Mutual Pools & Staff Pty Ltd v the Commonwealth

[1994] HCA 9

HIGH COURT OF AUSTRALIA

MASON CJ, BRENNAN, DEANE, DAWSON, TOOHEY, GAUDRON AND McHUGH JJ

MUTUAL POOLS AND STAFF PTY. LIMITED v THE COMMONWEALTH OF AUSTRALIA (1994) 179 CLR 155, (1994) 94 ATC 4103, (1994) 119 ALR 577, (1994) Aust Sales Tax Cases 85-181, (1994) 27 ATR 357,

(1994) 68 ALJR 216

9 March 1994

Constitutional Law (Cth)

Constitutional Law (Cth)—Powers of Commonwealth Parliament—Taxation—Acquisition on just terms—Sales tax imposed on swimming pools—Contravention of requirement that laws imposing taxation deal only with imposition of taxation—Act providing for refund of tax—Refund to builder where tax not passed on to owner—Refund to owner where tax passed on—Validity—Whether law with respect to taxation—Whether acquisition of builder's property otherwise than on just terms—The Constitution (63 and 64 Vict. c. 12), s. 51(ii), (xxxi), (xxxix), 61—Swimming Pools Tax Refund Act 1992 (Cth), s. 4.

Orders

Answer the questions in the case stated as follows:
1. If the said amount of $1,522 was paid pursuant to the SPASA agreement, was the Defendant legally obliged, before the (Swimming Pools Tax Refund Act 1992 (Cth)) was enacted, to repay the said amount to the Plaintiff by reason of the facts and matters referred to in paragraphs 5, 6, 7, 8 and 10 (of the case stated)?
Answer: By consent, yes.

2. Is the (Swimming Pools Tax Refund Act) invalid in its application to the circumstances of this case?
Answer: No.

Liberty to the Defendant to file in this Court and serve on the Plaintiff within seven days written submissions with respect to costs. Liberty to the Plaintiff to file and serve on the Defendant within seven days of such service written submissions in reply.

Decisions

MASON CJ This case, which was stated by McHugh J, arises out of this Court's decision in Mutual Pools and Staff Pty. Ltd. v. Federal
Commissioner of Taxation ((1) (1992) 173 CLR 450.). By that decision, the Court declared that the sales tax imposed on so much of a swimming pool as is constructed in situ was invalid and of no effect on the basis that the legislation imposing the tax was contrary to s.55 of the Constitution. The facts stated in the case can briefly be summarized.

The facts

2. The plaintiff is a builder of swimming pools in situ. As a result of the Sales Tax Laws Amendment Act 1986 (Cth), the Sales Tax Assessment Act (No.1) 1930 (Cth) ("the Assessment Act"), when read as one with the Sales Tax Act (No.1) 1930 (Cth) ("the Taxing Act"), had the effect of imposing a tax on so much of a swimming pool as is constructed in situ ("the in situ pool tax"). The plaintiff instituted the earlier proceedings in this Court in 1990 and obtained the declaration, already mentioned, that the provisions of the Assessment Act were invalid. However, prior to the decision of this Court in that case, the Swimming Pool and Spa Association of Australia Ltd. ("SPASA"), a body representing the swimming pool and spa industry, of which the plaintiff was a member, made an agreement on behalf of its members with the Commissioner of Taxation on behalf of the defendant to the effect that:

(i) notwithstanding the challenge to the validity of the in situ pool tax, the plaintiff and other SPASA members would pay the sales tax purportedly exacted by the impugned legislation pending this Court's decision; and (ii) in the event the challenge was successful, all amounts paid by the plaintiff and other SPASA members as in situ pool tax would be refunded, together with interest at the rate specified in the Taxation (Interest on Overpayments) Act 1983 (Cth).

This agreement was made on 19 November 1990.

3. On 30 December 1990, the plaintiff made an agreement with Mr and Mrs Chaplin for the construction of a swimming pool in situ, and the plaintiff proceeded to construct the swimming pool. The plaintiff paid to the Commissioner of Taxation the sum of $1,522 as sales tax in respect of the construction of the swimming pool. The sum of $1,522 was passed on by the plaintiff to Mr and Mrs Chaplin in whole and has
not been refunded in whole or in part to Mr and Mrs Chaplin.

4. Following the decision by this Court that the in situ pool tax was invalid, the Commonwealth enacted the Swimming Pools Tax Refund Act 1992 (Cth) ("the Refund Act"), which provides for the refund of taxes paid pursuant to the invalid in situ pool tax provisions. Section 4 of the Refund Act relevantly provides:

"(1) Except as provided by this section, the Commonwealth is not liable to make any in situ pool tax refund payment.

(2) If, before the commencement of this Act or within 2 years after its commencement, the pool builder in respect of an in situ pool tax payment has made a declaration to the

Commissioner ... of either or both of the following kinds: (a) that a specified amount, being the whole or part of the in situ pool tax concerned, was not passed on to the pool purchaser in relation to the swimming pool concerned; (b) that a specified amount, being the whole or part
of any of the in situ pool tax concerned that was passed on to the pool purchaser in relation to the swimming pool concerned, has been refunded to the pool purchaser;

then the Commonwealth is only liable to make the in situ pool tax refund payment to the pool builder to the extent that it equals the sum of: (c) the amount of the tax that was not passed on; and (d) the amount of the tax that was refunded. (3) If, before the commencement of this Act or within 2 years after its commencement, the pool builder in respect
of an in situ pool tax refund payment and the pool purchaser in relation to the swimming pool concerned have jointly made a declaration to the Commissioner, in a form approved by the Commissioner for the purpose, that a specified amount, being the whole or part of any of the in situ pool tax concerned that was passed on to the pool purchaser, has not been refunded to the pool purchaser, then subsection (4) applies. (4) If a declaration is made under subsection (3), the Commonwealth is liable to make so much of the in situ pool tax refund payment as equals the amount of the tax that was passed on to the pool purchaser and not refunded, but is liable to make the payment to the pool purchaser instead of to the pool builder."

Section 3 of the Refund Act contains a number of definitions. "In situ pool tax" is defined to mean the tax purportedly imposed by the Assessment Act and the Taxing Act "on a sale value of so much of a swimming pool as is constructed in situ". "In situ pool tax payment" is defined to mean "an amount paid to the Commissioner in purported compliance with the requirements of the law relating to sales tax, or under an agreement, to pay in situ pool tax". "In situ pool tax refund payment" is defined to mean "any payment that the Commonwealth is liable to make by way of refund of an in situ pool tax payment, whether the liability arose as a result of a refund agreement or otherwise". "Refund agreement" is defined to mean "an agreement having the effect that the Commonwealth is required to refund an in situ pool tax payment together with interest".

5. Other provisions in the Refund Act confer a statutory right to interest in favour of any person entitled to claim a refund under s.4 ((2) s.5.) and remove any other right to claim interest, whether on the basis of a refund agreement or otherwise ((3) s.8.). Other provisions deal with the adjustment of interest where the pool purchaser has received a refund from the pool builder ((4) s.6.) and compensation to a pool builder where interest is payable to a pool purchaser and not to a pool builder ((5) s.7.).

6. The plaintiff has requested that the defendant repay to the plaintiff the sum of $1,522, being the payment made pursuant to the Refund Agreement, or pursuant to the invalid in situ pool tax
provisions, by the plaintiff in respect of the swimming pool constructed for Mr and Mrs Chaplin. The defendant has refused to repay that sum to the plaintiff on the basis that it is liable to repay only the sum provided for under the Refund Act and, as the tax was passed on to Mr and Mrs Chaplin and not refunded to them by the plaintiff, the defendant has no liability to make any repayment to the plaintiff. The plaintiff now contends that the Refund Act is invalid.

7. The questions reserved by the case stated for the consideration
of the Full Court are:

"1. If the said amount of $1,522 was paid pursuant to the SPASA agreement, was the Defendant legally obliged, before the Refund Act was enacted, to repay the said amount to the Plaintiff by reason of the facts and matters referred to in paragraphs 5, 6, 7, 8 and 10 hereof. 2. Is the Refund Act invalid in its application to the circumstances of this case?"

Question 1

8. The facts and matters referred to in pars 5, 6, 7, 8 and 10 of the case have been stated in my summary of the facts. In essence, the question raised is whether, before the enactment of the Refund Act, the Commonwealth was liable to repay the amount in question to the plaintiff in consequence of the two agreements, the plaintiff's membership of SPASA, the construction of the pool by the plaintiff for the Chaplins pursuant to the agreement with them, the payment of the amount by the plaintiff to the Commissioner of Taxation in respect of the construction of the pool and the declaration of invalidity of the in situ pool taxation provisions. By consent of the parties, the question is to be answered in the affirmative.

Question 2
(a) The source of power 9. There are a number of provisions of the Constitution which could constitute the source of legislative power to bar or modify the liability otherwise resting upon the Commonwealth pursuant to the SPASA agreement to refund moneys received by the government as a payment of tax under a taxing statute which is subsequently declared to be invalid. It is unnecessary to examine these provisions in any detail, as the argument in this Court ultimately proceeded upon the basis that the Refund Act was within a head of power conferred by the Constitution. It is clear that either s.51(ii) or s.51(xxxix) in conjunction with s.61 authorizes the enactment of the Refund Act.

10. This approach accords with the views expressed by Rich J, Starke J and Dixon J in Werrin v. The Commonwealth ((6) (1938) 59 CLR 150.). In that case, s.12A of the Sales Tax Procedure Act 1934 (Cth) barred recovery of certain payments made as sales tax on the ground that the goods had gone into use or consumption before the relevant transactions of sale allegedly attracting duty. Rich, Starke and Dixon JJ upheld the validity of the section. The basis for the conclusion reached by Rich J is not at all clear. His Honour said that ((7) ibid. at 161.):
"it was clearly within the competence of the Federal
Parliament to say that a sum of money erroneously collected under a tax Act by administrative officers acting in good faith should be retained".

Starke J considered that s.51(ii) conferred power to enact s.12A ((8) ibid. at 163.), whereas Dixon J identified ss.51(xxxix)
and 61 as the source of power ((9) ibid. at 165.), while acknowledging that these sections may not have been the only source of power. Dixon J said ((10) ibid.) that:

"the enforcement of the taxation laws ... is the function of the government under sec.61 and it is a matter incidental to that function or power to receive payments on account of tax including sums which, through some mistake of fact or law, are collected although not strictly payable". (emphasis added)

11. In the present case the plaintiff seeks to recover moneys paid as tax under a taxing statute which was invalid, whereas in Werrin the payment was made under a valid taxing statute which, on its true construction, did not impose tax on the plaintiff in respect of the relevant transactions of sale. But this difference is not material in determining whether the Parliament has power to enact a law such as the Refund Act. The difference would be material in a case where the invalidity of the taxing statute had its origin in some want of legislative power or irremediable contravention of a constitutional prohibition ((11) Antill Ranger and Co. Pty. Ltd. v. Commissioner for Motor Transport (1955) 93 CLR 83; affd (1956) 94 CLR 177; Barton v. Commissioner for Motor Transport (1957) 97 CLR 633.). However, here there was no absence of legislative power; the taxing provision was invalid by reason of non-compliance with s.55 of the Constitution.

12. In my view, both s.51(ii) and s.51(xxxix) taken in conjunction with s.61 authorize the enactment of the Refund Act. So long as the Parliament had power under s.51(ii) to impose the tax which has been held to be invalid by reason of contravention of s.55, then the Parliament has power to provide that the Commissioner (or the Commonwealth) either is entitled to retain the moneys paid as tax under the invalid statute or is not liable to refund them. As the Refund Act deals with the consequences arising from payment as and for tax of a tax which was invalidly levied it is, in my opinion, a law with respect to taxation. Because s.4(1) of the Act extinguishes the Commonwealth's liability to repay the in situ pool tax, except as provided by the section, its effect in that respect is to leave the payer in the same position as if the original exaction were lawful under the Constitution ((12) Antill Ranger (1955) 93 CLR at 99.). The fact that, in certain circumstances, it is provided that the Commonwealth is obliged to refund the moneys paid does not deny the character of the law as a law with respect to taxation.

13. The Refund Act may be said to operate retrospectively by authorizing the retention of moneys previously paid. However, it is well settled that the Parliament may exercise its legislative powers so as to alter or abrogate rights which would otherwise be enforced
by judicial determination ((13) Nelungaloo Pty. Ltd. v. The Commonwealth (1948) 75 CLR 495 at 503-504, 579-580; Reg. v. Humby; Ex
parte Rooney (1973) 129 CLR 231 at 250; Australian Building Construction Employees' and Builders Labourers' Federation v. The Commonwealth (1986) 161 CLR 88 at 95-96.). It is also well settled that, at least outside the realm of criminal law, the Parliament can enact "a retrospective or retroactive law dealing with substantive rights or liabilities" ((14) Polyukhovich v. The Commonwealth (1991) 172 CLR 501 at 534-540.).

14. Also, for the reasons given by Dixon J in Werrin, the provision is a law with respect to a matter incidental to the execution of s.61 of the Constitution, the enforcement of taxation laws being a function of the executive government and the receipt of payments on account of tax being a matter incidental to that function, even when the amounts paid are not payable to the Commissioner by reason of the invalidity of the statute, so long as the payments were received by mistake in good faith. Indeed, it was conceded in argument that s.51(xxxix) and s.61 constitute a sufficient source of power to sustain the validity of the Refund Act.

15. The Refund Act is therefore validly enacted unless it can be demonstrated that it contravenes some other provision of the Constitution. The plaintiff's argument that the Refund Act is contrary to s.55 of the Constitution was abandoned in argument. The only remaining challenge to the validity of the Refund Act is based on s.51(xxxi) of the Constitution - that the regime established by the Refund Act amounts to an acquisition of property otherwise than on just terms.

Section 51(xxxi)

16. Section 51(xxxi) confers a power upon the Parliament to legislate with respect to the acquisition of property from any State or person on just terms for any purpose in respect of which the Parliament has power to make laws. The provision has been described as a provision of a fundamental character, having the status of a constitutional guarantee, which was designed to protect citizens from being deprived of their property except on just terms ((15) Minister of State for the Army v. Dalziel (1944) 68 CLR 261 at 276 per Latham CJ, 284-285 per Rich J; Clunies-Ross v. The Commonwealth (1984) 155 CLR 193 at 201-202
per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR 480 at 509.).

17. The foregoing statement of the purpose and effect of s.51(xxxi) does not reveal completely its true character and its relationship with the other legislative powers conferred upon the Parliament by the Constitution. The true position is, as Dixon J pointed out in Grace Bros. Pty. Ltd. v. The Commonwealth ((16) (1946) 72 CLR 269 at 290-291.), that s.51(xxxi) was introduced into the Constitution as a specific power:

"not, like the Fifth Amendment, for the purpose of protecting the subject or citizen, but primarily to make certain that the Commonwealth possessed a power compulsorily to acquire property, particularly from the States. The condition 'on just terms' was included to prevent arbitrary exercises of the power at the expense of a State or the subject."

18. The words "for any purpose in respect of which the Parliament has power to make laws" are, in the context of a grant of legislative power, words of limitation. They confine the exercise of the power to an implementation of a purpose within the field of Commonwealth legislative power. They are not to be read as an exclusive and exhaustive statement of the Parliament's powers to deal with or provide for the involuntary disposition of or transfer of title to an interest in property.

19. The conferral of the legislative power of compulsory acquisition subject to the requirement of just terms means that, apart from s.122 which stands in a separate position ((17) See Teori Tau v. The Commonwealth (1969) 119 CLR 564 at 570.), in the absence of any indication of contrary intention, the other legislative powers reposed in the Parliament must be construed so that they do not authorize the making of a law which can properly be characterized as a law with respect to the acquisition of property for any relevant purpose otherwise than on just terms. For it is a well-accepted principle of interpretation that, when a power is conferred and some qualification or restriction is attached to its exercise, other powers should be construed, absent any indication of contrary intention, so as not to authorize an exercise of the power free from the qualification or restriction ((18) See Attorney-General (Cth) v. Schmidt (1961) 105 CLR 361 at 370-372 per Dixon CJ). Hence, the effect of s.51(xxxi) when read in conjunction with the other legislative powers of the Parliament is that, subject to any contrary intention, it forbids the making of laws with respect to the acquisition of property from any State or person for a relevant purpose on terms that are not just ((19) See Australian Apple and Pear Marketing Board v. Tonking (1942) 66 CLR 77; Johnston Fear and Kingham and The Offset Printing Co. Pty. Ltd. v. The Commonwealth (1943) 67 CLR 314; Bank of N.S.W. v. The Commonwealth ("the Bank Nationalization Case") (1948) 76 CLR 1 at 349-350 per Dixon J). Consequently, a law with respect to the acquisition of property must comply prima facie with the requirement of just terms.

20. An indication of contrary intention may be provided by the express terms in which a specific power is conferred or by the very nature of the subject-matter of a specific power or what is included within it. Thus, the very terms of s.51(xxxiii), which confers power to make laws with respect to the acquisition of State railways "on terms arranged between the Commonwealth and the State", indicate that an acquisition of State railways stands outside s.51(xxxi). And, so does s.85 which makes special provision with respect to compensation payable by the Commonwealth for property passing from a State under that section.

21. Likewise, a law made in the exercise of the power with respect to bankruptcy and insolvency, which provides for the sequestration of the property of a bankrupt and its vesting in the Official Receiver, is not a law with respect to the acquisition of property within s.51(xxxi) ((20) Schmidt (1961) 105 CLR at 372.). It is no more and no less than a law which regulates the incidents and effects of bankruptcy, the provision for the vesting of title to the bankrupt's property in the Official Receiver being subordinate to sequestration. That element in the law would not enable one to describe it with any semblance of accuracy as a law for the acquisition of property. So also with a law which provides for the forfeiture of prohibited imports

((21) Burton v. Honan (1952) 86 CLR 169 at 180-181.) or for forfeiture as a consequence of conviction for a criminal offence or for breach of some statutory provision which regulates conduct ((22) Schmidt (1961) 105 CLR at 372.). Such a law would not be described as a law with respect to the acquisition of property within s.51(xxxi) simply because acquisition in the form of forfeiture of property is prescribed as a penalty for engaging in conduct proscribed by the law, proscription of that conduct being the primary purpose and effect of the law. The law which provided for the application of enemy property as war reparations was in the same category because it was a subsidiary provision in a general scheme for the disposition of enemy property and had to be characterized against the common law subjection of the property of enemy aliens to seizure and forfeiture by the Crown ((23) ibid. at 373; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR 397 at 456-457 per Aickin J).

22. Again, because the purpose served by an exercise of the taxation power conferred by s.51(ii) is compulsorily to acquire money for public purposes ((24) Commissioner of Taxation v. Clyne (1958) 100 CLR 246 at 263 per Dixon CJ; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR at 453-454 per Aickin J), a law that relates to the imposition of taxation will rarely, if ever, amount at the same time to a law with respect to the acquisition of property within the meaning of s.51(xxxi) ((25) But cf. Australian Tape Manufacturers (1993) 176 CLR at 509-510 per Mason CJ, Brennan, Deane and Gaudron JJ). Of its nature "taxation" presupposes the absence of the kind of quid pro quo involved in the "just terms" prescribed by s.51(xxxi) ((26) ibid. at 509.). Although this conclusion virtually disposes of the second question in the case stated, it will be convenient to consider later the general nature of the relationship between s.51(xxxi) and other specific legislative powers of the Parliament and the precise meaning of the expression "acquisition of property".

23. The examples given above of instances in which a law dealing with property or a chose in action necessarily stands apart from s.51(xxxi) demonstrate that the words "for any purpose for which the Parliament has power to make laws" do not support the proposition that s.51(xxxi) applies to any law providing for acquisition of property enacted by the Parliament. Instead, the Court has decided that acquisitions of various kinds, even though they might perhaps fall prima facie within the general power, are to be regarded as authorized by the exercise of specific powers otherwise than on the basis of just terms. Of these instances, it may be said that they are all cases in which the transfer or vesting of title to property or the creation of a chose in action was subservient and incidental to or consequential upon the principal purpose and effect sought to be achieved by the law so that the provision respecting property had no recognizable independent character. Indeed, the taxation cases apart, they were all cases in which the relevant statute provided a means of resolving or adjusting competing claims, obligations or property rights of individuals as an incident of the regulation of their relationship, e.g., the relationship between a bankrupt and the creditors in the bankruptcy, between the Crown and the person who brings in prohibited imports, and between the Crown and an enemy alien with respect to enemy property. In a context in which the law resolves or adjusts competing claims, obligations or property rights, it is not possible to regard the law as a law for the acquisition of property within the meaning of s.51(xxxi). In Australian Tape Manufacturers Association Ltd. v. The Commonwealth ((27) (1993) 176 CLR at 510.), Mason CJ, Brennan, Deane and Gaudron JJ said:

"In a case where an obligation to make a payment is imposed as genuine taxation, as a penalty for proscribed conduct, as compensation for a wrong done or damages for an injury inflicted, or as a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity, it is unlikely that there will be any 'acquisition of property' within s.51(xxxi) of the Constitution."

That is not to say that the constitutional provision applies only to an acquisition of property for "the use and service of the Crown", as Dixon CJ suggested in Attorney-General (Cth) v. Schmidt ((28) (1961) 105 CLR at 373.).

24. Whether a law falls within s.51(xxxi) and must comply with the requirement ultimately depends upon the characterization of the law and upon the context of the expression "acquisition of property" within the meaning of s.51(xxxi). In the present case, because the Refund Act can be supported as a law that relates to the imposition of taxation and as a law that involves the adjustment of competing claims and obligations of individuals (namely, the pool builder and the pool owner), it almost certainly follows that it stands outside the constitutional conception of a law with respect to the acquisition of property for reasons already given. However, it is necessary to look more closely at the meaning of the words "acquisition of property" with a view to ascertaining how the extinguishment of the cause of action effected by the Refund Act stands in relation to that expression.

The meaning of the expression "acquisition of property"

25. In conformity with the liberal interpretation which is given to a legislative power subject to a safeguard such as "just terms" ((29) Bank Nationalization Case (1948) 76 CLR at 349.), the word "property" has a broad meaning ((30) See The Commonwealth v. New South Wales (1923) 33 CLR 1 at 20-21; Dalziel (1944) 68 CLR at 285, 290; Bank Nationalization Case (1948) 76 CLR at 349; The Commonwealth v. Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 145, 246-247, 282-283; Australian Tape Manufacturers (1993) 176 CLR at 509.). Thus, a contractual right, amounting to a chose in action, is "property" for the purposes of s.51(xxxi) ((31) Dalziel (1944) 68 CLR at 290; Norman v. Federal Commissioner of Taxation (1963) 109 CLR 9 at 26; Australian Tape Manufacturers (1993) 176 CLR at 509.), as are "innominate and anomalous interests" ((32) Bank Nationalization Case (1948) 76 CLR at 349.). And a legislative imposition of an obligation to pay money, depending upon the contract, may amount to an "acquisition of property" ((33) Australian Tape Manufacturers (1993) 176 CLR at 509-510.). On the other hand, the mere extinguishment by the Commonwealth of a right enjoyed by an owner in relation to his or her property does not amount to an acquisition of property ((34) The Tasmanian Dam Case (1983) 158 CLR at 145.); in the absence of an acquisition of a benefit or an interest in property, however slight or insubstantial it may be, the complete extinguishment of contractual rights does not constitute such an acquisition ((35) Reg. v. Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653.).

26. Although the distinction between extinguishment and acquisition of rights is clearly recognized in the law of property, it may be that in some circumstances the extinguishment of a chose in action against the Commonwealth would amount to an acquisition of property. The extinguishment of such a cause of action could have the same effect as an assignment of the chose in action to the Commonwealth. It has been said that what the Constitution forbids directly cannot be achieved
indirectly or by means of some circuitous device ((36) Bank Nationalization Case (1948) 76 CLR at 349-350; see also Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR at 407 per Gibbs CJ; The Tasmanian Dam Case (1983) 158 CLR at 283 per Deane J).

27. There is some authority to suggest that the Commonwealth may
legislate to extinguish a cause of action against it without contravening s.51(xxxi). In Werrin, Dixon J said ((37) (1938) 59 CLR at 165.):

"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."

Although Dixon J did not specifically mention s.51(xxxi), clearly his Honour did not consider that provision to be an impediment to the extinguishment of a cause of action against the Commonwealth, at least in the circumstances of that case. The section of the Sales Tax Act in question in Werrin, s.12A, was in effect very similar to that in question in this case. However, in Werrin the cause of action in question was a claim for restitution of taxes mistakenly paid and was not based on a contractual right. As such, the cause of action, if there was one, which the Court in Werrin assumed but did not decide ((38) ibid. at 164.), was not assignable and his Honour may have thought that it did not amount to property for the purpose of s.51(xxxi) ((39) See Australian Capital Television Pty. Ltd. v. The Commonwealth (1992) 177 CLR 106 at 165-166 per Brennan J See also Poulton v. The Commonwealth (1953) 89 CLR 540 at 602 per Williams, Webb and Kitto JJ But cf. Trendtex Trading Corporation v. Credit Suisse (1982) AC 679 at 703 per Lord Roskill.).

28. In Perpetual Executors and Trustees Association of Australia Ltd. v. Federal Commissioner of Taxation ((40) (1948) 77 CLR 1.), the Commonwealth, by certain bonds that it had issued, had promised that it would pay interest on the bonds without deduction for any taxes. In Magrath v. The Commonwealth ((41) (1944) 69 CLR 156 per Rich, McTiernan and Williams JJ), a majority of the Court had decided that
this promise amounted to a term of the contract between the Commonwealth and the bondholder that interest would not form part of the assessable income of the taxpayer. Subsequent to the issue of the bonds to the bondholder in Perpetual Executors and Trustees, the Income Tax Assessment Act 1936 (Cth) levied income tax upon such interest. The Court held by majority that the interest was taxable under the statute and that the assessment and collection of the tax was not a breach of contract. Dixon J stated that ((42) (1948) 77 CLR at 28.) :

"the change in the law could not amount to a breach of contract for which the Commonwealth would be liable in damages or otherwise. A statute destroys all contracts which stand in the way of its operation."

29. A similar conclusion had been reached in Magrath by Rich J and Williams J, although in that case it had been unnecessary to decide the point because the Commonwealth had stated that, if the Court found the existence of a contract, then the Commonwealth would honour its contractual obligations. In Magrath, Rich J observed that "(t)he Commonwealth, by its legislature, can, without any breach of the law, repudiate promises given by its Executive Government" ((43) (1944) 69 CLR at 170.). In neither case did the Court consider s.51(xxxi) to be
a possible bar to the validity of the imposition of the tax.

30. Perpetual Executors and Magrath support the proposition that, where the Executive enters into a contract with a citizen, that contract may be overridden by subsequent legislation without the need for the provision of just terms ((44) See Rose, "The Government and Contract", in Finn (ed.), Essays on Contract, (1987), 233 at 252-254, where the author supports this approach in respect of contracts not involving land or goods. See also Hogg, Liability of the Crown, 2nd
ed. (1989) at 172.). In that context, and if the subsequent legislation is a law imposing taxation or a law with respect to taxation which regulates competing claims and interests, no question of acquisition of property will arise.

31. So understood, both Magrath and Perpetual Executors, as well as Werrin, are consistent with the general proposition that a law with respect to taxation which regulates competing claims and interests is not a law for the acquisition of property. And here there is no additional element in the Refund Act which would enable the Court to say that, though it is a law with respect to taxation, it is also a law for the acquisition of property.

32. If, contrary to the view which I take, the Refund Act can be supported only as an exercise of the power conferred by ss.61 and 51(xxxix), it is still not possible to characterize the law as one for the acquisition of property. Because in this case the tax has been passed on to the pool owners, that is, the pool owners have borne the burden of the tax, they too have an interest in the refund of the taxes collected. Thus, notwithstanding the Commonwealth's contractual arrangements with the pool builder, the Refund Act is in essence a legislative measure directed to achieving a genuine resolution of the competing claims of pool builders, pool owners and the Commonwealth in relation to the refund of moneys in respect of the tax that was
invalidly levied. As such, for the reasons discussed above,
extinguishment of the cause of action does not constitute an acquisition of property within the meaning of s.51(xxxi), even if the Refund Act is to be supported by reference to ss.61 and 51(xxxix) in relation to the whole or some of its provisions.

33. Accordingly, I would answer the questions asked as follows:
1. Yes.
2. No.

BRENNAN J The Chief Justice has exposed the issues in this case and the circumstances from which those issues arise. For reasons with which I respectfully agree, his Honour concludes that, s.51(xxxi) apart, the Swimming Pools Tax Refund Act 1992 (Cth) ("the Refund Act") finds support in s.51(ii) or in a combination of s.61 and s.51(xxxix) of the Constitution ((45) In particular, I respectfully agree that where a taxpayer is entitled to recover moneys exacted as a tax under a purported but invalid law, the question whether a legislature has power to enact a law which does no more than bar such recovery depends on whether the legislature had power to impose the purported tax (as in Werrin v. The Commonwealth (1938) 59 CLR 150) or had no such power (as in Antill Ranger and Co. Pty. Ltd. v. Commissioner for Motor Transport (1955) 93 CLR 83).). That conclusion leads me immediately to a consideration of s.51(xxxi) and its guarantee of just terms.

Can the extinguishing of a debt be an acquisition of property?

2. In Mutual Pools and Staff Pty. Ltd. v. Federal Commissioner of Taxation ((46) (1992) 173 CLR 450.) this Court upheld a challenge to the validity of the law imposing a tax on so much of a swimming pool as is constructed in situ. It is conceded that, in consequence of that decision, the Commonwealth was indebted to the plaintiff in the amount which the plaintiff had paid purportedly as tax in accordance with the impugned legislation and interest on that amount. That debt (whether it be regarded as owing under the agreement made by the Swimming Pool and Spa Association of Australia Ltd. and the Commissioner of Taxation or in restitution) was not a claim created or governed by a statute. It was a common law chose in action vested in the plaintiff and assignable by it. The debt was "property" within the meaning of that term in s.51(xxxi) of the Constitution.

3. By exercising its legislative power, the Commonwealth can extinguish debts owing by it or interests outstanding against it and thereby obtain a discharge from its liability which a subject could obtain only by purchase or payment of the debt or by transfer or surrender of the interest. If rights against the Commonwealth are extinguished by statute and the rights are proprietary in nature ((47) A question considered in Health Insurance Commission v. Peverill, unreported, 9 March 1994.), there is an acquisition of property by the Commonwealth. By force of s.4(1) of the Refund Act, the Commonwealth's debt to the plaintiff was extinguished. The debt was not discharged by payment, but the debtor - the Commonwealth - was discharged from its liability to pay. The Commonwealth thus received a benefit precisely corresponding with the plaintiff's loss of its property ((48) See per Deane J in The Commonwealth v. Tasmania (the Tasmanian Dam Case) (1983) 158 CLR 1 at 283.). The legislative extinction of such a debt constitutes an acquisition of property. The more difficult question is whether the extinction of the debt in the present case constitutes such an acquisition of property for the purposes of s.51(xxxi): if it does, the validity of the Refund Act depends on whether it provides just terms for the acquisition of the debt; if it does not, the requirement of just terms does not apply and the Refund Act is a valid exercise of the other powers conferred by s.51(ii) or by a combination of s.61 and s.51(xxxix) or by both.

Just terms

4. If the Refund Act must find support in s.51(xxxi), it cannot satisfy the constitutional requirement of just terms. True it is that the purpose of the Refund Act is to direct refunds to the pool owners who had borne, or who are likely to have borne, the burden of the purported but invalid tax and thus to deny a windfall benefit to the suppliers who, though they had made the payment of the purported tax to the Commissioner, had passed it on to the pool owners. That consideration is relevant to the character of the Refund Act, but not to the question whether it provides just terms. A law does not provide just terms for the acquisition of property by the Commonwealth from A if it provides for the payment of the price to B. Here, the debt was owned beneficially by the plaintiff and those other suppliers who had made the payment of the purported tax to the Commonwealth, not by the pool owners from whom the suppliers had recouped the payments they had made. It may be that, if a supplier received a refund, he would be bound in restitution to refund to the owner from whom he had previously recouped the purported tax the amount received or the amount recouped whichever is the less. But that is a question which does not arise for present consideration.

5. The critical question is whether the Refund Act is to be classified as a law with respect to the acquisition of property which must find its support in s.51(xxxi) of the Constitution.

Classification of laws providing for the taking of property

6. Section 51(xxxi) of the Constitution has a dual effect. First, it confers power to acquire property from any State or person for any purpose for which the Parliament has power to make laws and it conditions the exercise of that power on the provision of just terms. Second, by an implication required to make the condition of just terms effective, it abstracts the power to support a law for the compulsory acquisition of property from any other legislative power ((49) Johnston Fear and Kingham and The Offset Printing Co. Pty. Ltd. v. The Commonwealth (1943) 67 CLR 314 at 318, 325; W.H. Blakeley and Co. Pty. Ltd. v. The Commonwealth (1953) 87 CLR 501 at 521; Attorney-General (Cth) v. Schmidt (1961) 105 CLR 361 at 371; Trade Practices Commission
v. Tooth and Co. Ltd. (1979) 142 CLR 397 at 445.) (s.122 apart ((50) Teori Tau v. The Commonwealth (1969) 119 CLR 564; Clunies-Ross v. The Commonwealth (1984) 155 CLR 193 at 201.) ). Nevertheless, there are sundry laws providing for the acquisition of property which are supported by heads of power other than s.51(xxxi) and which are not affected by the requirement of just terms. For example, laws providing for the imposition of a tax ((51) MacCormick v. Federal Commissioner of Taxation (1984) 158 CLR 622 at 638, 649.), the compulsory payment of provisional tax ((52) Commissioner of Taxation v. Clyne (1958) 100 CLR 246 at 263, 270; Federal Commissioner of Taxation v. Barnes (1975) 133 CLR 483 at 494-495, 500.), the seizure of the property of enemy aliens ((53) Attorney-General (Cth)
v. Schmidt (1961) 105 CLR at 372-373.), the sequestration of
bankrupts' property ((54) ibid. at 372.), the forfeiture of prohibited imports or the exaction of fines and penalties ((55) Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR at 408; Reg. v. Smithers; Ex parte McMillan (1982) 152 CLR 477 at 487-489.) have been held to be unaffected by the guarantee of just terms. If the laws considered in these cases had been classified as laws falling within s.51(xxxi), the acquisitions of property for which they provided would have failed for want of the provision of just terms. Clearly there are some laws which, though they provide for what can properly be described as an acquisition of property, are not classified as laws falling within s.51(xxxi). The acquisitions of property for which they provide are not acquisitions of property for the purposes of s.51(xxxi).

7. In Australian Tape Manufacturers Association Ltd. v.
The Commonwealth, Mason CJ, Brennan, Deane and Gaudron JJ
said ((56) (1993) 176 CLR 480 at 510.):

"In a case where an obligation to make a payment is imposed as genuine taxation, as a penalty for proscribed conduct, as compensation for a wrong done or damages for an injury inflicted, or as a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity, it is unlikely that there will be any question of an 'acquisition of property' within s.51(xxxi) of the Constitution ((57) See, generally, Attorney-General (Cth) v. Schmidt (1961) 105 CLR at 372-373.). On the other hand, the mere fact that what is imposed is an obligation to make a payment or to hand over property will not suffice to avoid s.51(xxxi)'s guarantee of 'just terms' if the direct expropriation of the money or other property itself would have been within the terms of the sub-section. Were it otherwise, the guarantee of the section would be reduced to a hollow facade."

The question here is whether the Refund Act, though it provides for the acquisition of a debt by the Commonwealth and thus falls literally within s.51(xxxi), is nevertheless to be classified as a law falling under a head of power other than s.51(xxxi).

Indicia of classification

8. A grant of legislative power comprehends a power to enact provisions appropriate and adapted to the fulfilment of any objective falling within the power. As Dixon CJ said in Wragg v. State of New South Wales ((58) (1953) 88 CLR 353 at 386.):

"A legislative power, however, with respect to any subject matter contains within itself authority over whatever is incidental to the subject matter of the power and enables the legislature to include within laws made in pursuance of the power provisions which can only be justified as ancillary or incidental."

In Burton v. Honan ((59) (1952) 86 CLR 169 at 177. See also British Medical Association v. The Commonwealth (1949) 79 CLR 201 at 274 and Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 at 77.), his Honour stated his view to be that "everything which is incidental to the main purpose of a power is contained within the power itself so that it extends to matters which are necessary for the reasonable fulfilment of the legislative power over the subject matter". In Nationwide News Pty. Ltd. v. Wills ((60) (1992) 177 CLR 1 at 27.), Mason CJ pointed out that the notion of necessity was too narrow to describe the scope of what is incidental to a legislative power. He said:

"If one thing emerges clearly from the decisions of this Court it is that, to bring a law within the reach of the incidental scope of a power, it is enough that the provision is appropriate to effectuate the exercise of the power; one is not confined to what is necessary for the effective exercise of the power".

I respectfully agree. Although s.51(xxxi) abstracts from other heads of power the power of acquisition which that paragraph itself confers, it does not thereby abstract the power to prescribe the means appropriate and adapted to the achievement of an objective falling within another head of power where the acquisition of property without just terms is a necessary or characteristic feature of the means prescribed.

9. In each of the cases in which laws for the acquisition of property without the provision of just terms have been held valid, such an acquisition has been a necessary or characteristic feature of the means selected to achieve an objective within power, the means selected being appropriate and adapted to that end. Therefore a law which selects and enacts means of achieving a legitimate objective is not necessarily invalid because the means involve an acquisition of property without just terms. What is critical to validity is whether the means selected, involving an acquisition of property without just terms, are appropriate and adapted to the achievement of the objective. The absence of just terms is relevant to that question, but not conclusive. Where the absence of just terms enhances the appropriateness of the means selected to the achievement of the legitimate objective, the law which prescribes those means is likely to fall outside s.51(xxxi) and within another supporting head of power. If it were otherwise, the guarantee of just terms would impair by implication the Parliament's capacity to enact laws effective to fulfil the purposes for which its several legislative powers are conferred. It would be erroneous so to construe grants of legislative power as to fetter their exercise by implying that s.51(xxxi) precluded the enactment of laws under other heads of power where the laws involved an acquisition of property without just terms, even though laws of that kind are appropriate and adapted to the execution of those powers in the public interest.

10. It would be erroneous to elevate the constitutional guarantee of just terms to a level which would so fetter other legislative powers as to reduce the capacity of the Parliament to exercise them effectively. When the United States Supreme Court was considering the effect of a charter granted to the proprietors of a bridge on the capacity of the legislature to enact a law affecting the benefits of a franchise created by the charter, the Court wrote ((61) Charles River Bridge v. Warren Bridge (1837) 11 Pet 420 at 548; 36 US 341 at 431.):

"The continued existence of a government would be of no great value, if, by implications and presumptions, it was disarmed of the powers necessary to accomplish the ends of its creation, and the functions it was designed to perform, transferred to the hands of privileged corporations."

This observation, repeated more recently ((62) Keefe v. Clark (1944) 322 US 393 at 397.), was not concerned with the reconciliation of different constitutional provisions. The Court was concerned to show that legislative authority is not bargained away by executive contracts ((63) Perpetual Executors and Trustees Association of Australia Ltd.
v. Federal Commissioner of Taxation (1948) 77 CLR 1 at 28.). Nevertheless, the dictum is appropriate to describe the approach to be taken to the reading down of express legislative powers in order to accommodate the guarantee of just terms.

11. In my view, a law may contain a valid provision for the acquisition of property without just terms where such an acquisition is a necessary or characteristic feature of the means which the law selects to achieve its objective and the means selected are appropriate and adapted to achieving an objective within power, not being solely or chiefly the acquisition of property. But where the sole or dominant character of a provision is that of a law for the acquisition of property, it must be supported by s.51(xxxi) and its validity is then dependent on the provision of just terms.

Classification of the Swimming Pools Tax Refund Act

12. The purpose of the Refund Act, as its title indicates, is to direct the making of refunds of the payments made as and for tax purportedly imposed by the provisions inserted into the Sales Tax Assessment Act (No.1) 1930 (Cth). The purported tax was of a kind which is usually passed on to the consumer of the goods or services in respect of which the tax is imposed. It was open to the Parliament to provide that the purported tax collected should be refunded. It was equally open to the Parliament to provide that the refund be made to those who bore, or who are likely to have been the bearers of, the burden of the amounts collected. The Parliament prescribed the manner in which the fund of collected tax should be paid out. That fund would not have sufficed to provide refunds to those who had borne, or who are likely to have borne, the burden of the amount collected if refunds also had to be made to those suppliers who had already recouped their payments of the purported tax from pool owners. Given that the collected tax was treated as the fund from which refunds were to be made, the scheme necessarily involved the extinction of the debts owing to suppliers who had recouped their payments of the purported tax from pool owners. Thereby the fund was kept available to those who were deemed to have the better entitlement to a refund of the amount collected. The critical question is: was the extinction of the debts owing to the plaintiff and other suppliers a necessary feature of providing for the refund of moneys collected as taxes payable under the invalid law to those who bore, or who were likely to have borne, the burden of the amounts collected? The answer must be: yes.

13. It follows that the extinction of the plaintiff's claim without the provision of just terms is supportable as an exercise of power under s.51(ii) or under the combined operation of s.61 and s.51(xxxix) or under both but not as an exercise of power under s.51(xxxi). Thus the guarantee of just terms is not attracted and the Refund Act is valid.

14. I would answer the questions in the stated case:
1. Yes.
2. No.

DEANE AND GAUDRON JJ The issue between the parties to this stated case is whether the Swimming Pools Tax Refund Act 1992 (Cth) ("the Refund Act") is invalid in its application to the circumstances of this case. The resolution of that issue requires consideration of the prima facie scope of relevant Commonwealth legislative power and the effect of the requirement of "just terms" in s.51(xxxi) of the
Constitution. The detailed facts and the relevant statutory provisions are adequately summarized or set out in other judgments and it is unnecessary that we repeat them.

Prima Facie Legislative Power

2. The Commonwealth relies on a number of distinct grants of legislative power to sustain the competence of the Parliament to enact the Refund Act. It suffices to refer to one of them, namely, the grant of legislative power "to make laws for the peace, order, and good government of the Commonwealth with respect to:- ... Taxation" (Constitution, s.51(ii)).

3. As Dixon CJ, McTiernan, Webb, and Kitto JJ pointed out in Grannall v. Marrickville Margarine Pty. Ltd. ((64) (1955) 93 CLR 55 at 77.), the words "with respect to" should never be neglected in considering the extent of a legislative power conferred by s.51 of the Constitution. All that those words require is "a relevance to or connection with the subject assigned to the Commonwealth Parliament". Their Honours went on to say ((65) ibid.):

"In the next place, every legislative power carries with it authority to legislate in relation to acts, matters and things the control of which is found necessary to effectuate its main purpose, and thus carries with it power to make laws governing or affecting many matters that are incidental or ancillary to the subject matter."

4. Section 51(ii)'s grant of legislative power "with respect to" taxation "carries with it power" to define and regulate rights of refund of amounts paid to the Commonwealth by way of taxation in circumstances where an amount paid was not in fact due or owing either because the legislative provision purportedly exacting the tax was invalid for some procedural reason, such as a failure to comply with the requirements of s.55 of the Constitution, or because the circumstances of the case were not such as to attract liability to pay
tax under that legislative provision ((66) See Werrin v. The Commonwealth (1938) 59 CLR 150 at 163.). Subject to an important qualification, a law regulating and defining rights of refund of amounts unnecessarily or mistakenly paid to the Commonwealth in discharge of asserted taxation liabilities is a law "with respect to" taxation for the purposes of the plenary grant of power contained in s.51(ii).

5. The qualification referred to in the preceding paragraph is that, quite apart from the effect of s.51(xxxi), a purported law regulating and defining rights of refund of amounts unnecessarily or mistakenly paid by way of taxation may not be a law within s.51(ii) to the extent that it extinguishes or modifies the right of a person to obtain a refund of a tax which it was beyond the legislative powers of the Commonwealth to impose. If, for example, a law purporting to impose a tax was outside the legislative power conferred by s.51(ii) because the imposition of the tax contravened s.92 of the Constitution, a law which purported to extinguish all rights of recovery of amounts exacted under the invalid law would, at least prima facie, be outside the legislative power conferred by s.51(ii) because it also would involve contravention of s.92 ((67) See Antill Ranger and Co. Pty. Ltd. v. Commissioner for Motor Transport (1955) 93 CLR 83; affd (1956) 94 CLR 177; Barton v. Commissioner for Motor Transport (1957) 97 CLR
633 at 641, 662.). In the present case, however, the taxing legislation was not invalid by reason of any absence of substantive legislative power. Its character was that of a law with respect to "taxation" and its enactment fell within the scope of the legislative power conferred by s.51(ii). Invalidity flowed only from failure to comply with the procedural requirements of s.55 ((68) Mutual Pools and Staff Pty. Ltd. v. Federal Commissioner of Taxation (1992) 173 CLR 450.).

6. It is now common ground between the parties that the Refund Act is not itself invalid on the ground that its enactment contravened the requirements of s.55. It follows from what has been said above that, subject to the applicability and effect of s.51(xxxi)'s requirement of "just terms", it is a valid enactment of the Parliament pursuant to the legislative power conferred by s.51(ii) of the Constitution. It is, in our view, unnecessary for the Commonwealth to call in aid the augmentation of that legislative power by s.51(xxxix) and s.61.

Section 51(xxxi)

7. Section 51(xxxi) confers upon the Parliament power to make laws for the peace, order and good government of the Commonwealth 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 now settled that par.(xxxi)'s requirement of "just terms" enjoys the status of a constitutional guarantee and "is to be given the liberal construction appropriate to such a constitutional provision" ((69) Clunies-Ross v. The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; and see also Minister of State for the Army v. Dalziel (1944)
68 CLR 261 at 276 per Latham CJ, 284-285 per Rich J; Bank of N.S.W. v. The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J;
The Commonwealth v. Tasmania (The Tasmanian Dam Case) (1983)
158 CLR 1 at 282 per Deane J; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR 480 at 509
per Mason CJ, Brennan, Deane and Gaudron JJ; Re Director of Public Prosecutions; Ex parte Lawler, unreported, High Court of Australia, 9 March 1994 at 13 per Deane and Gaudron JJ).

8. Accordingly, the cases establish that, in its context in s.51(xxxi), the word "property", which has been said to be "the most comprehensive term that can be used" ((70) The Commonwealth v. New South Wales (1923) 33 CLR 1 at 20-21 per Knox CJ and Starke J; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR at 509 per Mason CJ, Brennan, Deane and Gaudron JJ), must be construed as extending "to every species of valuable right and
interest including real and personal property, incorporeal hereditaments ... and choses in action" ((71) Minister of State for the Army v. Dalziel (1944) 68 CLR at 290; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR at 509.). Money is within ordinary concepts of personal property and the acquisition of money is an acquisition of property. Like other constitutional guarantees, s.51(xxxi) is concerned with substance rather than form. That being so, the imposition of an enforceable obligation to pay money and the consequent conferral of a chose in action upon the creditor can, depending upon the context in which the obligation is imposed, constitute an acquisition of property by the creditor ((72) Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR at 509-510.).

9. Similarly, the word "acquisition" is not to be pedantically or legalistically restricted to a physical taking of title or possession. Once it is appreciated that "property" in s.51(xxxi) extends to all types of "innominate and anomalous interests" ((73) Bank of N.S.W. v. The Commonwealth (1948) 76 CLR at 349 per Dixon J; see also The Tasmanian Dam Case (1983) 158 CLR at 145, 246-247, 282-283.), it is apparent that the meaning of the phrase "acquisition of property" is not to be confined by reference to traditional conveyancing principles and procedures. Nonetheless, the fact remains that s.51(xxxi) is
directed to "acquisition" as distinct from deprivation. The extinguishment, modification or deprivation of rights in relation to property does not of itself constitute an acquisition of property ((74) See British Medical Association v. The Commonwealth (1949) 79 CLR 201 at 270-271 per Dixon J; The Tasmanian Dam Case (1983) 158 CLR at 145-146 per Mason J, 181-182 per Murphy J, 247-248 per Brennan J, 283 per Deane J; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR at 528 per Dawson and Toohey JJ It is relevant to note that the Privy Council has also, in the context of interpreting the Malaysian Constitution, drawn a distinction between deprivations and acquisitions: Government of Malaysia v. Selangor Pilot Association (1978) AC 337 at 347-348.). For there to be an "acquisition of property", there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property. On the other hand, it is possible to envisage circumstances in which an extinguishment, modification or deprivation of the proprietary rights of one person would involve an acquisition of property by another by reason of some identifiable and measurable countervailing benefit or advantage accruing to that other person as a result ((75) See, generally, The Tasmanian Dam Case (1983) 158 CLR at 283-284.). Indeed, the extinguishment of a chose in action could, depending upon the circumstances, assume the substance of an acquisition of the chose in action by the obligee.

10. The general statement that s.51(xxxi)'s requirement of just terms enjoys the status of a constitutional guarantee must, of course, be understood in the context that the requirement exists as a confining component of the subject-matter of that paragraph's positive grant of legislative power. That means that the requirement's direct operation as a guarantee of just terms is necessarily confined within that grant of power. It is in its indirect operation that the requirement of just terms transcends the limits of par.(xxxi) and reaches into other grants of legislative power contained in s.51. The cases establish that the effect of par.(xxxi)'s express conferral upon the Parliament of the power to make certain laws with respect to the acquisition of property subject to the safeguard of just terms is that the legislative power to make such laws without the safeguard is presumed to be excluded or abstracted from other grants of legislative power contained in that section. And that is so notwithstanding that, were it not for s.51(xxxi), ordinary principles of constitutional construction would require those other grants of legislative power to be construed as encompassing, either directly or incidentally, the power to make laws with respect to the acquisition of property for the purposes to which they related ((76) See, e.g., Kohl v. United States (1875) 91 US 367 at 371-372; Johnston Fear and Kingham and The Offset Printing Co. Pty. Ltd. v. The Commonwealth (1943) 67 CLR 314 at 317; Attorney-General (Cth) v. Schmidt (1961) 105 CLR 361 at 371.). This indirect operation of par.(xxxi)'s requirement of just terms to reduce the content of other grants of legislative power contained in s.51 was explained by Latham CJ in Johnston Fear and Kingham and The Offset Printing Co. Pty. Ltd. v. The Commonwealth ((77) (1943) 67 CLR at 317-318.):

"The paragraphs of s.51 should not, in my opinion, in general be read as limiting each other in any way. But there are special characteristics of par.xxxi. which raise special questions with respect to the power to legislate for the acquisition of property. Par.xxxi. gives express power to legislate for the acquisition of property 'for any purpose in respect of which the Parliament has power to make laws.' This phrase is used in a general descriptive sense and, in its setting, may fairly be interpreted as referring to all other matters with respect to which the Parliament has power to make laws and, therefore, as including the thirty-eight subjects referred to in the other paragraphs of s.51 ... When par.xxxi. is thus construed in relation to a particular purpose it must, I think, be regarded as limiting the legislative power with respect to the acquisition of property for that purpose."

As Dixon CJ pointed out in Attorney-General (Cth) v. Schmidt ((78) (1961) 105 CLR at 371-372.), in a judgment with which the other four members of the Court agreed, that indirect operation of par.(xxxi) to reduce the content of other grants of legislative power is through the medium of a rule of construction, namely, that "it is in accordance with the soundest principles of interpretation to treat" the conferral
of "an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect" as inconsistent with "any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorized the same kind of legislation but without the safeguard, restriction or qualification".

11. There are two related matters to be noted with respect to s.51(xxxi)'s operation to confine the content of other grants of legislative power in s.51. The first is that that operation, being merely indirect as a matter of construction, is necessarily subject to any contrary intention either expressed or made manifest by the words or content of those other grants of power. In particular, some laws which are expressly authorized under other grants of legislative power necessarily encompass acquisition of property unrestricted by any requirement of the quid pro quo of just terms. Laws "with respect to ... Taxation" are an example. The second is that s.51(xxxi) is, first and foremost, a grant of power, and only secondarily a guarantee of "just terms". For present purposes, it can be described as a power to make laws with respect to acquisition of property on just terms. The presence of the words "just terms" indicates that the acquisitions to which the grant of legislative power is directed are acquisitions of a kind which permit of just terms. There are some kinds of acquisition which are of their nature antithetical to the notion of just terms but which were plainly intended to be permissible under laws made pursuant to one or more of the grants of power contained in s.51. An example of those kinds of acquisition is the compulsory forfeiture to the Commonwealth of money or specific property as punishment for breach of some general rule of conduct prescribed by a valid law of the Commonwealth. Such an acquisition stands apart from the kinds of "acquisition of property" which constitute the subject-matter of s.51(xxxi) and such laws are beyond the reach of the paragraph's guarantee of just terms. Indeed, a law providing for an acquisition of property of a kind which is inconsistent or incongruous with the notion of just terms could validly be enacted pursuant to par.(xxxi) itself. An example is a law providing for the payment of a pecuniary penalty for a corrupt breach of a statutory duty imposed by a valid law with respect to the acquisition of property on just terms.

12. It is because s.51(xxxi) operates only indirectly to confine other powers in s.51, and, then, only within the area in which it operates, that the following laws involving acquisition of property without the provision of just terms have been held or indicated, in judgments in the Court, to be supported by a grant of legislative power other than that contained in s.51(xxxi): the imposition of a tax ((79) Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR at 508-510.); the imposition of a liability to pay moneys in advance of an actual taxation liability (i.e. provisional tax) ((80) Commissioner of Taxation v. Clyne (1958) 100 CLR 246 at 263, 270; Federal Commissioner of Taxation v. Barnes
(1975) 133 CLR 483 at 494-495.); the forfeiture of illegally imported goods in the hands of an innocent third party ((81) Burton v. Honan (1952) 86 CLR 169 at 180-181. See also Cheatley v. The Queen (1972) 127 CLR 291 at 307-308.); the imposition of a pecuniary penalty by way of civil proceedings ((82) Reg. v. Smithers; Ex parte McMillan (1982) 152 CLR 477 at 487-489.); the acquisition by the Controller of Enemy Property of the property of subjects of a former enemy to be applied to reparations payable by an enemy State ((83) Attorney-General (Cth) v. Schmidt (1961) 105 CLR at
373, 376-377.); the vesting of a bankrupt's estate in an Official Receiver or Trustee ((84) ibid. at 372.); and, the condemnation of prize ((85) ibid. at 372-373.). In such cases, the law in question is either (or both) clearly within the intended scope of another legislative power so that it is manifest that the rule of construction which gives s.51(xxxi) its operation as a guarantee of just terms does not operate to deny authority to make that law, or it is a law of a kind that does not permit of just terms in the sense we have explained and, thus, stands outside s.51(xxxi).

13. There is another matter to be noted with respect to the area in which s.51(xxxi) operates and, thus, confines or reduces the content of other grants of legislative power. The requirement of "just terms" is directed to laws with respect to the acquisition of property from any State or person for any purpose in respect of which the Parliament has power to make laws. The settled method for determining whether a particular law is or is not of the kind referred to in one or other of the grants of legislative power contained in s.51 is that of characterization. That being so, the indirect operation of par.(xxxi) does not extend beyond abstracting from other grants of legislative power authority to make laws which can properly be characterized as laws with respect to the acquisition of property for a purpose in respect of which the Parliament has power to make laws. That does
not, of course, mean that a law will be outside the reach of par.(xxxi) unless that is its sole or dominant character. For the purposes of s.51, a law can have a number of characters and be, at the one time, a law with respect to the subject-matter of a number of different grants of legislative power. However, unless a law can be fairly characterized, for the purposes of par.(xxxi), as a law with respect to the acquisition of property, that paragraph cannot indirectly operate to exclude its enactment from the prima facie scope of another grant of legislative power. Put differently, "it is at least clear that before the restriction involved in the words 'on just terms' applies, there must be a law with respect to the acquisition of property (of a State or person) for a purpose in respect of which the Parliament has power to make laws" ((86) ibid. at 372; see also The Tasmanian Dam Case (1983) 158 CLR at 282.).

14. The importance of the limitations on the operation of s.51(xxxi) is magnified by the fact that the cases establish that the paragraph's implied guarantee is not confined to acquisitions of property by the Commonwealth and its agents. It extends to acquisitions "by any other person" ((87) PJ Magennis Pty. Ltd. v. The Commonwealth (1949) 80 CLR 382 at 401-402, 411, 422-423, 429-430; and see, generally, Jenkins v. The Commonwealth (1947) 74 CLR 400 at 406; McClintock v.
The Commonwealth (1947) 75 CLR 1 at 23, 36; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR 397 at 407-408, 427, 451-452; Clunies-Ross v. The Commonwealth (1984) 155 CLR at
202; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR at 510-511, 526.). Obviously, many general laws which regulate the rights and conduct of individuals may, for any number of legitimate legislative purposes, effect or authorize an "acquisition of property" within the wide meaning of those words as used in s.51(xxxi). If every such law which incidentally altered, modified or extinguished proprietary rights or interests in a way which constituted such an "acquisition of property" were invalid unless it provided a quid pro quo of just terms, the legislative powers of the Commonwealth would be reduced to an extent which could not have been intended by those who framed and adopted the Australian Constitution.

15. As has been said, the limitations overlap. A law which is clearly authorized under some other grant of legislative power or which necessarily involves an acquisition of property unrestricted by any requirement of just terms, such as a law imposing a penalty for unlawful conduct, may well not be susceptible of independent characterization as a law with respect to the acquisition of property. While there is no set test or formula for determining whether a particular law can or cannot properly be characterized for the purposes of s.51(xxxi) as a law with respect to the acquisition of property for a purpose in respect of which the Parliament has power to make laws, it is possible to identify in general terms some categories of laws which are unlikely to bear the character of a law with respect to the acquisition of property notwithstanding the fact that an acquisition of property may be an incident of their operation or application. One such category consists of laws which provide for the creation, modification, extinguishment or transfer of rights and liabilities as an incident of, or a means for enforcing, some general regulation of the conduct, rights and obligations of citizens in relationships or areas which need to be regulated in the common interest. Another category consists of laws defining and altering rights and liabilities under a government scheme involving the expenditure of government funds to provide social security benefits or for other public purposes. A law falling within either of those categories may, as an incident of its operation or enforcement, adjust, modify or extinguish rights in a way which involves an "acquisition of property" within the wide meaning which that phrase bears for the purposes of s.51(xxxi). Yet, if such a law is of general operation, it is unlikely that it will be susceptible of being properly characterized, for the purposes of s.51 of the Constitution, as a law with respect to the acquisition of property for a purpose in respect of which the Parliament has power to make laws. The reason why that is so is that, even though an "acquisition of property" may be an incident or a consequence of the operation of such a law, it is unlikely that it will constitute an element or aspect which is capable of imparting to it the character of a law with respect to the subject-matter of s.51(xxxi).

Conclusion

16. It is now common ground that, subject to the effect of the Refund Act, the defendant Commonwealth is under a contractual obligation to repay to the plaintiff ("Mutual Pools") the amount of $1,522 paid in respect of Mr and Mrs Chaplin's in situ swimming pool pursuant to the agreement between the Swimming Pool and Spa Association of Australia Limited and the Commonwealth. In circumstances where Mutual Pools has passed on that amount to Mr and Mrs Chaplin and has not made any refund of it to them, the effect of the Refund Act, if it is valid,
is to extinguish Mutual Pools' contractual right against the
Commonwealth to recover that amount. It is arguable that the extinguishment of that chose in action, to the countervailing benefit of the Commonwealth, either itself involves the substance of an acquisition of the chose in action by the Commonwealth ((88) But cf. e.g. Werrin v. The Commonwealth (1938) 59 CLR at 160-161, 163, 165-168.) or converts the voluntary payment made by Mutual Pools under the agreement into an acquisition by the Commonwealth of the amount of the payment. It is, however, unnecessary to decide whether that is so. Even if the extinguishment of the chose in action constituted or retrospectively gave rise to an "acquisition of property" within the meaning of those words as used in s.51(xxxi), the Refund Act is, both generally and in its application to the present case, outside the reach of the guarantee of just terms contained in that paragraph.

17. Both generally and in its application to the present case, the Refund Act is a law defining and regulating the entitlement of persons with possibly competing claims (i.e. builders and owners of in situ swimming pools) to a refund of amounts paid to the Commonwealth on account of taxes in circumstances where no tax was, in fact, payable. Its operation is designed to ensure that any refund of amounts so paid is made to a person who has in fact truly borne the burden of the payment. In defining and regulating entitlement to receive such refunds, the Refund Act necessarily affects any rights to a refund which would have existed if it had not been enacted. In some cases, such pre-existing rights are transformed into rights under the Refund Act. In other cases, they are modified or extinguished, without compensation, in favour of some competing claim, such as the claim of a pool owner who has borne the burden of payment and received no refund from the builder who has merely made the actual payment. In the present case where Mr and Mrs Chaplin had borne the burden of the tax, the Refund Act extinguished Mutual Pools' right to receive a refund of the amount paid in respect of Mr and Mrs Chaplin's pool. Any such modification or extinguishment of pre-existing rights without compensation was, however, but an incident of the operation of the law as a law defining and regulating rights of refund and does not impart to any of the provisions of the Refund Act a distinct additional character. It follows that, even if such an extinguishment or modification of some pre-existing right does constitute or bring about an "acquisition of property" within the meaning of those words as used in s.51(xxxi), that incidental operation of the Refund Act does not impart to all or any of its provisions the character of a law with respect to the acquisition of property. It follows that the Refund Act is not within the reach of the guarantee of just terms contained in s.51(xxxi) of the Constitution.

18. There is one further matter which should be mentioned. It is that, even if the requirement of just terms had been applicable, it would seem to us to be arguable that Mutual Pools' suffered no compensable or measurable detriment by reason of the operation of the Refund Act. Such an argument would depend upon the proposition that, if Mutual Pools had obtained a refund of the amount paid in respect of Mr and Mrs Chaplin's pool, the principles of unjust enrichment would have required it to pass on the amount of the refund to Mr and Mrs Chaplin. The validity of that proposition was not, however, examined in argument and it is unnecessary that we express any view in relation to it.

19. The questions asked in the stated case should be answered:
1. Yes.
2. No.

DAWSON AND TOOHEY JJ In Mutual Pools and Staff Pty. Ltd. v. Federal Commissioner of Taxation ((89) (1992) 173 CLR 450.) this Court held that a tax which the defendant purported to impose upon the sale value of swimming pools constructed in situ was in breach of s.55 of the Constitution and of no effect. The plaintiff, who was also the plaintiff in the previous litigation, carries on a business which includes the construction of swimming pools in situ. It is a member of a body called "The Swimming Pool and Spa Association of Australia Ltd." ("SPASA"), which represents the swimming pool and spa industry in Australia. Before the question of the validity of the sales tax upon in situ swimming pools was decided by this Court, SPASA entered into an agreement ("the SPASA agreement") on behalf of its members with the Commissioner of Taxation under which the members agreed to pay the tax upon the basis that, if the relevant legislation were ultimately found to be of no effect, all amounts paid would be repaid together with
interest at the rate specified in the Taxation (Interest on Overpayments) Act 1983 (Cth).

2. On 12 February 1992 this Court decided that the in situ swimming pools tax provisions were of no effect, and on 21 September 1992 the Commonwealth Parliament enacted the Swimming Pools Tax Refund Act 1992 (Cth) ("the Refund Act"). Under that Act the Commonwealth is not liable to make any in situ pool tax refund except as provided ((90) Swimming Pools Tax Refund Act 1992 (Cth), s.4(1).). The tax is to be refunded to the pool builder only to the extent that the pool builder did not pass on the tax in the price of the pool to the pool purchaser or to the extent that the pool builder refunded the tax to the pool purchaser ((91) ibid., s.4(2).). If the pool builder passed on the tax to the pool purchaser and did not refund it, then the Commonwealth is obliged to refund the tax directly to the pool purchaser ((92) ibid., s.4(4).).

3. The plaintiff constructed a swimming pool in situ for a Mr and Mrs Chaplin and paid $1,522 to the Commissioner of Taxation as sales tax on the pool. It alleges that the payment was made pursuant to the SPASA agreement. The amount of $1,522 was passed on in whole by the plaintiff to Mr and Mrs Chaplin and it has refunded no part of that sum to them. The plaintiff contends that the defendant is liable to repay to it the amount of $1,522, but the defendant says that it is not liable to make the payment by reason of the provisions of the Refund Act. The defendant concedes that, if the amount of $1,522 was paid pursuant to the SPASA agreement as alleged by the plaintiff, the defendant was legally obliged, before the Refund Act was enacted, to repay that amount to the plaintiff. The first question reserved for the Court by the case stated should therefore be answered yes. The defendant argues, however, that the situation is now governed by the Refund Act. The only question raised for the determination of the Court is whether the Refund Act is invalid in its application to the circumstances of this case.

4. The plaintiff contends that the Commonwealth Parliament lacked power to pass the Refund Act. Apart from s.51(xxxi), which provides for the acquisition of property on just terms for any purpose in respect of which the Parliament has power to make laws, the plaintiff argues that the defendant is unable to rely upon any other head of legislative power. And it says that, whilst the Refund Act is a law providing for the acquisition of property, it does not provide just terms and the acquisition which it effects is not for any purpose in respect of which the Parliament has power to make laws.

5. It is convenient to turn at once to s.51(xxxi) because, if it applies, it does so to the exclusion of any other legislative power upon which the Commonwealth might seek to rely. It has been observed on a number of occasions that, were it not for s.51(xxxi), many of the other legislative powers of the Commonwealth Parliament would extend incidentally to the acquisition of property. But the presence of s.51(xxxi), requiring, as it does, the provision of just terms, abstracts from those other powers (including the incidental power
under s.51(xxxix) but excluding the territories power under s.122 ((93) Teori Tau v. The Commonwealth (1969) 119 CLR 564.) ) the power to legislate with respect to the acquisition of property for any purpose in respect of which the Parliament has power to make laws and makes s.51(xxxi) the exclusive repository of that power ((94) Johnston Fear and Kingham and The Offset Printing Co. Pty. Ltd. v. The Commonwealth (1943) 67 CLR 314 at 317-318, 325, 331; PJ Magennis Pty. Ltd. v. The Commonwealth (1949) 80 CLR 382 at 401-403; W.H. Blakeley and Co. Pty. Ltd. v. The Commonwealth (1953) 87 CLR 501 at 520-521; Attorney-General (Cth) v. Schmidt (1961) 105 CLR 361 at 370-373; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR 397 at 403, 445.).

9. In this case, the Amending Act was invalid only because it failed to comply with s.55 of the Constitution. If it wished, federal Parliament could have re-enacted the substance of the Amending Act and given it a retrospective operation. While Parliament has chosen to repay the moneys unlawfully collected to those who really paid the tax instead of retrospectively validating the collection of the tax, the Refund Act is still a law with respect to taxation within the meaning of s.51(ii) of the Constitution. Furthermore, neither the Amending Act nor the Refund Act involved or involves an "acquisition" of property within the meaning of s.51(xxxi) of the Constitution. Accordingly, in my opinion, the Refund Act is a valid enactment.

Barring remedies for unlawful conduct
(i) Section 51 and the incidental power 10. The powers conferred by s.51, when read with the incidental power (s.51(xxxix)), are sufficiently comprehensive to enable the Parliament of the Commonwealth to enact laws retrospectively validating the legality of conduct falling within a head of power conferred by s.51. The power of the Parliament to pass retrospective criminal legislation is beyond doubt ((162) Polyukhovich v. The Commonwealth (1991) 172 CLR 501.). Similarly, the federal Parliament can retrospectively validate unlawful conduct either absolutely or conditionally if that conduct is a matter falling within a federal head of power ((163) Talga Ltd. v. MBC International Ltd. (1976) 133 CLR 622.). It must follow that the federal Parliament can legislate to prevent the bringing of an action in respect of that conduct, whether or not it decides to validate the conduct in question. The power to validate the legality of conduct must carry with it the power to prevent any action being brought in respect of that conduct.

(ii) Section 61 and the incidental power 11. The combination of s.61 and the incidental power is another source of power for validating unlawful executive activity or for barring actions in respect of such activity. That combination is sufficiently comprehensive to enable the federal Parliament to prevent the bringing of an action against the executive government in respect of an act done in good faith on behalf of the Commonwealth which, although not authorised by statute, was reasonably related to a power vested in the executive government. Thus, subject to the Constitution, s.51(ii) confers power on the Parliament of the Commonwealth to make laws with respect to taxation. Collecting moneys paid in discharge of taxation liabilities, imposed by a federal statute, is a function of the executive government of the Commonwealth. It is part of the executive
power of the Commonwealth within the meaning of s.61 of the Constitution and can properly be regarded as "incidental to the execution of (a) power vested by this Constitution in the Parliament ... or in the Government of the Commonwealth" within the meaning of s.51(xxxix) of the Constitution even if the assessment imposing the tax is unlawful. If the action of the executive government was carried out in good faith and could reasonably be referred to such a power, it can fairly be regarded as incidental to that power. In s.51(xxxix), matters incidental to the execution of the powers specified in that paragraph should not be construed as encompassing only intra vires actions. Mistaken, but honest and reasonable, actions taken to execute and maintain a valid law of the Commonwealth can be regarded as incidental to the execution of a power vested by the Constitution in the government of the Commonwealth.

12. In Werrin v. The Commonwealth ((164) (1938) 59 CLR 150.), the Court upheld the validity of s.12A of the Sales Tax Procedure Act 1934 (Cth) which was passed to prevent the recovery of taxes which ought not to have been paid having regard to the decision of this Court in Deputy Federal Commissioner of Taxation (S.A.) v. Ellis and Clark Ltd. ((165) (1934) 52 CLR 85.). That case held that sales tax was not payable on goods which had gone into consumption. After the decision in Ellis and Clark Ltd., s.12A of the Sales Tax Procedure Act was enacted and provided that where money had been paid as sales tax in respect of any goods, a person was not entitled to a refund of the tax paid upon the ground that, at the time that the tax was paid, the goods had already gone into use and consumption.

13. The members of the Court who held that s.12A was valid gave different reasons for their conclusions. Rich J said ((166) Werrin (1938) 59 CLR at 161.) that "it was clearly within the competence of the federal Parliament to say that a sum of money erroneously collected under a tax Act by administrative officers acting in good faith should be retained". Starke J said that the legislation was a law with respect to the subject of taxation. Dixon J said ((167) ibid. at 164-165.) that probably more than one head of power could be relied upon as enabling the federal Parliament "to bar a liability otherwise resting upon the Crown in respect of tax mistakenly levied upon the subject under the provisions of a taxing statute". But his Honour based his decision on the ground that the law was a law with respect to a matter incidental to the execution of a power vested in the government of the Commonwealth within the meaning of s.61 and s.51(xxxix) of the Constitution.

14. Werrin has no binding ratio decidendi. But the judgment of Dixon J shows that s.51(xxxix) and s.61 as well as the various heads of power conferred by s.51 can be the source of legislation preventing
the recovery of money unlawfully collected by the executive government. However in applying the remarks of his Honour, the background to the enactment of s.12A must be kept in mind. Werrin was a case where the taxation authorities had acted in good faith on a view of the legislation which was clearly open. It does not follow that every law purporting to bar the right to recover money unlawfully exacted as a "tax" is necessarily a valid law pursuant to the combination of powers conferred by s.61 and s.51(xxxix). A law barring recovery which is founded on those two provisions must be incidental to the execution of a power vested in the Parliament or "in the Government of the Commonwealth". Barring the right to recover payments will not be incidental to the execution of such a power if what the Executive has done was not done in good faith or had no reasonable connection with a power actually vested in the Executive. However, if the executive government, acting in good faith, has mistakenly collected a tax from a person while purporting to act under a provision of a valid law of the Parliament of the Commonwealth, the combination of s.61 and s.51(xxxix) is sufficiently comprehensive to enable the Parliament to enact a law barring recovery of the tax so paid if the exaction of the tax was reasonably referable to the provision relied upon to found the assessment.

15. Although the combination of s.61 and the incidental power may be sufficient to validate or prevent action in respect of unlawful executive activity in many cases, the power conferred by the various paragraphs of s.51 to pass retrospective laws or to bar remedies is more comprehensive. Conduct may be validated under s.51 even though it was not carried out in good faith or was not reasonably referable to a power vested in the executive government, provided that the conduct in question was within one of the heads of power conferred by s.51. There can be few, if any, examples of a law validating conduct or barring a remedy concerning a subject matter of s.51, which would be valid under the combination of s.61 and s.51(xxxix) but which would not be valid under the relevant head of power conferred by s.51 itself. Thus, s.51(ii) seems the preferable source of power for the enactment of the Refund Act.

Restrictions on the power to validate conduct

16. The power of the federal Parliament to bar remedies or validate
conduct is subject, however, to two restrictions. One is the acquisition of property power (s.51(xxxi) of the Constitution). The other is the principle that what the Parliament cannot do directly, it cannot do indirectly.

17. Where the conduct which the federal Parliament seeks to validate or to protect from legal action involves or involved an acquisition of property, any attempt to validate that conduct or to bar a remedy for the recovery of that property will be invalid unless it complies with the provisions of s.51(xxxi) of the Constitution. That is to say, the legislation validating the acquisition or barring the right to recover the property will be invalid unless it provides "just terms" for the acquisition. It is well established that, so far as possible, the powers conferred by s.51 are to be read subject to the provisions of s.51(xxxi) which are both a source of power to acquire property and a constitutional guarantee that property will be acquired by the Commonwealth only on just terms ((168) Johnston Fear and Kingham and The Offset Printing Co. Pty. Ltd. v. The Commonwealth (1943) 67 CLR 314 at 318; Bank of N.S.W. v. The Commonwealth (1948) 76 CLR 1 at 349, 350; W.H. Blakeley and Co. Pty. Ltd. v. The Commonwealth of Australia (1953) 87 CLR 501 at 520; Attorney-General (Cth) v. Schmidt (1961) 105 CLR 361 at 370-372.).

18. Furthermore, if the federal Parliament had no power to enact the law which gave rise to the conduct or receipt of money or acquisition of property, it would seem to follow that the Parliament cannot validate that conduct, receipt or acquisition or bar remedies in respect of it. In a federation such as Australia, the legislative and executive powers of the federating government are circumscribed. To allow a government of the federation to validate or bar action in respect of conduct purporting to be done under a statute which it had no power to enact would be to usurp the constitutional scheme and set aside the Constitution's allocation of legislative power. If a legislature has no power to enact a statute, its executive government has no power to enforce it. A law purporting to bar the recovery of money collected under such a statute would not be a law with respect to any relevant head of power. Nor would it be a matter incidental to any "power vested by this Constitution" in the Parliament or the government of the Commonwealth within the meaning of s.51(xxxix) of the Constitution. The validity of a law barring the right to recover moneys paid under an invalid enactment cannot depend, therefore, on whether the executive government has acted in good faith and whether its actions are reasonably referable to a "power" conferred by the
invalid enactment. "The Constitution is not to be mocked by substituting executive for legislative interference with freedom" of the citizen ((169) James v. Cowan (1932) AC 542 at 558 per Lord Atkin.). Nor does the federal Parliament acquire any special power to pass validating legislation in cases where the government has spent the moneys raised under the invalid statute. To accept any of these propositions would mean that the taxpayer would be left in the same
position as if the statute imposing the tax was within the constitutional power of the government enacting the statute. "If a State cannot take by unconstitutional means it cannot retain by unconstitutional means." ((170) Amax Potash Ltd. v. Government of
Saskatchewan (1976) 71 DLR (3d) 1 at 12.) This is simply an application of the principle that what the legislature cannot do directly, it cannot do indirectly.

19. In Antill Ranger and Co. Pty. Ltd. v. Commissioner for Motor Transport ((171) (1955) 93 CLR 83.) and Barton v. Commissioner for Motor Transport ((172) (1957) 97 CLR 633.), the Court held invalid legislation enacted by the Parliament of New South Wales abolishing the legal right of the plaintiffs to recover moneys which had been paid by interstate carriers under legislation which the Privy Council subsequently held was in breach of s.92 of the Constitution. Because s.92 withdrew the power to tax interstate carriers, it followed that it prohibited legislation which sought to prevent the recovery of money obtained in breach of s.92. On appeal in the Antill Ranger Case ((173) Commissioner for Motor Transport v. Antill Ranger and Co. Pty. Ltd. (1956) 94 CLR 177 at 179-180.), the Judicial Committee said that "(n)either prospectively nor retrospectively ... can a State law make lawful that which the Constitution says is unlawful". In Deacon v. Grimshaw ((174) (1955) 93 CLR 83.), the Court also held that the legislation considered in Antill Ranger was invalid in so far as it purported to abolish the plaintiff's right of action for the wrongful detention of his motor vehicle during the course of an interstate journey.

20. The principle which is the basis of these cases is equally applicable to cases where the Constitution has not granted to a Parliament the power to enact the statute which it purported to enact. It would be a curious result if the Commonwealth, for example, could bar claims in respect of money obtained by "legislation" outside the scope of the powers affirmatively granted to it by the Constitution even though it could not bar claims for the recovery of money obtained in breach of s.92 of the Constitution. In Canada, the Supreme Court has held that the Provinces of Canada cannot bar remedies in respect of conduct purporting to be authorised by a statute going beyond the Constitution's grant of affirmative powers to the Provinces. Thus, in Amax Potash Ltd. v. Government of Saskatchewan ((175) (1976) 71 DLR (3d) 1.), the Supreme Court held invalid a sub-section of the Proceedings Against the Crown Act, R.S.S. 1965, c.87 which provided that no proceedings would lie against the Crown in respect of anything done under a statutory provision which is, was or may be beyond the jurisdiction of the Legislature. Dickson J, who gave the judgment of the Court, said ((176) ibid. at 12.):

(I)f a statute is found to be ultra vires the Legislature which enacted it, legislation which would have the effect of attaching legal consequences to acts done pursuant to that invalid law must be equally ultra vires because it relates to the same subject-matter as that which was involved in the prior legislation. If a State cannot take by unconstitutional means it cannot retain by unconstitutional means."

21. Consequently, where the Parliament of the Commonwealth has no power to create obligations of the kind which it purported to create, any right to retain property received in discharge of those "obligations" would seem to depend upon private law principles such as change of position etc. The argument for the Commonwealth did not accept that this was so. The Commonwealth contended that, whatever the position may be in other federations, s.78 of the Constitution enabled it to enact legislation preventing the recovery of money owed by the Commonwealth to a taxpayer even though that money had been obtained by force of legislation which was outside the power of the Commonwealth to enact. Section 78 provides:

"The Parliament may make laws conferring rights to proceed against the Commonwealth or a State in respect of matters within the limits of the judicial power."

22. It would be surprising if s.78 was intended to enable the federal Parliament to protect itself against the consequences of enacting a statute beyond its constitutional powers. The primary purpose of s.78 was to ensure that federal Parliament could remove the immunity of the Crown in right of the Commonwealth or the States from actions of tort or breach of contract ((177) See Official Record of the Debates of the
Australasian Federal Convention, Melbourne, 1 March 1898, at 1653-1654.). It is another question whether it was intended to ensure that the Commonwealth could protect itself in respect of conduct which is outside the scope of the powers of the Commonwealth. The principle which is the basis of the decisions in Antill Ranger, Deacon, Barton and Amax Potash Ltd. would be set at nought if s.78 conferred a power so comprehensive that it enables the Commonwealth to protect itself against the consequences of enacting legislation beyond its other powers. It could hardly be thought that s.78 would authorise the Parliament to protect the Commonwealth against the consequences of a breach of s.92 of the Constitution. While the powers conferred by s.51 are conferred "subject to this Constitution", that fact provides no reason why any distinction should be drawn between a law which is invalid because it breaches s.92 and a law which is outside the affirmative grant of powers of the Commonwealth. It seems almost absurd to think that, relying on s.78, the Commonwealth could bar the right to bring an action for the recovery of, or damages for, property acquired by the Commonwealth otherwise than on just terms, contrary to s.51(xxxi) of the Constitution.

23. Section 78 must be read in the context of a constitutional document which allocates powers between the Commonwealth and the States and creates a High Court in which it vests the judicial power of the Commonwealth for the purpose, inter alia, of enforcing the Constitution's allocation of power. Because the Constitution creates the Commonwealth and defines its constitutional powers, rights and duties, the right to sue the Commonwealth in respect of matters concerned with the scope of its constitutional powers is arguably
conferred by the Constitution itself (see covering cl.5 and s.75(iii)). In a case concerned with the scope of the constitutional powers of the Commonwealth, s.75(iii) of the Constitution, which declares that the High Court shall have original jurisdiction in all matters "(i)n which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party", might be thought to be intended to give this Court jurisdiction in a suit which is concerned with the scope of the constitutional powers of the Commonwealth. In that respect, it might be thought that the jurisdiction conferred by s.75(iii) was similar to that conferred by s.75(v), which this Court has said cannot be taken away by Parliament ((178) The Commonwealth v. New South Wales (1923) 32 CLR 200 at 216; R. v. Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 614-617; R. v. Commonwealth Rent Controller; Ex parte National Mutual Life Association of Australasia Ltd. (1947) 75 CLR 361 at 369; quoted with approval in R. v. Central Reference Board; Ex parte Thiess (Repairs) Pty. Ltd. (1948) 77 CLR 123 at 130; O'Toole v. Charles David Pty. Ltd. (1990) 171 CLR 232 at 292,
306.), notwithstanding that s.75(iii) is expressed in terms of parties while s.75(v) is expressed in terms of remedies. If the Constitution does confer the right to proceed against the Commonwealth in this Court in respect of constitutional matters, the jurisdiction conferred should extend to the determination of any question or claim which is not severable from the determination of the scope of the constitutional powers of the Commonwealth ((179) cf. Philip Morris Inc. v. Adam P Brown Male Fashions Pty. Ltd. (1981) 148 CLR 457.).

24. In The Commonwealth v. New South Wales ((180) (1923) 32 CLR 200.),
the Court held that s.75(iii) of the Constitution conferred jurisdiction on the Court to hear an action in tort brought by the Commonwealth against a State without the consent of the State. The decision in The Commonwealth v. New South Wales has never been overruled although later cases have virtually ignored its reasoning and acted as if ss.75 and 78 of the Constitution and ss.39, 56 and 64 of the Judiciary Act 1903 (Cth) or some combination of them is the source of the Commonwealth's liability in tort and contract ((181) See Maguire v. Simpson (1977) 139 CLR 362; The Commonwealth v. Evans Deakin Industries Ltd. (1986) 161 CLR 254 at 263-264; Breavington v. Godleman (1988) 169 CLR 41 at 68-69 per Mason CJ, 101-105 per Wilson and Gaudron JJ, 117-118 per Brennan J, 139-140 per Deane J, 151-153 per

Dawson J, 169 per Toohey J See also Cowen and Zines, Federal
Jurisdiction in Australia, 2nd ed. (1978) at 35-38; Wynes, Legislative, Executive and Judicial Powers in Australia, 5th ed. (1976)
at 455-461.). However, even if, as I think is the case, s.75(iii) is not itself the source of the Commonwealth's liability in tort and contract, it may well be that its inclusion in the Constitution enables an action to be brought against the Commonwealth in this Court in respect of matters concerning, or not severable from, the scope of the Commonwealth's constitutional powers. In that event it would not be open to the federal Parliament to bar the right to proceed against the Commonwealth in respect of the scope of its constitutional powers.

25. However, irrespective of the basis of the liability of the Commonwealth to be sued in this Court, I am of the opinion that the Refund Act was authorised by s.51(ii) of the Constitution and does not involve any acquisition of property within the meaning of s.51(xxxi). It is therefore not necessary for the Commonwealth to rely on s.78 to support the Refund Act.

The source of validity of the Refund Act

26. In my opinion, subject to the question whether the Refund Act acquired the property of the taxpayer for the purposes of s.51(xxxi),
it was authorised by the provisions of s.51(ii) of the Constitution ((182) If the Refund Act constituted an acquisition of property "for any purpose in respect of which the Parliament has power to make laws", the only source of power to make the law would be s.51(xxxi): Johnston Fear (1943) 67 CLR at 318; W.H. Blakeley
(1953) 87 CLR at 521. Thus, a law for the acquisition of a
building for the Department of Taxation is a law made under s.51(xxxi) and not s.51(ii).). It was not, and could not be, disputed that, if the Federal Parliament had re-enacted the substance of the Amending Act and made it operate retrospectively, such an Act would have been a valid law with respect to taxation within the meaning of s.51(ii) of the Constitution. Furthermore, it would have been a law with respect to taxation even if it provided that amounts paid under the Amending Act were to be "confiscated" and credited towards the liability of the taxpayer under the re-enacted legislation ((183) Air Canada v. British Columbia (1989) 59 DLR (4th) 161.). Does it make any difference that the Refund Act does not impose a retrospective tax but provides that the moneys refundable by the Commonwealth as the result of the invalidity of the Amending Act are only to be paid in accordance with the provisions of the Refund Act, which in some
instances, is to persons other than those who paid the tax?

27. If the Refund Act had provided for no more than a procedure for repaying the sums collected under the Amending Act to those who had paid those sums, it would undoubtedly be a law with respect to taxation. Although such a hypothetical enactment would not itself impose a tax, the repayment of moneys wrongly collected as taxes is an incident of the subject matter of taxation; a law dealing with the consequences of an invalid attempt to collect a tax is as much a law with respect to taxation as a law providing for the refund of taxes overpaid. Although it is likely that, in many cases falling within the operation of the Refund Act, the repayment of the "tax" will be made to a person other than the taxpayer - because the burden of the tax was passed onto that person - the Refund Act is a law which deals with the repayment of moneys unlawfully collected as taxes. It is, therefore, a law with respect to taxation.

28. Furthermore, the present case is not one which is concerned with an attempt by the Commonwealth to retain moneys obtained or exacted by legislation outside the scope of its constitutional powers. The Amending Act, although invalid by reason of its failure to comply with s.55 of the Constitution, was nevertheless a law with respect to taxation within the meaning of s.51(ii) of the Constitution. Furthermore, to uphold the validity of the Refund Act does not undermine the constitutional purpose which is performed by s.55, for it was open to the Senate to delete or amend any provision of the Refund Act. The Refund Act does not suffer from the defect which brought down the Amending Act.

29. Accordingly, in my opinion, the Refund Act was a law authorised by
s.51(ii) of the Constitution.

The effect of s.51(xxxi)

30. Section 51(xxxi) provides that the Parliament may make laws with respect to "(t)he 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". Whether or not the Commonwealth has acquired property in a particular case is to be examined as a matter of substance and not form ((184) Bank of N.S.W. v. The Commonwealth (1948) 76 CLR at 349; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR 397 at 407.). If legislation involves an acquisition of property for the purpose of s.51(xxxi), it must comply with the terms of that paragraph ((185) Johnston Fear (1943) 67 CLR at 318; W.H. Blakeley (1953) 87 CLR at 521; Schmidt (1961) 105 CLR at 371-372.). Section 51(xxxi) is, therefore, both a source of power and a guarantee that the property of a State or an individual citizen will not be sacrificed for the public welfare of the Commonwealth. If the Parliament wishes to acquire property belonging to a State or individual, the cost of the acquisition has to be borne by the taxpayers of the Commonwealth and not by the owner of the property. However, not every taking or receipt of property by the Commonwealth constitutes an acquisition of property for the purpose of s.51(xxxi). In Attorney-General (Cth) v. Schmidt ((186) (1961) 105 CLR 361 at 372.), Dixon CJ, with the concurrence of Fullagar, Kitto, Taylor and Windeyer JJ, said that s.51(xxxi) "does not mean that property can never pass to or become vested in the Commonwealth or its officers except under a law made in pursuance of" that paragraph.

31. When the taking of property is an inevitable consequence of the exercise of a power conferred by s.51 ((187) See The Commonwealth v. Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 282 per Deane J) or is a reasonably proportional consequence of a breach of a law passed under one of those powers, no acquisition of property within the meaning of s.51(xxxi) takes place. Although s.51(xxxi) abstracts the power of acquisition from other legislative powers in s.51, it cannot be interpreted so broadly as to render meaningless the legitimate use and operation of other powers conferred by s.51. The compound conception ((188) Grace Brothers Pty. Ltd. v. The Commonwealth (1946) 72 CLR 269 at 290 per Dixon J) of an "acquisition of property on just terms" predicates a compulsory transfer of property from a State or person in circumstances which require that the acquirer should pay fair compensation to the transferor. When, by a law of the Parliament, the Commonwealth or someone on its behalf compulsorily acquires property in circumstances which make the notion of fair compensation to the transferor irrelevant or incongruous, s.51(xxxi) has no operation. Thus, property taken from the citizen by taxation is in substance an acquisition of property but it is not an acquisition of property for the purposes of s.51(xxxi). It has often been suggested, however, that taxation is outside the operation of s.51(xxxi) because taxation consists of no more than the creation and discharge of a debt to the Commonwealth. On this theory, the moneys paid by the taxpayer simply discharge the debt owed to the Commonwealth ((189) Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR at 453-454; MacCormick v. Federal Commissioner of Taxation (1984) 158 CLR 622 at 638-639; Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR 480 at 527.). However, the purpose behind s.51(xxxi) would be but a pious aspiration if the terms of that paragraph could be avoided by the device of raising a debt and then requiring the citizen to pay it or have his or her property sequestrated. Furthermore, the creation of debt theory does not explain the provisional tax cases. The Court has held that the system of provisional taxation does not constitute an acquisition of property for the purpose of s.51(xxxi) notwithstanding that, at the time of payment of provisional taxation, no debt has been incurred by the taxpayer ((190) Commissioner of Taxation v. Clyne (1958) 100 CLR 246 at 263, 270; and see Moore v. The Commonwealth (1951) 82 CLR 547.). In Commissioner of Taxation v. Clyne ((191) (1958) 100 CLR at 263.), Dixon CJ said that once it was held that the system of provisional taxation was authorised by s.51(ii) "it seems absurd to say that, within the meaning of s.51(xxxi.), the sums paid or payable as provisional tax constitute property acquired for a purpose in respect of which the Parliament has power to make laws". His Honour pointed out that the very purpose of the power conferred by s.51(ii) is to enable the Commonwealth to raise moneys for public purposes.

32. Although I have previously been attracted to the view that
taxation does not involve any acquisition of property by the Commonwealth ((192) See Australian Tape Manufacturers (1993) 176 CLR at 528 where I agreed generally with the reasons of Dawson and Toohey JJ) the elaborate argument on s.51(xxxi) which the Court heard in this case and the associated cases of Health Insurance Commission v.
Peverill ((193) Unreported, 9 March 1994.) and Georgiadis v. Australian and Overseas Telecommunications Corporation ((194) Unreported, 9 March 1994.) has convinced me that Deane J was correct when he expressed the view in The Commonwealth v. Tasmania (The Tasmanian Dam Case) ((195) (1983) 158 CLR 1 at 282.) that compulsory taxation does involve an acquisition of property but is nevertheless outside the scope of s.51(xxxi) ((196) cf. Epstein, Takings; Private Property and the Power of Eminent Domain, (1985) at 100, 285.). This is because the exercise of the taxation power necessarily involves an acquisition of property from the taxpayer.

33. Similarly, when a statute provides for the forfeiture of property obtained in breach of Commonwealth law even when the property has passed into the hands of a bona fide purchaser for value, the case is outside s.51(xxxi). The notion that the Commonwealth should pay fair compensation to the owner of the property in such a situation is simply absurd. In Burton v. Honan ((197) (1952) 86 CLR 169.), the Court upheld the validity of provisions of the Customs Act 1901 (Cth) which provided, inter alia, for the forfeiture of goods obtained as the result of breaches of the Customs (Import Licensing) Regulations. Dixon CJ said ((198) ibid. at 180-181.):

"(T)he whole matter lies outside the power given by s.51(xxxi.). It is not an acquisition of property for any purpose in respect of which the Parliament has power to make laws. It is nothing but forfeiture imposed on all persons in derogation of any rights such persons might otherwise have in relation to the goods, a forfeiture imposed as part of the incidental power for the purpose of vindicating the Customs laws. It has no more to do with the acquisition of property for a purpose in respect of which the Parliament has power to make laws within s.51(xxxi.) than has the imposition of taxation itself, or the forfeiture of goods in the hands of the actual offender."

34. Similarly, in Schmidt, the Court upheld legislation, the effect of which was (1) to preclude the return to German ownership of property, taken control of in Australia in wartime, and (2) to apply the property in or towards the satisfaction of claims upon Germany for war reparations. The Court held that the legislation was a valid law with respect to the defence power. Dixon CJ said ((199) Schmidt (1961) 105 CLR at 373.) that the "whole subject is altogether outside the scope of s.51(xxxi)".

35. Thus, Burton, Schmidt and Clyne establish that, if the purpose of a law passed under s.51 is to impose sanctions for breach of a law passed under that section or to use the property of alien enemies to satisfy war reparations or to facilitate the collection of taxes, that law is not within the scope of s.51(xxxi) even though it incidentally or even directly results in the Commonwealth acquiring the property of a State or person. Such a law is not a law for the acquisition of property for a purpose "in respect of which the Parliament has power to make laws" but an exercise of the power itself. It would have been absurd, for example, to construe the laws considered in Burton and Clyne as providing for the acquisition of property for the purposes of s.51(xxxi). The notion of paying compensation for the property acquired was incompatible with the purpose for which the law was enacted and the power exercised. The nature of the law considered in Schmidt was no doubt more debatable. However, the three cases are authority for the general proposition that, where the particular implementation of a valid exercise of s.51 power necessarily involves an acquisition of property or is a reasonably proportional sanction for a breach of a s.51 law, the acquisition is outside the scope of s.51(xxxi).

The Refund Act does not involve an acquisition of property for the
purpose of s.51(xxxi)

36. In the light of these principles, the Refund Act does not involve
any acquisition of property for the purpose of s.51(xxxi).

37. No doubt the promise made by the Commissioner on behalf of the Commonwealth to repay the money constituted a chose in action enforceable against the Commonwealth. The chose in action was also property for the purpose of s.51(xxxi) ((200) Minister of State for the Army v. Dalziel (1944) 68 CLR 261 at 290; Bank of N.S.W. v. The Commonwealth (1948) 76 CLR at 299, 349.). In some circumstances, it could attract the protection of that paragraph. For example, the chose in action would constitute property for the purpose of s.51(xxxi) if a federal enactment purported to acquire all the property of the plaintiff.

38. Furthermore, in substance the Commonwealth has acquired the chose in action of the plaintiff. In The Tasmanian Dam Case ((201) (1983) 158 CLR at 145.), Mason J pointed out:

"(I)t is not enough that 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".

The Refund Act, however, did more than terminate the plaintiff's pre-existing right to payment of the sum of $1,522 and interest. Its effect was to increase, albeit momentarily, the assets of the
Commonwealth when the chose in action of the plaintiff was extinguished. True it is that the Commonwealth immediately thereafter came under a new obligation to repay the moneys collected under the Amendment Act. Nevertheless, although in form the Commonwealth did not acquire the debt it owed to the plaintiff, in substance it did. The Refund Act had the effect of increasing the value of its own assets, albeit momentarily, by the precise amount of the debt and
interest which it owed to the plaintiff. It is true that the Commonwealth did not obtain any new proprietary interest as the result of the Refund Act. But it was the direct beneficiary of the taking of the plaintiff's property.

39. In construing an important constitutional guarantee such as s.51(xxxi), the Court must be astute to ensure that the Parliament does not evade the guarantee by devices which have the effect that in substance, although not in form, the Commonwealth acquires the property of a State or individual without providing just terms. What may be regarded as an extinguishment and not an acquisition of property rights under the general law of property may have to be regarded differently in the context of a constitutional guarantee such as s.51(xxxi). Thus, when the Parliament legislates so as to extinguish a property right of a person or State which is not dependent for its continued existence on federal law and the effect of the extinguishment is to vest a corresponding benefit of commensurate value in the Commonwealth, the law should be characterised as one providing for the acquisition of the property of that person or State by the Commonwealth. Thus, if the Commonwealth legislates to abolish a right of way over its land, it acquires that right of way even
though the legislation does no more than free the land of an encumbrance. Similarly, when the Parliament legislates to abolish a debt of the Commonwealth, the legislation should be seen as an acquisition of property by the Commonwealth. The common law has never treated "indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money" ((202) Young v. Queensland Trustees Ltd. (1956) 99 CLR 560 at 567.). In a case such as the present, the substantial effect of the legislation is that the Commonwealth acquires that sum of money for itself.

40. Nevertheless, the Refund Act did not involve an acquisition of property for the purpose of s.51(xxxi). If the Parliament had re-enacted the substance of the Amending Act, given it a retrospective operation, and provided that moneys paid under the invalid Amending
Act were to be set off against the taxes levied under the re-enactment, no question of acquisition of property would arise ((203) cf. Air Canada v. British Columbia (1989) 59 DLR (4th) 161.). If, in those circumstances, the Commonwealth would not have acquired the property of the plaintiff for the purposes of s.51(xxxi) of the Constitution, how can its election to enact the Refund Act to repay those moneys to those who have borne the burden of the invalid tax constitute an acquisition of property for the purpose of s.51(xxxi)?

41. The purpose of the Refund Act is to repay the "taxes" unlawfully
obtained as the result of the enforcement of a law which was authorised by the taxation power but invalid because it breached s.55 of the Constitution. It is correctly characterised as a law with respect to taxation for the purpose of s.51(ii). What is validly within s.51(ii) is outside s.51(xxxi), for the two powers are mutually exclusive. In so far as the Refund Act acquires property, it does so incidentally. The acquisition of property is merely an incident of a law which seeks to repay invalid taxes to those who have really borne the burden of paying the "taxes". An enactment can fall within s.51(ii) and outside the operation of s.51(xxxi) even though it provides for the acquisition of property and does not itself impose a tax, provided that it is a law with respect to taxation. Thus, in Clyne, the imposition of provisional tax was held to be outside s.51(xxxi) even though the liability to pay provisional tax was "not a separate tax but a liability ancillary to the income tax and social service contribution which s.17 of the Assessment Act provides shall be levied and paid ... for each financial year, upon the taxable income derived during the year of income by any person" ((204) (1958) 100 CLR at 260 per Dixon CJ). Consequently, the Refund Act did not effect an acquisition of property for the purpose of s.51(xxxi).

42. The questions in the case stated should be answered as follows:
Q.(1) Yes.
Q.(2) No.