plaintiff has passed on the
tax or levy so that the burden has fallen on

another should provide a defence to his claim.

Although this is contemplated by the European

Court of Justice in the San Giorgio case, it

is evident from Air Canada v British Columbia,

that the point is not without its difficulties

and one may say, indeed, it is not because there

will often be factual difficulties in deciding what

"passing on" means in practice -

and the availability of such a defence may depend upon the nature of the tax or other

levy. No doubt matters of this kind will in

any event be the subject of consideration

during the current consultations with the Law

Commission.

Our point is that so far as the law in England

is concerned, and I am not aware of the particular

matter of tax recoveries where there has been a

payment under a mistake of law, et cetera, here,
but plainly there there is the real prospect that

under the common law rules concerning unjust

enrichment, and so on, it could well be a defence

to the government that the person claiming the

refund of tax would be getting a windfall. In my

submission, that does accord with the ordinary

notions of justice that one could well expect the

courts to take into account when further developing

that area of the law.

The next point in the outline is the one in

which I have already responded to Your Honour

Mr Justice Brennan, that the adjustment is fair in

the interests of the parties and the community or,

at the very least is an adjustment within the range

of what can reasonably be regarded as "just".

Those passages in Grace Bros and Nelungaloo, I

will not read them to the Court, but the substance of it is that within limits it is a matter for the Parliament to decide on the form of the terms. It

would be valid as long as it is within the range of
what can reasonably be regarded as just. It is not

relevant that the Court may have some different

notion as to a more perfect way of settling the

Mutual 59 10/2/93

situation and that the interests of the community

are relevant factors.

In that respect, as I have indicated, here we

had the executive government making an agreement

under which pool builders could have got a

windfall. The legislature has come in with

legislation which says those refunds to builders

are to be confined to cases where the builders

would not get a windfall and we are going to make

payments as well to the owners, who otherwise would

not have had a claim against the Commonwealth

though they may have had a claim on the basis of

the common law against the builder who got a

refund.

The submission in paragraph 9.3 of the outline

draws attention, if the Court pleases, to the United States law on similar matters. In the United States there is of course the Fifth

Amendment concerning the federal legislation and

the Fourteenth Amendment concerning the States with

the requirements of due process.

In the United States, Anniston Manufacturing

Co v Davis, (1937) 301 US, is the leading case. It

arose as a sequel to the decision of the Supreme Court in United States v Butler, in which in the

early 1930s the United States Supreme Court held

invalid a federal tax under which the government

had collected a billion dollars in 1930s money.

The federal government passed legislation limiting

the right to refunds to those taxpayers who had not

passed on the burden.

In the nature of the tax, it may well have

been the fact that they had all passed it on, but

the court had no difficulty in holding that that

legislation was consistent with the due process

requirements of the United States Constitution. In

my submission, that is an appropriate analogy to be	applied here in that sort of situation that the
Commonwealth was confronted with.

If I can refer the Court to particular pages

in 301 US, Your Honours will find the relevant

passages at pages 348 to 350. There is an

interesting passage in the middle of page 348 where

there is an indication that the common law

concerning unjust enrichment and so on in the
United States in this context does involve a
defence that the taxpayer had passed on the burden.

There is a further development in recent years

of that principle in the United States as to the
passing on defence, because in McKesson Corporation
v Division of Alcoholic Beverages and Tobacco,

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Department of Business Regulation of Florida,

(1990) 496 US, the State of Florida sought, with
many other defences, to resist the claim on the

grounds that the persons who had paid the taxes - it was on liquor in that case - had passed on the

burden.

The problem with that, as the Supreme Court

saw it, was that although the monetary burden had

been passed on, so to speak, the result was that

this being a State tax and since some other States

did not impose similar taxes, the sellers who had

paid the tax were at a real risk of a reduction in

the volume of their sales. They had had to put

their prices up because of this tax. They were in competition with sellers from other States who did

not have to pay the tax, so overall it could not be

said that merely because they had passed on the

monetary amount of tax that they had passed on the

burden. They may well have borne a lot of the

burden themselves because of the volume reduction.

That sort of situation can arise where you have got

some States but not all of them imposing taxes.

Plainly in the Anniston Manufacturing Co v Davis

case which concerned a federal tax, .that kind of

problem did not exist.

McHUGH J:	Mr Rose, assuming the general validity of the propositions in paragraph 9 of your written
submissions, what do you say of its application in
a case such as the present, where you have an express contractual promise to repay, when it is not relying on the general law?

MR ROSE: Well, in our submission, Your Honour, one looks at

the legislation. True it is overriding in part, an

agreement that has been made, but one looks at the

legislation and asks whether the result is a fair

one, and as between the Commonwealth and the pool

builder, our submission is that it is fair because

it is unfair for a windfall to be obtained.

McHUGH J:  Even though the Commonwealth arguably induced the

payment by its promise to repay?

MR ROSE:  The executive government may have done that, if

Your Honour pleases.

McHUGH J:	The executive government, yes.
MR ROSE:	The Parliament has overridden that and it is the

legislation of the Parliament that, in my

submission, one needs to look at to see whether the

total set of provisions is fair and I have referred

briefly before to the provisions under which the
builders and the owners, depending on whether they

have borne the burden, get a refund, and the

Mutual 61 10/2/93

comprehensive provisions concerning interest

payable at 10 per cent, which is the rate provided

for in the agreement anyway, and even the provision

for expenses for the pool builders to do the paper

work involved in cases where they make a joint

declaration under section 4(3). If the Court

pleases, that concludes my submission.

MASON CJ:  Thank you, Mr Rose. Mr Solicitor for

South Australia.

McHUGH J:  Mr Solicitor, much of your written submissions

seems to go outside the specific question.

MR DOYLE:  Yes. If the Court pleases, Your Honours will

have seen from the outline there are two points we

seek to argue: that there is no common law right in

this situation and acknowledging, in effect, we are

asking the Court to state the law in a new

direction and secondly, that section 78 is not the

relevant source of Commonwealth power for the

legislation.

I think I should begin by submitting to the

Court how the issue of the common law right arises,

because if the Court concludes that it does not

arise, then we do not seek to put the submission

and we are here to put it in case, from the way

Mr Bloom's submissions unfolded, it was seen to

arise. Mr Bloom relied for invalidity of the

Commonwealth legislation on the submission that the legislation was an attempt, in effect, to defeat section 55 to achieve indirectly what section 55

said could not be achieved directly. That was

paragraph 9 of his outline.

Now, our submission is that in so far as he

relied upon the impact of the Refund Act on his

contractual right, that argument simply does not

arise because, in extinguishing the contractual

right, Parliament is not actually saying anything

about section 55; it is simply saying, a

contractual right which you had, you no longer

have. However, in so far as the Refund Act impacts

on what I call the common law right, the right if

any available to those who did not have an

agreement then, of course, one can say, well now,

here are people who have paid money, which was
purportedly levied from them or raised from them as
a tax, because the law is invalid they may well

have a right of recovery on the basis of mistake of

law or compulsion and, to extinguish that right,

may be to achieve indirectly what section 55 said

could not be achieved directly.

Our argument is that, in fact, the attack on

validity based on section 55 is more or less doomed

Mutual 62 10/2/93

to failure in so far as it focuses on the

extinction of the contractual rights, and,

obviously I have discussed this with my friend

before the hearing to try to work out whether our

argument did arise or not, and I must admit I am

not entirely clear whether he is prepared to say in
relation to his argument on section 55, whether he

pins himself wholly and solely on the contractual

right, and does not seek to rely on anything beyond

that.

Our submission is, if he wants to limit

himself entirely to the contractual right as a

basis for invalidity, so be it, and we have put

very briefly then why the section 55 argument

cannot avail him, but we put this submission

because it seems to us that the section 55

argument, if it has strength, really has strength

in the application of the Refund Act to a common

law right, and of course we want to say, and it

fails there because, in truth, on our submissions,

there is no common law right, or the Court should

hold there is none.

So, that is how we see the wider issue of the

common law right arising from what I call, in very

shorthand terms, the section 55 argument which my

friend puts.

DEANE J:  In one sense we would want to avoid that though,

would we not, because if you do come back to common

law rights, if one accepts Lord Goff's approach in

the Woolwich case, there is a great deal to be said

for the view that if any common law right is based

on restitution, if the tax has been passed on, the

common law right of action is in the pool owner and

not in the builder.

MR DOYLE: That may well be, Your Honour. Obviously, part

of the difficulty here is, in England the common	law is moved in one direction; we are urging the
Court to go in exactly the opposite direction, and
part of the difficulty for the argument is, as
Your Honour rightly points out, in any event, what
is the common law right we are talking about, and
in whom is it vested.

DEANE J: But David Securities goes a long way towards

seeing the right of action in a case such as this

I am not saying it decides it - as lying in

restitution. Well now, if that is so, it is

difficult to concede that the right of action under

restitution law would not be that of the pool
owner, and not the pool builder, when the unjust

enrichment was, in real terms, at the expense of

the pool owner.

Mutual	63	10/2/93
MR DOYLE:	Yes.	Your Honour, I think our submissions would

be that the pool owner likewise has no right.

Your Honours will have seen, I hope on a quick

glance, that we are putting arguments of a broad

nature saying in the area of taxes raised under

invalid laws, the restitutionary principles which

underpin David Securities just do not work.

I noted Mr Bloom, at an early stage of his

argument, said that the Refund Act was invalid

because of its impact on any right, and I did in

that sense take him to be saying, "Well, to the
extent I need to point to its impact on rights

other than the contractual right, I do", and he

stressed those words "any right". So it seems to

us that the issue at least may well arise, "Is

there indeed any right beyond the contractual

right?". If his argument on the contractual right

fails, then can he still launch an attack on the

validity of the Act on the basis of its impact on

such other common law rights, as I call them, as

there may be?

The other point, Your Honours, I think I

should raise right at the outset is that - and

again I should say, as a preface, that if the case
is disposed of under section Sl(xxxi) then, of

course, none of these issues arise, our submission

being as indicated in paragraph 3, that the Court

should go in exactly the opposite direction to the

House of Lords and hold that there is no right of

recovery on restitutionary grounds in a case such
as this.

One then has to say, "Well now, what about the cases in paragraph 6 of our outline where this

Court has in the past allowed recovery of moneys

raised under laws at least contrary to section 92?"

It appears to us that it is necessary for us to

seek leave to reargue the correctness of the

decision in Mason v New South Wales which, despite

Sir Owen Dixon's expressed uneasiness about

applying private law principles in this area,

proceeds fairly and squarely on that basis. The

same assumption underlies Antill Ranger and Barton

v Commissioner of Road Transport, namely, that

private law principles are to be applied in this

area, and if there is a restitutionary claim under

private law principles, then so be it; because

again, the argument we seek to develop is that the

Court should decide that that is not so and that

private law principles are not to be applied in

this area. So if convenient to the Court I

thought I should perhaps begin by putting fairly

briefly the reasons why we submit we should be

given leave to reargue the correctness of the

Mutual 64 10/2/93

decision in Mason and the reasoning which underlies

the decision there.

BRENNAN J:  Mr Solicitor, the terms of the Refund Act itself

postulate the existence of what might be called a

private law liability, do they not, in the

definition of "in situ pool tax refund payment"?

MR DOYLE:  Yes, that is so, Your Honour.

BRENNAN J: Well now, if there is no liability at common law

for whatever reason, we do not have to concern

ourselves about section 55 and the validity of the

Act.	The Act simply upon its terms does not
purport to apply.	It is only if there be a

liability, which at all events is said in the first

instance to arise from the contract.

MR DOYLE:	Yes.
BRENNAN J:	It is only if there is a liability that the Act, according to its terms, has any application.
MR DOYLE:	Yes.
BRENNAN J:	So do we really need to look at the source of the liability in order to consider any question
here, or is it sufficient if we assume that there
may be a form of liability, albeit it arises under
the contract? I understand your anxiety to canvass the other question, but it just does not seem to me
to be an appropriate vehicle in which to do so.

MR DOYLE:  No. I have to say, Your Honour, we are not, as

it were, madly anxious to argue these other

questions. What we are anxious to avoid is a

situation in which the Court in effect, there being
argument to the contrary, simply applies private

law principles in this area in relation to an

assumed common law right of recovery.

MASON CJ: But until you rose to your feet, this had never

been an issue in the case. It had certainly never been suggested by the defendant that the plaintiff

could not recover apart from the contractual right.

Having regard to the bare foundations that we have

recited in the stated case, this case would seem a
singularly unsuitable vehicle for a determination

of this question that you have just identified,

which of course is a fundamental question and

involves very considerable difficulty.

MR DOYLE:  Yes, I understand that, Your Honour. However, as

I said, my understanding of Mr Bloom's argument,

based on some discussions with him, was that if

necessary he does argue that the Act is invalid

because of its application to a right which arises

Mutual 65 10/2/93

otherwise. I can understand him not wanting to, as

it were, absolutely abandon that argument, and it

was because of that that it seemed to us that we

should be prepared to argue that in fact there was

no right which arose otherwise and that it should

not be assumed there is.

McHUGH J:  I must say on more than one occasion I refused to

state a case in this particular matter because of the factual foundations. It was my understanding that the plaintiff's case was tied to the

contractual promise.

MR DOYLE: That is so, and in fairness to Mr Bloom, he in

effect said, "Look, all I really need to rely on is

my contractual promise", but again I do not want to

put words into his mouth. My understanding was

that he is not prepared to say, "But if I have to

resort to the impact of the Act on other rights, I refuse to resort to that." My understanding is he

wants to if he has to.

MASON CJ:  Mr Doyle, could we clarify at this stage the case

as it is presented by Mr Bloom, because I must say

I thought that the thrust of his case on invalidity was that he was relying on a contractual right. He certainly has not developed the existence of a

common law right independent of a contractual

right.

MR DOYLE:  No.

MASON CJ: Is that not so, Mr Bloom?

MR BLOOM:	Yes, it is, Your Honour.
MASON CJ:	On that footing, it seems to me it is not

necessary for us to hear your argument.

MR DOYLE:  Well, so be it. Mr Bloom told me a moment ago

that I had put his position fairly, that he did not

in fact eschew reliance upon the common law right,

should he have to.

MASON CJ:  I mean, he has clearly stated now that he has put

it on the basis of a contractual right.

MR DOYLE: Yes.	If the Court pleases.
BRENNAN J:	Mr Solicitor, perhaps I could ask Mr Bloom a

supplementary question at this stage?

MR DOYLE:  Yes, Your Honour.

BRENNAN J: That is, I take it your attack upon the validity

of the statute is founded exclusively upon the

existence of a contractual right?

Mutual 66 10/2/93

MR BLOOM:  So far as concerns section 5l(xxxi), yes, but the

attack on the statute, so far as concerns

section 55 is broader although it focuses on no

particular identified common law right. The attack

under 55 is simply this: that the statute, the

Refund Act, purports to abolish all liabilities,

whether contract or otherwise, without identifying
what those liabilities are, and our submission,

based on Antill Ranger, was that any statute that

does that, that just in a blanket sense abolishes

all liability, is bad for the same reason as the

original statute was bad, and that does not

require, as we see it, identification of what
rights are, in effect, abrogated by the statute.

The statute assumes rights and simply says, "All of

them, whatever they are, are abrogated". And the

question is, as we saw it hopefully, one that

simply said a statute that sought to cancel the

entire effect of the invalidity is as invalid as

the former statute.

BRENNAN J:  To the extent to which your argument is valid on

section 55, and on that method of invoking Antill

Ranger, it does not depend at all upon the

existence of a contract.

MR BLOOM:  It does not depend at all upon any particular right, whether contractual or otherwise.

BRENNAN J: Indeed, the contract would be, as it were, a

novus actus.

MR BLOOM:  Yes.

BRENNAN J: Well then, why should we concern ourselves with

that attack under section 55 when your case is not
that you have derived rights consequent upon the

striking down of the statute simpliciter, but had

derived them under the contract which was specially

made?

MR BLOOM:  Yes, that is our case. We do not seek here to

enforce the common law right that exists unless my

learned friend, Mr Doyle, has the position

reversed.	We simply seek here to enforce a
contractual right.	But there is a statute which

says that every right which exists as a result of

the former invalidity is taken away. We just say,

with respect, that it is a simple proposition. If
we are right about 55 and 92 not being different in

this sense, no statute can do that, take away all

rights. That does not seem to us to require,

Your Honour, identification of the particular

nature of the particular right or in whom it is.

McHUGH J: But it does, does it not, to give you some

standing?

Mutual	67	10/2/93
MR BLOOM:	We rely on a contract to give us standing.	The

contract gives us the right to challenge the

validity of the statute, we say, on whatever ground

that validity might appear to be challengeable.

That is how we raise the section 55 broad ground,

but without the need, it seems to us, to get into

the question of what is the nature, if any, of the

common law rights that exist.

DEANE J: But you cannot answer the question without doing

more than you are doing. I mean, if the Act says,

"We are going to keep the tax, you are in Antill Ranger territory". But if the Act says, "We are

going to refund the tax to those who really bore

the burden of it", you are in completely different

territory. On what is put against you, the Act

does not say, "We are going to keep the tax", it

says, "We are going to refund the tax to the people

who bore the burden of it". And on one approach to

the common law, to the people who, without

legislation, are entitled to a refund of it.

MR BLOOM:  Yes. Yes, they were the last submissions of

Mr Rose on that point. Yes, Your Honour.

DEANE J: It just seems to me - I follow your argument on contractual rights, but if you are going to come back to pre-contractual rights, there are a number

of difficult questions which arise at the threshold

which have not really been the subject of argument.

MR BLOOM:  And I think, Your Honour - I will get some

instructions on this, but I think we would be as

loathe to explore those areas as Your Honours would

at this stage, given the limited nature of the

stated case.

TOOHEY J: But what if it could be demonstrated, for

instance, that on any view of the matter there were

no rights outside the contract, which seems to be

the way in which the Solicitor has put the argument

if necessary.

MR BLOOM:  I would have difficulty with my section 55

argument, and that is why indeed Mr Doyle seeks to

put what he wishes to put.

TOOHEY J: But your point earlier on, Mr Bloom, was that it

was not necessary for your argument to identify a

particular right, but that may be so, unless the

argument put against you, which I understand is to

be put against you if it arises, namely that there

are in fact, no rights.

MR BLOOM:  Or indeed, as Justice Deane points out, that the

right conferred by the statute is equivalent,

perhaps, on one view to the right which we had.

Mutual 68 10/2/93

We were not seeking to get into the detail of the right. That was - - -

TOOHEY J:	No, it is not a matter of detail, is it, if in fact the argument to be put against you is that
there are no rights?

MR BLOOM:  There are no rights, yes. Yes, I see the force

of that, Your Honour.

Your Honours, it seems, with respect, better

that we do not press the section 55 argument and we

will withdraw it.

MASON CJ: Yes, thank you, Mr Bloom.

MR BLOOM: If Your Honour pleases.

MASON CJ: Well, is that the end of you, Mr Solicitor?

MR DOYLE:  No, Your Honour. Success sometimes arrives by

unexpected routes, but there is the section 78

argument, and dare I say that this is also a

negative argument, because we are simply wanting to
put the submission that section 78 is not a source
of power for the extinction of liability and may

well not be the source of power for the legislation

which creates the right of recovery.

Your Honours will understand the State's interest in the scope of section 78. Our

submission which we want to put is that section 78

is much more limited than that. We do not for a

moment deny that the Commonwealth has other heads

of power and, again, if the Court were of the view
that it was not going to be necessary to decide the
relevance of section 78, we likewise, do not seek

to put this argument, but it is, and I will say it

right now that it has been put in case the Court

does find it necessary to go to section 78 in this

particular case.

Your Honours, it is necessary for me to go

back through a little bit of history of section 78.

I do not mean in terms of cases, but in terms of

Crown immunity, and I propose to do that now.

Our submission is that the scheme of things,

if I can call that here, is that the Constitution

by sections 75, 76 and 77 provides for or enables

the conferral of jurisdiction on courts. To put it

in simple terms, what section 78 does is - that
jurisdiction having been conferred - it gives the

Parliament the power to remove the immunities of the Crown and the immunities of the State and the

Commonwealth to ensure that the Crown and the State

and the Commonwealth, can be impleaded, brought

Mutual 69 10/2/93

before those courts, but that when one comes to

laws going beyond that and creating or removing

substantive liabilities, that one has to look

elsewhere for the source of power, one does not
find it in section 78.

Now, I do not suggest for a moment that that line between the power to remove the traditional

immunities of the Crown and then the creation and

removal of substantive liabilities will always be

an easy one to draw, but we submit that that, as a

matter of history and as a matter of fact and as a

matter of concern of the convention delegates, is

what section 78 was aimed at.

The problem, at the turn of the century, facing someone who wanted to sue the Crown and the

problem the delegates foresaw in relation to the

State and the Commonwealth was, first of all this

problem, how do you implead the King in his own

courts; secondly the problem, the King can do no

wrong, which means no liability in tort and no

vicarious liability. And then, in our submission,

one can really draw a line and say, another problem

that was not really present to their minds in this

discussion is that the Crown is not ordinarily

bound by statutes and also the means by which one

just generally creates liabilities for the Crown. Now, this Court has held in a number of cases

that section 64 covers the second and third

together; that is, the rule that the King can do no

wrong and the rule that the Crown is not bound by

statues, that it purports to make applicable to the

Crown and the States statues which on their terms

did not purport to so apply. And so, the meaning

of section 64 is settled. But if one goes back to

1900, first of all, in our respectful submission,

it is fairly clear from the case law at that time

that the colonial predecessors of section 64 were	not understood as having that third effect; that
is, applying to the Crown statutes which on their
terms did not apply to them.

So that was something, in our submission, that

was not part of the then understanding of the

colonial and predecessors of section 64. Moreover,

when one looks at section 78 and compares it with

section 64, in our respectful submission the very

language of section 78 is apt for something aimed

at the narrower problem, that is, impleading the

King in his own courts and the rule that the King

can do no wrong. And, in our respectful

submission, when one looks then at the colonial

provisions relating to the liability of the Crown,

which will express much more widely in terms

similar to section 64, and then when one considers

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what were the problems which the delegates saw

arising out of the conferral of jurisdiction in

section 75 and 76, and when one looks at the

language of section 78, one is driven to the

conclusion that it must have been aimed at giving a

power to remove the immunities that would otherwise

be there, but not going any further than that. In

other words, section 78 did not say, Parliament may

make laws either respecting or with respect to the

rights and liabilities of the Commonwealth or a judicial power, words that probably would have been apt to go into that wider area that section 64

covers. In our respectful submission, it seems

deliberately narrower words have been chosen.

And what I would seek to do fairly briefly, if

I can, is first of all refer the Court to some

passages from the debates and then to a few short

passages from Quick & Garran in support of the

submission that what was in the mind of the

delegates was this problem of immunity, not the

wider issue of the power to legislate quite

generally as to the rights and liabilities of the

Crown. And, my submission is that, while the

debates are a bit equivocal, they rather tend my

way, but that Quick & Garran, to the extent that

that shows contemporary understanding, is

relatively firmly my way.

I think we had the reference to the debates on

the list of authorities. Do Your Honours have the

debates there? It was the Melbourne debates,

pages 1653 through to about 1680. I only want to

refer to about six pages because I know time is
relatively short, Your Honours, and I am just going

to pick out some key passages from what is a

somewhat confusing debate at times. I start, just

to show Your Honours where the delegates began, on

page 1653, the speech of Mr Glynn. Could I say

again as a preliminary that the problems that

seemed to be worrying the delegates were these:

first of all do we put in what they referred to as

a self-executing provision, namely imposing some

sort of liability on the Crown or liability to be

impleaded or do we merely give Parliament the

power? That was one thing they were worrying

about.

Secondly, they were worrying: is it really

necessary to say anything at all about this, but a
number of the delegates were saying, "Well, this is

a matter of prerogative and unless we expressly

provide the power on their thinking at the time, it

may be concluded there is no power to do it." Then

the third thing that kept cropping up in here was

the King can do no wrong and the immunity of the

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King and then occasionally - and this is why I

acknowledge the debates are a bit inconclusive -

there are references to the King or the State being

in the same position as the subject when sued and

various people saying, "Look how well our State has

done this", or "our colony".

First of all, page 1653, column 2, about

point 5, you see Mr Glynn's provision which looks a

bit like a self-executing provision, that it simply

may be presented and maintained and he says that

the leader of the convention - I assume still

Mr Barton - has suggested an alternative formula,

73A:

Proceedings may be taken against the

Commonwealth or a state in all cases, within

the limits of the judicial power -

Again, we would suggest that that smacks very much

of just getting rid of the immunity - "Proceedings

may be taken" - and then he begins an explanation

for the benefit of non-legal members of the

convention of what the general law is. Over to

page 1661, column 1, point 5, Mr Barton now

intervenes in the debate and says:

I wish either to confer through the

Constitution -

that is self-executing

or through power under legislation, the right

upon the subject to bring actions in all cases

which are set forth in clause 73, because I

think those rights should be conferred.

Again, to us that is very much aimed at the notion

of getting rid of any immunity which will confront

the subject. That is what I understand my honorable

Mr Symon says:

friend directed his attention to; and if the

effect of this amendment were simply to

empower the Parliament to deal with this

subject, there would be comparatively little

objection to it.

So he is saying, "Look, this is self-executing."

Then Mr Barton says:

Would this satisfy my honorable and

learned friend? -

The Parliament may make laws -

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and now we get something getting pretty close to

what we have got. In the right-hand column on the

same page, about the mid point of the page,

Sir John Downer says:

We have decided -

I think he must be talking about South Australia -

with the consent of Her Majesty herself, that

the Queen can do wrong.

Again, it is just that limited thing he is talking

about.

Let me take, first of all, the amendment which

Mr Barton has suggested to Mr Symon. Suppose

there is a power given to legislate. There

has to be an interval -

Then he refers to the laws of the colonies and just

makes the point that the Crown has taken over a lot

of public functions which the Crown does not hold

in England, and as a result all the legislatures

have passed legislation saying that the Crown can

be sued. Then he refers to the maxim "The Queen

can do no wrong". Could I then jump over to 1663,

column 1, where perhaps it tends a little bit

against me. Again, Sir John Downer:

Let me deal with the principle and not with

the wording of the clause. I say that the

object of Mr Glynn in moving this amendment

was to say that whenever a subject had a right

of action against another citizen within the

limits of the judicial power under this

Constitution, he should, under the same conditions, have a right of action against the

Commonwealth. That is the way I understand

him, and so understanding him I entirely

approve of the action he has taken.

My submission is that when you look at his whole

speech it does seem reasonably clear; he is still

talking of getting rid of the immunity. At 1663, the same page, column 2 just above the mid point,

where he says -

the march is strong and sure, and the time is
not far distant when the petition of right and
all these special provisions will be done away

with, and the same remedy will be given to the

subject against the Crown as the subject is

liable to himself.

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Again, in my submission, he seems to be saying, "Let the Crown just be sued in the same way and

none of this talk of immunities."

Then at page 1670, column 1, Mr O'Connor, at

about point 6, says:

In answer to Mr Fraser's question I would point out that power is given here for

proceedings by one state against another.

Now, at the present time, an individual could

not proceed against a state for a wrong;	an
individual could not sue a state.

So, in other words, the immunity.

Mr Fraser - But could not a state Parliament

grant that permission to sue which you now

seek to put in the Commonwealth Bill?

Mr O'Connor - The state might grant the

permission.

Mr Fraser - Then why interfere?

Mr O'Connor - For this reason: These subjects

of jurisdiction are subjects which arise under

this Constitution, and in giving this

jurisdiction regarding subjects arising under

the Constitution you must also provide for

your remedies. It is an idle thing to say

that there shall be certain jurisdiction to

deal with disputes arising under the

Constitution if a state cannot sue another

state -

and he goes on to make the point. And my

submission is again he is just saying, "Look, we

have to make sure these States cannot plead an

immunity and we cannot leave it up to them to

decide whether the immunity will be waived or not."

Then at 1676, Mr Glynn, at the bottom of the left-hand column was just touching on the concern

about how they go about laws affecting the

prerogative, and then Mr Barton on the same page,

column 2, at about the middle, is making the point

that unless they say something about this, it might

not be implied from the mere conferral of

jurisdiction that there is a power to remove the

immunities. That is the passage:

The result is that you might pass a clause

giving judicial power to a court -

et cetera. He is saying, "Well look, we do have to

say something about this", a bit further down:

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Where there is a jurisdiction given, that is

simply the right to try cases where there is

shown a right of action.

And over the page at 1677, still Mr Barton, in the

left-hand column is still making the point that,

"We've got to deal with this, otherwise we may find

we don't have the power", and at about point 6,

column 1:

We have no right, so that the point is

narrowed down to this:  The question is

whether any words in this Bill can be read to

confer by themselves the right upon a subject to bring an action in the face of the maxim I

have referred to -

that, namely, the King can do no wrong -

or whether apart from that there is any power

conferred by the words of this Constitution.

Then finally, Your Honours, 1678, using words

perhaps a bit wider and so a bit against what I am

putting, column 1, where Mr Barton's name is:

I am content with that. Where a claim is

maintainable against a subject it should be

maintainable also against the Commonwealth or

a state.

So we would argue that there is a fairly consistent

tenor there of the focus on the power to remove the

immunities. Could I then go briefly to Quick &

Garran, The Annotated Constitution, just about

three or four pages, Your Honours, page 772. The

authors there in note 323 against that part of the

text below the quotation, say:

This sub-section, like the others,

confers a jurisdiction only, not a right of

action. It does not enable actions to be

brought by or against the Commonwealth, but

only provides that, where any such action

lies, the High Court shall be a competent

court.

And over the page:

The power of the Commonwealth to confer

rights of suit against itself was the subject
of some debate ..... The jurisdiction extends,

not only to cases in which the Commonwealth is

a party, but to cases -

et cetera. So, making the preliminary point right,

there is the jurisdiction and I think there is a

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reference there to the need for consent that I

cannot just see at the moment, Your Honours, but I

am pretty sure it is on page 773. And at 774, in

relation to "Suits Against a State", again:

It is submitted that - notwithstanding

Chisholm v Georgia ..... this

sub-section ..... only confers a jurisdiction,

and not a right of action where no right of

action existed before.

And a bit further down:

It has been decided in the United States

that a State may waive its immunity. So, again, concern with this immunity. And then at

page 804 when he comes to section 78, and in
particular page 805 Your Honours will see that,

again, the talk is very much in terms of getting

rid of that principle, the King can do no wrong,

and the difficulty of impleading the King in his

own courts, and I would ask Your Honours, in due

course, to look at pages 805 and 806 where he, in
our respectful submission, again in terms of

contemporary understanding, seems to be focusing

very much on the removal of the immunity.

So we would argue, Your Honours, that if one

takes, as it were, a mischief rule approach, what

was their concern when section 78 was raised. It

did seem to be getting rid of the immunity and

ensuring that as to the Crown and these new
entities, the States and the Commonwealth, that it

would be the Commonwealth Parliament which had the

power to remove the immunities. So we draw in

part, as it were, on the history of the treatment

of this section.

Your Honours, in our respectful submission

this particular point is as yet unresolved by this

Court. We have referred just to the main cases in

paragraph 28 of our outline, and although in

Maguire v Simpson Sir Garfield Barwick expressed a

fairly firm view contrary to what I am putting and Mr Justice Jacobs generally agreed with him, other

members of the Court either expressed the doubt

about the scope of section 78 or said nothing, and

as Your Honours will probably remember in

Commonwealth v Evans Deakin, at the particular page

we have noted in our reference in paragraph 28, the

scope of section 28 was specifically kept open by

five members of this Court. So, on our argument

authority certainly does not stand against us at

the moment.

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So, we submit Your Honours, that as a matter,

as it were, of the natural wording of section 78 it

seems a relatively limited thing, that looked at in

its context in the Constitution it makes sense to

read it in that limited sense, and that the

historical material suggests very strongly that the

removal of the immunity was what it was aimed at,
not that much wider power to legislate generally in

respect of the rights and liabilities of either

State or Commonwealth in Federal jurisdiction.

One has to remember, when one looks back at

sections 75 and 76, that if a resident was suing a

State, the delegates would have expected there was

an available body of law there to cover that, or if

a State would sue a State. In our submission,

there is no thought there that we have got to

create, as it were, a body of law here, there is no

existing body of law; all they were saying was,

well, unless we create the power, we will not be able to make sure we can get these bodies before

the court to which we have given jurisdiction.

The other thing we would argue, Your Honour,

is that the oddity of the submission to the

contrary which was put by the Commonwealth, is
really highlighted by the fact that when one looks
at the words, "may make laws conferring rights to

proceed", the Commonwealth is really driven to

argue that what that really means is, "may make

laws extinguishing rights to proceed". I

acknowledge, even my argument will - there are

going to be some grey areas, because obviously a right to proceed may be a conditional one, or an

unlimited one, and it is conceivable, I suppose,

that a right to proceed may be validly conferred

which, in part, perhaps, takes away some existing

right. But as I understood Mr Rose, he did not

shrink from the conclusion that section 78, in

fact, enable the Commonwealth Parliament simply to

terminate existing rights because that was within

his concept of the scope of it.

In our respectful submission, that is a very

surprising conclusion - - -

DAWSON J:  What do you say, that once they have conferred the rights, they are there and you cannot amend the

MR DOYLE:  No. I am sorry, Your Honour. I am glad

Your Honour asked me that question, because I do acknowledge that if we are talking of a right which

the Commonwealth has itself, created, it could

later take that right away. I am grateful to

Your Honour because that reminds me that, as it were, I needed to identify the benchmark from which

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I work, and that is re the position 1900, in other words, that was the position the delegates were

dealing with. They were giving the

Commonwealth Parliament the ability to create

additional rights to proceed, and I would

acknowledge that having created them say, in 1905,

in 1910 the Commonwealth Parliament could terminate

the right created five years ago, but that it is

not, as it were, a roving commission, or an

ambulatory power, to make laws generally about the

rights and liabilities of the States and the

Commonwealth and not in a general sense, a power

just to extinguish whatever rights the Commonwealth

feels fit to extinguish. I am sorry that I jumped

over that quite important part of the submission.

Your Honours, our submission is that there are

Constitution way, as it is done in section 64 in relation to itself, and there is simply no need to resort to
certainly other provisions of the to
which one can readily go to find the source of the

section 78, and we say you cannot. We acknowledge

that under 78 the Commonwealth can remove State

immunities, but we argue that it does not have the

power, generally, to create rights and liabilities

and obligations for the States in the area of

federal jurisdiction.

Your Honours, that, in relatively brief form,

is the submission which we want to put in the event

that the Court does need to consider section 78 in

relation to Commonwealth powers in this matter.	We
argue that section 78 has that relatively limited
scope. If the Court pleases.

MASON CJ: Thank you, Mr Solicitor. Mr Bloom.

MR BLOOM:	If the Court pleases. Your Honours, we say nothing in relation to section 78, save that we are
prepared to assume, for the purpose of our
submission, the Commonwealth has power under that
section to legislate, and even if that be the case
it is, of course, our submission that
section 5l(xxxi) is paramount and has what Sir Owen
Dixon described in Schmidt, as the forbidding
effect, so that it goes right throughout the
Constitution forbidding in all but certain cases the enactment of legislation which effectively
acquires property on unjust terms.  Now, there are
obviously exceptions, taxation is one, and in
MacCormick, which is not on our list, but I will
give Your Honours the reference: 158 CLR,
particularly in the judgment of Justice Brennan at
649, it is pointed out that laws imposing taxation
are not laws acquiring property on unjust terms.

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DAWSON J:	They are not laws acquiring property, are they?
MR BLOOM:	Yes, Your Honour, but in a way, of course, they are acquiring a payment of money, but they are not
laws - - -

DAWSON J: Well, they are creating a debt.

MR BLOOM:  Yes. And likewise, laws enacted under the

defence power or under the bankruptcy power

requiring forfeiture are not acquisitions of

property to which section Sl(xxxi) apply, and just

terms need not be found for those, if indeed it is

not the case that just terms are given merely in

terms of the legislative framework. But,

provisions such as section 78 or section Sl(xxxix),

in our respectful submission, are subject to and

must be read subject to section Sl(xxxi).	Now, our
learned friend relied upon Werrin's case as

deciding that, in effect, by default that, I think,

section 78 authorized the legislation there, but

was not subject to section Sl(xxxi).

With respect, Werrin may be distinguished from

this case on three principal bases, the first of

which is absolutely critical to this case, that is

that in Werrin one was concerned with the

construction of a valid law, not with an invalid

law as here. The moneys paid in that case were

paid as a result of a mistake as to the operation

of that valid law, but not under an invalid

enactment. The second, and also a critical
difference with this case, is that there was no

contract in Werrin. So the plaintiff in Werrin's

case was not the beneficiary of a contractual

promise, something which is clearly, and we would

say accepted by our learned friends as such, a

property within section Sl(xxxi).

The existence of the contractual right here is

the second significant distinction and there is a

third, that is that Werrin was decided when the

distinction between mistake of law and mistake of

fact was a very real distinction and there was not

even a common law right that could be pointed to in

that case as possibly property which might be

acquired under section Sl(xxxi). So it is not

surprising in that context that section Sl(xxxi)

did not, as it were, get a run.

Little was said to Your Honours about the

common law developments in relation to restitution,

particularly in relation to passing on and the

decision in Woolwich. Of course Woolwich is

limited to the common law situation and, again,

does not apply to the sort of situation we find

here, namely where there is a contractual right or

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obligation. But even in Woolwich, it is clear, if

one looks, for instance, at (1992) 3 WLR, at pages

394 to 395 in the speech of Lord Goff, it is clear

that the situation even at common law is far from

clear, either in Canada or in England. It does not

and has not attained that absoluteness which my

learned friend, Mr Rose, suggested it had with

respect to tte situation of passing on.

But all that, of course, ignores what we have

here and what we now solely rely upon in every

sense, and that is the contractual obligation.

That contract is set out in the papers at page 9.

There are concessions which have been made about it

and those concessions, with respect, leave the

position clearly that we are the beneficiary of the promise that we are entitled to be repaid provided,

of course, that the amount in question was paid pursuant to the contract, which is not a matter

which concerns Your Honours. If Your Honours

please.

BRENNAN J:  Mr Bloom, do you have anything to say about the

distinction between extinction of a cause of action

and the point that was based, I think, on Peacock's

case?

MR BLOOM:  Yes, Your Honour. Peacock's case was a tax case.

There was the promise to which Your Honour drew

attention which is set out, I think, at page 25 in

that judgment in the middle of the page, but it is

also the situation that Peacock's case involved a

law with respect to taxation. Such a law is not,

as Your Honour has pointed out elsewhere, in

MacCormick, an acquisition within 5l(xxxi).

The other cases, Ludeke and the Australian

Capital Television case, do not stand for the broad proposition that they were said to stand for,

namely that extinction cannot involve acquisition.	Justice Deane in the Dams case pointed out that it
can where, in effect, the result of the extinction
is to confer upon the Commonwealth an equal or equivalent benefit.

That is what happens here. In this case the

obligation and the right are really the mirror

image of each other. The Commonwealth which owes

the liability extinguishes it and has its own

coffers increased, at least initially, to the

extent of what it cancels or extinguishes.

Your Honours, we would say with respect that

Australian Capital

neither of those cases, proposition.

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The Privy Council's decision supports what we

1. put to Your Honours, as does the passage from the

   reasons of the Privy Council also in Bone's case to

   which we took Your Honours earlier in our initial

C	submissions. But this is a case where extinction and acquisition really amount to the same thing in
substance and the Commonwealth ought not to be
entitled to say the contrary. If Your Honours
please.

MASON CJ:  Thank you, Mr Bloom. The Court will consider its

decision in this matter.

AT 3.40 PM THE MATTER WAS ADJOURNED SINE DIE

)

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