Peverill, R.E. v Health Insurance Commission
[1991] FCA 643
•29 OCTOBER 1991
Re: RICHARD EDWIN PEVERILL
And: HEALTH INSURANCE COMMISSION
Nos. N G688 and 689 of 1990
FED No. 643
Constitutional Law - Health Insurance Act
(1991) 104 ALR 449
(1991) 32 FCR 133
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J.(1)
CATCHWORDS
Constitutional Law - s. 51(xxxi) of the Constitution - whether there was an acquisition in circumstances where a debt owed by the Commonwealth was eliminated in part by retrospective legislation - discussion of the principle that a broad meaning should be contributed to a constitutional guarantee - whether "just terms" were provided - whether it is possible to find just terms in the absence of provision of the pecuniary equivalent of the property acquired.
Health Insurance Act - retrospective amendment to pathology services provisions.
Constitution Act, s. 51(xxxi)
Health Insurance Act 1973, ss. 20, 20A and Schedule 1A
Health Insurance (Pathology Services) Amendment Act 1991, ss. 5 and 6
HEARING
SYDNEY
#DATE 29:10:1991
Counsel for the Applicant: Mr J.J. Spigelman QC with Dr G.A.
Flick and Mr M. Christie
Solicitors for the Applicant: Messrs Morris Fletcher and Cross
Counsel for the Respondent: Mr D.J.S. Jackson QC with Mr J.C. Sheahan
Solicitors for the Respondent: Australian Government Solicitor
ORDER
The applicant bring in Short Minutes of Orders to reflect the reasons of the court.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
By his application and amended statement of claim in matter number G688 of 1990, the applicant, a specialist pathologist with a large practice in Queensland and the Northern Territory, sued the respondent, the Health Insurance Commission. Dr Peverill alleged that moneys, being medicare benefits, were payable to him in respect of pathology services, rendered in various laboratories between 3 December 1984 and 31 July 1989, by virtue of s. 20 of the Health Insurance Act 1973, the right to receive the payments having been assigned to him under s. 20A of that Act. The pathology services were stated to have involved the performance of quantitative estimations of Rubella specific immunoglobulin G or Rubella specific immunoglobulin M by fluorescent immunoassay or enzyme immunoassay, each falling within item 1345 of Schedule 1A to the Health Insurance Act 1973 (or previous schedule provisions which that item of Schedule 1A replaced).
In earlier proceedings, treated at that time as test cases, the application of item 1345 of the Schedule, as well as of certain other items, was determined in relation to selected services. My decision in those matters, which was published on 3 April 1990, is reported: Peverill v Meir (1990) 95 ALR 401. An appeal from that decision was discontinued. Thereafter, the parties remained in difference, and matter number G 688 of 1990 was launched by the filing of an application on 3 December 1990.
By its further amended defence filed 3 May 1991, the respondent alleged (inter alia):
"21(a) Each of the substances referred to in paragraph 16 of the
Amended Statement of Claim (this paragraph alleged that relevant pathology services were services `which quantitatively estimated a substance') is a microbiological antibody.
(b) The quantitative estimation of substances referred to in paragraph 16 of the Amended Statement of Claim is excluded from item 1345 of the Schedule referred to in the Statement of Claim by the Health Insurance (Pathology Services) Amendment Act 1991.
(c) In the premises the Respondent is not liable to pay the Applicant for performance of any of the pathology services set forth in paragraph 15 of the Amended Statement of Claim under item 1345 of the Schedule.
22 As to such of the pathology services referred to in paragraph 15 of the Amended Statement of Claim as were performed using the procedure known as `enzyme immunoassay', such services fall and are to be taken to have fallen at all material times within item 2294(3) or 2294(4) of the said schedule, pursuant to the Health Insurance (Pathology Services) Amendment Act 1991. 23 Pursuant to Section 6 of the Health Insurance (Pathology Services) Amendment Act 1991, the amount which the Applicant is to be taken to have been entitled to receive in respect of the pathology services referred to in paragraph 15 of the Amended Statement of Claim is the amount of the benefit in fact paid to him."
By paragraph 10 of the applicant's further amended reply, the applicant pleaded (inter alia):
"10 In answer to paragraphs 21, 22 and 23 of the Further Amended Defence, the Applicant maintains that the Health Insurance (Pathology Services) Amendment Act 1991 (Cth) is ultra vires and beyond the power of the Parliament of the Commonwealth. Particulars
(i) The Health Insurance (Pathology Services) Amendment Act 1991, is a law providing for the acquisition of property other than on just terms contrary to Placitum 51(xxxi) of the Constitution of the Commonwealth of Australia;
(ii) The Health Insurance (Pathology Services) Amendment Act 1991 purports to insert into the Health Insurance Act 1973 provisions imposing taxation contrary to s. 55 of the Constitution."
It was ordered by consent that the issues raised by paras. 21, 22 and 23 of the respondent's further amended defence and by para. 10 of the applicant's further amended reply be decided separately, and that the question of costs be reserved. Appropriate notices, in relation to this action and the action mentioned below, were given under s. 78B of the Judiciary Act 1903. There has been no intervention by any Attorney-General.
In matter number G 689 of 1990, similar claims were made by Dr Peverill in respect of various other pathology services, alleged to have involved the quantitative estimation of substances, for which payment was claimed under item 1345. The same defences were raised under the retrospective provisions of the Health Insurance (Pathology Services) Amendment Act 1991, and the same reply was pleaded in response. The same order was made, by consent, for the separate decision of the questions thus raised, and it was also ordered, by consent, that the matters be heard together.
At relevant times, the Health Insurance Act (by virtue of s. 9 and of the definitions of "pathology service", "table" and "pathology services table" contained in s. 3), provided that medicare benefits in respect of pathology services, such as those with which these matters are concerned, "shall be calculated by reference to the fees" set out in Schedule 1A (or earlier versions of it). See Peverill v Meir (supra, at 402-403). By s. 10, read in the light of the definitions in s. 3, a medicare benefit, calculated in accordance with s. 10(2)(b), was declared to be "payable, subject to and in accordance with this Act", in respect of pathology services of the kind in question. Section 20(1) (and see also s. 125) provided:
"Subject to this Part, medicare benefit in respect of a professional service is payable by the Commission on behalf of the Commonwealth to the person who incurs the medical expenses in respect of that service."
Section 20A then provided:
"(1) Where a medicare benefit is payable to an eligible person in respect of a professional service rendered to the eligible person or to another eligible person, the first-mentioned eligible person and the person by whom, or on whose behalf, the professional service is rendered (in this sub-section referred to as `the practitioner') may enter into an agreement, in accordance with the approved form, under which -
(a) The first-mentioned eligible person assigns his right to the payment of the medicare benefit to the practitioner; and
(b) The practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first-mentioned eligible person.
(2) Where a practitioner determines that a pathology service is necessary to be rendered to an eligible person, the person to whom medicare benefit would be payable in respect of that service may, in accordance with the approved form, make an offer to the approved pathology practitioner by whom, or on whose behalf, the pathology service is to be rendered to enter into an agreement with him under sub-section (1), when the pathology service is so rendered, with respect to the medicare benefit payable in respect of the pathology service so rendered.
(3) Where an assignment under this section takes effect, or an agreement under this section is entered into, with respect to a medicare benefit, the medicare benefit is, subject to section 20B, payable in accordance with the assignment or the agreement, as the case may be.
. . .
(5) An assignment of a medicare benefit shall not be made except in accordance with this section."
Item 1345 of Schedule 1A referred to a "Quantitative estimation of - (numerous substances were specified) or any other substance not specified in any other item in this Division - each estimation". The whole of the item will be found set out in Peverill v Meir (supra, at 405).
In Peverill v Meir, one of the questions raised was whether the testing of a patient's serum for Rubella specific immunoglobulin G and immunoglobulin M by enzyme immunoassay (the test commonly referred to as the "Elisa" test) attracted the payment specified for item 1345, or that for item 2294. I held that item 1345 applied.
The Health Insurance (Pathology Services) Amendment Act 1991, (which I shall call the Amendment Act) was assented to on 24 April 1991. It effected certain amendments to Schedule 1A to the Health Insurance Act 1973. Section 5 inserted, in each of items 1345 and 1346, the exception "(other than a microbiological or tissue antigen or antibody)" after the word "substance". This amendment was made to commence "(i)mmediately after the commencement of section 52 of the Health Legislation Amendment Act 1986 on 1 August 1986". It was by section 52 that Schedule 1A was introduced into the Health Insurance Act. Previously, pathology services were incorporated in Schedule 1. Section 5 of the Amendment Act also inserted, with the same provision for its commencement, additional sub-items (3) and (4) in items 2294 and 2295, carrying significantly higher fees than 2294 and 2295 originally carried, but significantly less than the fees for items 1345 and 1346. The new sub-items (3) and (4) of items 2294 and 2295 were the following:
"(3) Enzyme-linked immunosorbent assay (ELISA) for a microbiological or tissue antigen or antibody where that antigen or antibody is not specified elsewhere in the Schedule - one test
(4) Each test referred to in the above item in excess of one".
Other provisions of the Amendment Act made similar changes to items 1345 and 1346, to be taken to have commenced on 1 January 1980, and similar amendments to items 2294 and 2295, to be taken to have commenced on 1 March 1984, 15 June 1984 and 14 March 1986. Corresponding provisions were also made in respect of pathology services tables prescribed for the purposes of s. 4A(2) of the Health Insurance Act (which authorized variations of the table by ministerial determination) and s. 4(2) (which authorized variations by regulation). All these various retrospective amendments were effected by ss. 4 and 5 of the Amendment Act. Section 6, headed "Transitional", then provided:
"6(1) Where:
(a) before the commencement of this section, a person made a claim for payment of a benefit in respect of a service by reference to an item that, because of the retrospective operation of a provision of section 4 or 5, did not relate to the service; and
(b) the person has been paid in respect of the service a benefit calculated by reference to the fees specified in that item;
the person is taken to have been entitled to receive in respect of the service the amount of benefit that was paid.
(2) Where:
(a) before the commencement of this section, a person made a claim for payment of a benefit in respect of a service by reference to an item that, because of the retrospective operation of a provision of section 4 or 5, related to the service; and
(b) the person has been paid in respect of the service a benefit calculated by reference to the fees specified in another item;
the person is taken to be entitled to receive in respect of the service the higher of:
(c) the amount of the benefit payable in respect of the service; and
(d) the amount of benefit that was paid.
(3) Where:
(a) before the commencement of this section, a person made a claim for payment of a benefit in respect of a service by reference to an item that, because of the retrospective operation of a provision of section 4 or 5, did not relate to the service; and
(b) the person has been paid in respect of the service a benefit calculated by reference to the fees specified in the item that, because of the retrospective operation of a provision of section 4 or 5, related to the service;
the person is taken to have been entitled to receive in respect of the service the amount of benefit that was paid.
(4) Where:
(a) before the commencement of this section, a person made a claim for payment of a benefit in respect of a service by reference to an item that, because of the retrospective operation of a provision of section 4 or 5, did not relate to the service; and
(b) subsection (3) does not apply to the person; and
(c) the person has been paid in respect of the service a benefit calculated by reference to the fees specified in another item;
the person is taken to be entitled to receive the higher of:
(d) the amount of the benefit payable in respect of the service; and
(e) the amount of benefit that was paid.
(5) If, apart from this subsection, an amount to which a person is taken to be, or to have been, entitled under this section, would not be an amount payable by the Commonwealth under Part II of the Principal Act, that amount is taken, for the purposes of section 125 of the Act, to be an amount payable by the Commonwealth under that Part."
The effect of the amendments was to reduce retrospectively the amounts payable in respect of tests for Rubella, for example, by approximately one half.
It was not suggested, of course, that the retrospective nature of the legislation in itself provided any ground for an attack on its validity: cf. Polyukhovich v Commonwealth of Australia (1991) 101 ALR 545; R v Kidman (1915) 20 CLR 425.
The principal challenge to the Amendment Act was based on s. 51(xxxi) of the Constitution, which provides:
"The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to:-
. . .
(xxxi) 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".
Although the terms of placitum xxxi might possibly have suggested, at first sight, that it should be regarded as an express conferral upon the Commonwealth Parliament of a limited power of eminent domain (to use the language of American constitutional law), it is settled that in truth a constitutional guarantee is involved. In Clunies-Ross v The Commonwealth of Australia (1984) 155 CLR 193 at 201-202, the joint judgment of six justices of the High Court declared:
"(T)he plenary grant of legislative power contained in s. 51(xxxi) has assumed the status of a constitutional guarantee of just terms (Minister of State for the Army v Dalziel (1944) 68 CLR 261, at pp 276, 284-285) and is to be given the liberal construction appropriate to such a constitutional provision: see Attorney-General (Cth) v Schmidt (1961) 105 CLR, at pp 370-372."
The proposition that a constitutional guarantee, and in particular placitum xxxi, should be liberally construed has been emphasized and elaborated in a number of cases. A constitution, especially a provision of it which has been framed as a constitutional guarantee, is a charter for the government, institutions and freedoms of a people. To construe a constitutional guarantee narrowly would be by that to diminish it and the Constitution. Repeatedly, and in various forms, this fundamental principle is laid down in the cases. In Hematite Petroleum Proprietary Limited v The State of Victoria (1983) 151 CLR 599 at 633 Mason J. referred to "(t)he philosophy ... that in applying constitutional prohibitions or guarantees the Court should not look beyond the direct legal operation of the impugned law according to its terms." He commented:
"It is a philosophy with which I profoundly disagree. It is necessary to examine the practical operation of a law as well as its terms in order to ascertain whether it imposes an excise (the case was concerned with s. 90) ... . Otherwise the constitutional prohibition is reduced to a formula which lends itself to evasion."
Earlier (at 632) Mason J. had referred to a statement of Dixon J. which, with respect to the application of the constitutional provision in question, had given primacy to "the substantial effect" of the impugned legislation. In the same case (at 662-663), Deane J. made it clear that the test was "the substance of the operation of the statute, rather than merely its form", citing from the judgment of Barwick C.J. in Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 186, and setting out a passage from the judgment of Isaacs J. in The Commonwealth and Commonwealth Oil Refineries Ltd v South Australia (1926) 38 CLR 408 at 423. Isaacs J. there said:
"The prohibitions of ss. 90 and 92 of the Constitution may be transgressed not merely by a direct and avowed contravention. They are transgressed also by a statute ... if it operates in the end by its own force so as to do substantially the same thing as a direct contravention would do, either in attaining a forbidden result or in using forbidden means. The relevant constitutional prohibitions include both means and results."
In The Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276 Latham C.J. said of placitum xxxi:
"The provision in the Constitution is plainly intended for the protection of the subject, and should be liberally interpreted."
Rich J. (at 284-285) said:
"What we are concerned with is not a private document creating rights inter partes, but a Constitution containing a provision of a fundamental character designed to protect citizens from being deprived of their property by the Sovereign State except upon just terms. The meaning of property in such a connection must be determined upon general principles of jurisprudence, not by the artificial refinements of any particular legal system or by reference to Sheppard's Touchstone. The language used is perfectly general. It says the acquisition of property. It is not restricted to acquisition by particular methods or of particular types of interest, or to particular types of property. It extends to any acquisition of any interest in any property. It authorizes such acquisition, but it expressly imposes two conditions on every such acquisition. It must be upon just terms, and it must be for a purpose in respect of which the Parliament has power to make laws."
In Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 349-350 Dixon J. (in a passage substantially quoted in Attorney-General of the Commonwealth v Schmidt (1961) 105 CLR 361 at 370-371 and by Mason J. in The Commonwealth of Australia v The State of Tasmania (the Tasmanian Dam case) (1983) 158 CLR 1 at 145), after referring to the manner in which "(t)he company and its shareholders are in a real sense, although not formally, stripped of the possession and control of the entire undertaking", said:
"Upon consideration I have reached the conclusion that this is but a circuitous device to acquire indirectly the substance of a proprietary interest without at once providing the just terms guaranteed by s. 51(xxxi) of the Constitution when that is done. I take Minister of State for the Army v Dalziel (1944) 68 CLR 261 to mean that s. 51(xxxi) is not to be confined pedantically to the taking of title by the Commonwealth to some specific estate or interest in land recognized at law or in equity and to some specific form of property in a chattel or chose in action similarly recognized, but that it extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property. Section 51(xxxi) serves a double purpose. It provides the Commonwealth Parliament with a legislative power of acquiring property: at the same time as a condition upon the exercise of the power it provides the individual or the State, affected with a protection against governmental interferences with his proprietary rights without just recompense. In both aspects consistency with the principles upon which constitutional provisions are interpreted and applied demands that the paragraph should be given as full and flexible an operation as will cover the objects it was designed to effect. Moreover, when a constitution undertakes to forbid or restrain some legislative course, there can be no prohibition to which it is more proper to apply the principle embodied in the maxim quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud. In requiring just terms s. 51(xxxi) fetters the legislative power by forbidding laws with respect to acquisition on any terms that are not just. In my opinion the provisions of s. 13(1) and ss. 17, 18, 19 amount to an indirect means of doing what the paragraph does not allow."
In Trade Practices Commission v Tooth and Co. Limited (1979) 142 CLR 397 at 403 Barwick C.J. said:
"It has been decided, and in my respectful opinion quite correctly, that the presence of s. 51(xxxi) in the Constitution means that no other head of power, including the incidental power, would support a law for the acquisition of property. And the reason is plain. The constitutional purpose is to ensure that in no circumstances will a law of the Commonwealth provide for the acquisition of property except upon just terms. Section 51 (xxxi) is a very great constitutional safeguard, not confined to the protection of the citizen from confiscation of his property by the State. It ensures that no one may, by virtue of a Commonwealth statutory provision, acquire his property except upon just terms."
Gibbs J. (at 407) said:
"I fully accept that the powers given by the other paragraphs of s. 51 do not authorize legislation for the acquisition of property ... and that the Court will not permit the adoption of `a circuitous device to acquire indirectly the substance of a proprietary interest without at once providing the just terms guaranteed by s. 51(xxxi) of the Constitution when that is done'".
See also Bourke v State Bank of New South Wales (1990) 170 CLR 276 at 285-286. In Street v Queensland Bar Association (1989) 168 CLR 461 at 527 Deane J. said:
"It is a long-settled general principle of construction that the provisions of a national constitution must be broadly interpreted and applied: their substance should not to be confounded by narrow technicality or legalism (see, e.g., Jumbunna Coal Mine N.L. v Victorian Coal Miners' Association (1908) 6 CLR 309, at pp 367-368; Reg. v Coldham; Ex parte Australian Social Welfare Union
(1983) 153 CLR 297, at p 314. In particular, a constitutional guarantee, such as that contained in s. 117, calls for `a generous interpretation ... suitable to give to individuals the full measure of the fundamental rights and freedoms referred to' (Minister of Home Affairs v Fisher (1980) AC 319, at p 328; and see, also, Maneka Gandhi v Union of India (1978) AIR (SC) 597; Hunter v Southam Inc. (1984) 2 SCR 145, at pp 155-156 (Can.)). A 'close and literal construction deprives (such guarantees) of half their efficacy, and leads to gradual depreciation of the right, as if it consisted more in sound than in substance' (Boyd v United States
(1886) 116 US 616, at p 635; Byars v United States (1927) 273 US 28, at p 32). That general principle of construction precludes the substitution of a rigid and artificial formula for a constitutional provision such as s. 117 and requires that regard be had to substance rather than mere form both in the construction of such a provision and in its application to the facts of a particular case."
In the present cases, it is clear that the Amendment Act, if valid, takes from Dr Peverill in large measure the statutory right which he had by virtue of s. 20 and of the assignments made to him under s. 20A. The right was, I think, plainly "property" within the meaning of placitum xxxi. It was argued that the statutory debt was not assignable in the hands of Dr Peverill, although s. 20A had authorised its assignment to him. However, there is no decision of the High Court which requires me to hold that such a statutory debt does not fall within the concept of property for the purposes of placitum xxxi. It would be contrary to constitutional principle to take a narrow view. In Dalziel (ubi cit. supra), Rich J. explained the relevant constitutional understanding of the word to embrace all forms of property without any limitation that might be inherent in the technical categorisations of a particular legal taxonomy. This is in keeping with the principle of construction of a constitutional guarantee expounded in the cases to which I have referred. Although, as was pointed out in the Tasmanian Dam case and elaborated by Gummow J. in Smith Kline and French Laboratories (Aust) Limited v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 116-117, placitum xxxi is not to be equated with the Fifth Amendment to the Constitution of the United States, the broad scope which Rich J. gave to placitum xxxi is consonant with what Professor Tribe, in his American Constitutional Law (1978) at 457, called "the sanctity of settled economic expectations under American Law".
But the respondent's principal argument was that there was no "acquisition" by the Commonwealth from Dr Peverill; all that had happened was the extinguishment pro tanto of his right against the Commonwealth. Reliance was placed on the Tasmanian Dam case, in which (at 145) Mason J. said:
"The emphasis in s.51(xxxi) is not on a `taking' of private property but on the acquisition of property for purposes of the Commonwealth. To bring the constitutional provision into play it 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."
And Murphy J. (at 181) said:
"But the extinction or limitation of property rights does not amount to acquisition. ... Unless the Commonwealth gains some property from the State or person, there is no acquisition within the paragraph."
Brennan J. (at 246-247), after emphasising the breadth of the concept of property, said:
"Where neither the Commonwealth nor any other person acquires proprietary rights under a law of the Commonwealth, there is no acquisition upon which par. (xxxi) may fasten."
Deane J. (at 283) said:
"The mere extinguishment or deprivation of rights in relation to property does not involve acquisition."
But he added:
"Difficult questions can arise when one passes from the area of mere prohibition or regulation into the area where one can identify some benefit flowing to the Commonwealth or elsewhere as a result of the prohibition or regulation. Where the benefit involved represents no more than the adjustment of competing claims between citizens in a field which needs to be regulated in the common interest, such as zoning under a local government statute, it will be apparent that no question of acquisition of property for a purpose of the Commonwealth is involved. Where, however, the effect of prohibition or regulation is to confer upon the Commonwealth or another an identifiable and measurable advantage or is akin to applying the property, either totally or partially, for a purpose of the Commonwealth, it is possible that an acquisition for the purposes of s. 51 (xxxi) is involved."
In the Tasmanian Dam case, the other Judges found it unnecessary to deal with this question. Mason, Murphy and Brennan JJ. did not take the view that anything had been obtained by the Commonwealth the obtaining of which could be regarded as an acquisition of property for the purposes of s. 51 (xxxi). Mason J. (at 146) said:
"However, what is important in the present context is that neither the Commonwealth nor anyone else acquires by virtue of the legislation a proprietary interest of any kind in the property. The power of the Minister to refuse consent under the section is merely a power of veto. He cannot positively authorize the doing of acts on the property. As the State remains in all respects the owner the consent of the Minister does not overcome or override an absence of consent by the State in its capacity as owner. The fact that the Minister has a power of veto of any development of or activity on the property does not amount to a vesting of possession in the Commonwealth. Significantly, the Act contains no provision dealing with possession".
These remarks concluded a discussion in which reference had been made to cases dealing with the regulation of the use of property and the effect of restrictions upon that use. In the Tasmanian Dam case nothing tangible was obtained by the Commonwealth. What it did was to assert a power of veto in order to control the use of that which remained the State's property.
In the present cases, the Commonwealth gained the whole benefit of what it took from the applicant. For its purposes, it had procured the rendering of the pathology services for which it owed the statutory debt, of which it obtained retrospective reduction. Nor could the legislation be regarded, in any sense, as a regulation or restriction of the applicant's use of his property. The position was exactly the same as it would have been if the Commonwealth had taken a formal transfer of the applicant's right so as to cause it to merge with the Commonwealth's obligation. To say that the obtaining of the benefit of the applicant's right by the method adopted was not an acquisition would be to characterise the law "by reference exclusively to its strict legal operation, without regard to its practical or substantial operation", as Mason C.J. and Deane J. put it in Philip Morris Limited v The Commissioner of Business Franchises (Victoria) (1989) 167 CLR 399 at 433. Their Honours went on to say that such an approach "is bound to yield, at least in some instances, highly artificial results".
If the Commonwealth possessed a parcel of land over which a citizen had a right of way or profit a prendre, could the Commonwealth cancel the right and say it had acquired no property? In my opinion, it would be a misapplication of the statements in the Tasmanian Dam case to hold that it could. The Commonwealth would have obtained the benefit of the right, although the pre-existing situation had enabled it to do so by the mechanism of a cancellation. A chose in action, too, is a form of property the nature of which permits its cancellation, in some circumstances, to achieve what is in truth an acquisition. Just as the Commonwealth could, if it chose, legislate to acquire by resumption rights, such as the easement or profit I have postulated, over its land, so it could pass an Act providing that all debts payable to pathologists should be payable henceforth only to the Commonwealth. If it did so, no one would doubt that the statute effected an acquisition. It cannot make any difference, to the "practical or substantial operation" of the law, if the debts are payable by the Commonwealth, and the law simply provides for their cancellation; precisely the same value is acquired, and it is the value represented by the chose in action. The ledger has two sides; and the cancellation of a pathologist's right to receive augments correspondingly the assets of the Commonwealth.
It is possible to have an acquisition where what the acquirer receives is not to be identified with something disposed of by the person from whom the acquisition is made: Allina Pty Limited v Commissioner of Taxation (1991) 28 FCR 203. Leases and options provide ready examples. The law sees no difficulty in regarding an option as involving an acquisition of a right which never belonged to the grantor of the option: Commissioner of Taxes (Queensland) v Camphin (1937) 57 CLR 127 at 133-134. But placitum xxxi, as a constitutional guarantee of what Lord Ackner, in Regina v Secretary of State for the Home Department, Ex parte Brind (1991) 1 AC 696 at 757, called a "fundamental human right - the peaceful enjoyment of one's possessions", must, by its nature, be concerned with the other side of the transaction - with its effect upon the "person" from whom the acquisition is made. If property is acquired from him, its transmutation into some other form in the hands of the Commonwealth is not really to the point. That does not, of course, overlook that there must be an acquisition of property in some form, and not a mere extinguishment of rights: the Tasmanian Dam case; The Queen v Ludeke; Ex parte The Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653.
For the applicant, emphasis was placed on the denial by Dixon J., in Bank of New South Wales v The Commonwealth (at 349), that the constitutional provision could be evaded by a "circuitous device", and in Federal Council of the British Medical Association in Australia v The Commonwealth (1949) 79 CLR 201 at 270, that it could be "avoided by indirect means". See also the Tasmanian Dam case per Deane J. at 283. However, the adoption by the High Court of the view that, where constitutional guarantees and prohibitions are involved, it is the substance of the matter that must be considered, seems to leave little room for any separate doctrine of indirect circumvention: Miller v TCN Channel Nine Proprietary Limited (1986) 161 CLR 556 at 575-576; Cole v Whitfield (1988) 165 CLR 360 at 399-400. Perhaps the true role of the perception of indirect or devious means is as an indication of an attempt to disguise the substance of the matter, and as a pointer to what that substance is. It may be noted that in Bank of New South Wales v The Commonwealth (at 349) Dixon J. used the word "substance" and the expression "circuitous device" in explaining a single concept. The complicated retrospective manipulation of the basis of the accrued rights in question, which Parliament could have reclaimed directly (while providing just terms), makes an analysis of that kind apt in relation to the Amendment Act.
In my opinion the Amendment Act effected an acquisition of property within the meaning of placitum xxxi.
Starke J., in Bank of New South Wales v The Commonwealth (at 300), said:
"`(J)ust terms' require that a party whose property is acquired shall have the pecuniary equivalent of the property acquired."
If I am at liberty to treat this proposition as less than universal, there has been no serious attempt in the present cases to demonstrate that the acquisition, effected by the Amendment Act without consideration, could properly be regarded as "on just terms". Of course, it was for the applicant to show that the Amendment Act is a law forbidden by placitum xxxi. He had to show it did not amount "to a true attempt to provide fair and just standards of compensating or rehabilitating the individual considered as an owner of property, fair and just as between him and the government of the country": per Dixon J., in Grace Brothers Proprietary Limited v The Commonwealth (1946) 72 CLR 269 at 290. And "the circumstances must vitally affect the question of what terms are just": per Fullagar J., in Poulton v The Commonwealth (1953) 89 CLR 540 at 574. It should follow, I think, that there may be situations where an uncompensated acquisition may be held to be proper, although those situations would be extraordinary. But at least prima facie, the applicant (who had given full value for the assignments of statutory rights under s. 20A) showed the Amendment Act did not provide just terms when he showed it provided no consideration. Not only that, its operation was retrospective after long delay and litigation establishing the applicant's right. If it be assumed the terms thus imposed would have been reasonable, had they been imposed at the relevant times, it would not follow that an acquisition now on those very terms, taking no account of the lapse of time or of what has happened, could reasonably be regarded as on just terms. The Amendment Act treats cases where payment was wrongly withheld at the time on exactly the same footing as cases where a payment was made which is retroactively validated; and in neither case allows interest. If a payment now to be made would have been just had it been made five years ago, it does not follow that the present acquisition of the applicant's greater legal right at exactly that figure is therefore on just terms. The question is not simply whether the provision of just terms generally requires the allowance of interest pending a payment following acquisition. If that be so, cedit quaestio; but this case is concerned with a retrospective acquisition which allows an affected pathologist to receive now only what the respondent's argument asserts was the amount properly payable years ago, or any outstanding balance of that amount, in cases where he has previously received nothing, or a lesser amount. Cf. Bank of New South Wales v The Commonwealth (supra, at 228-229, 277-279, 300-301, 341-343 and 397).
An affidavit was filed, on behalf of the respondent, to show that the pathology services giving rise to relevant rights were the subject of abortive proposals to make amendments, intended by a statutory committee or by the relevant Department (without lawful authority) to affect the operation of item 1345. Why these proposals (as already formulated) were not reflected in Schedule 1A, when it was introduced into the Act by the Health Legislation Amendment Act 1986, was not satisfactorily explained. It was not suggested that all of the retrospective changes made by the Amendment Act were the subject of any proposed or purported amendment. Nor was anything like a comprehensive examination of the circumstances undertaken to endeavour to show that, where a particular pathology service had at a particular time been the subject of a purported but invalid amendment, it was "just" that the provisions of the Amendment Act should at its date be retrospectively imposed. The circumstances under which the unauthorised provisions came to be treated as made, when their invalidity was appreciated, and why no timely remedy was adopted, were all matters left unexplored by evidence from those officials who would know the facts. In any case, reference to Queensland Medical Laboratory v Blewett (1988) 84 ALR 615 and Peverill v Meir (supra, at 418-419) suggests that a full examination of the legislative history might not have assisted the respondent.
All that the affidavit relevantly stated was the following:
"Items 2294(3), 2294(4), 2295(3) and 2295(4) referred to in the Health Insurance (Pathology) Services) Amendment Act 1991 were the subject of determinations in medicare assessment advices based on determinations of the Medical Benefits Advisory Committee which purported to make amendments to Schedule 1 and Schedule 1A which were ineffective and are in the terms of the Medicare Assessment Advices."
During a significant period, when item 1345 plainly applied to the relevant pathology services discussed in Peverill v Meir, the respondent insisted that only item 2294 applied - that being a catch-all item specifying a fee at the lowest level to be found in the Schedule, a fee which was held in Peverill v Meir (at 418) to provide no profit at all, and not even to cover the direct costs of the procedure. In those circumstances, once the matter comes down to a question of "just terms", something much more comprehensive than was attempted by the respondent would be necessary before a finding in favour of the respondent could be contemplated, assuming all of the pathology services in question had been the subject of purported and appropriate, though unauthorised, amendments at the time the services were rendered and the assignments were taken. Quite apart from the question whether fairness demanded a payment in the nature of interest, it would have been necessary for the respondent to show how a major retrospective change could be "just" after the extraordinarily long period during which Dr Peverill was left (as were any others who may have been in a like position) to incur legal and other expenses and to act upon the basis of what was demonstrated, once the matter was examined, as it was in Peverill v Meir, to have been quite clearly the law.
The respondent attempted also to rely, in order to justify acquisition without recompense, upon statements to be found in the speech of the Minister who moved the second reading of the bill which became the Amendment Act (House of Representatives Hansard for 11 April 1991, pp 2464-5), and in the Explanatory Memorandum relating to the bill. But no authority was cited permitting me to treat these statements as evidence of facts going to the issue of "just terms", nor was it submitted they actually were such evidence. They are, of course, receivable under s. 15AB of the Acts Interpretation Act 1901 for those purposes of "interpretation of a provision of (the) Act" stated in that section. If statements in the Explanatory Memorandum and the second reading speech were to be considered on the present issue, I would not regard them as rebutting the case made out by the applicant. They do not show that, in all the circumstances, a retrospective adoption of the purported amendments would now provide just terms, nor that the unauthorised acts of a committee or of the relevant Department were ever justified in any sense. A comparison, of the reference in the second reading speech to the Court's setting aside of recommendations of the Pathology Services Advisory Committee "for procedural deficiencies", with what was actually held by Gummow J. in Queensland Medical Laboratory v Blewett makes it plain that misapprehension of the law persisted up to the time of the speech; but that fact is of no assistance to the respondent.
For these reasons, the issue raised by para. 10 of the applicant's further amended reply in the one action, and the corresponding issue in the other, must be resolved in favour of the applicant. The Act cannot reasonably be regarded as providing just terms. Since the Amendment Act effects an acquisition, within placitum xxxi, the applicant's alternative argument, that, if there was no such acquisition, there was an imposition of taxation contrary to s. 55 of the Constitution, does not arise.
There is no need to examine in detail another way in which the applicant's case was put under placitum xxxi. It was suggested that the Amendment Act retroactively made each assignment from a patient to Dr Peverill into an acquisition that was not on just terms. Reliance was placed on authorities which hold that placitum xxxi is not confined to acquisitions by the Commonwealth: Trade Practices Commission v Tooth and Co Limited (supra); the Tasmanian Dam case (supra, at 146, 247 and 282); McClintock v The Commonwealth (1947) 75 CLR 1 at 23, 36; Bank of New South Wales v The Commonwealth (supra, at 250); P.J. Magennis Proprietary Limited v The Commonwealth (1949) 80 CLR 382 at 401; and Jenkins v The Commonwealth (1947) 74 CLR 400 at 406. In Clunies-Ross v The Commonwealth (supra, at 202), it was stated in the joint judgment:
"(I)t would seem to be established that the legislative power conferred by s.51(xxxi) extends at least to some acquisition by entities other than the Commonwealth."
In the present case, each assignment taken by the applicant under s. 20A of the Health Insurance Act was "in full payment of the medical expenses incurred in respect of the professional service" which he had rendered. If there were not an attempted acquisition by the Commonwealth on other than just terms, there would be much to be said for the proposition that the retrospective reduction of the value of the right assigned in full payment for the service rendered would have made the assignment into an acquisition on terms not just. But I think the better way to view the matter is to see the Amendment Act as providing, in substance, for an acquisition of property by the Commonwealth.
I direct the applicant to bring in short minutes of orders to reflect these reasons.
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