Peverill v Health Insurance Commission; Georgiadis v Australian and Overseas Telecommunications Corporatiion

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S21 of 1992
B e t w e e n -
RICHARD EDWIN PEVERILL

Applicant

and
HEALTH INSURANCE- COMMISSION

Respondent

Cause removed pursuant to
section 40 of the Judiciary Act
1903

Office of the Registry

Sydney No S77 of 1992
B e t w e e n -

Peverill(2)

9/3/93

CONSTANTINOS GEORGIADIS

Applicant

and
AUSTRALIAN AND OVERSEAS
TELECOMMUNICATIONS CORPORATION

Respondent

Cause removed pursuant to
section 40 of the Judiciary
Act 1903

MASON CJ
BRENNAN J
DEANE J

DAWSON J

TOOHEY J
GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 9 MARCH 1993, AT 10.22 AM

MR D.J.S. JACKSON, QC:

May it please the Court, I appear

with my learned friend, MR D.J. McGILL, for the
respondent Health Insurance Commission.
(instructed by the Australian Government Solicitor)

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

learned friend, DR G. FLICK, for Dr Peverill.
(instructed by Minter Ellison Morris)

MR G. GRIFFITH, QC, Solicitor-General for the Commonwealth:

If the Court pleases, I appear with my learned
friends, MR D.J. McGILL and MR G.R. KENNETT, for
the Attorney-General of the Commonwealth,
intervening to support the validity of the
legislation. (instructed by the Australian
Government Solicitor)

If the Court pleases, Mr Jackson and I have had discussions and, subject to the Court's
concurrence, have come to an arrangement,
Your Honour, that the Attorney will present the
primary argument on validity.

MASON CJ: Yes.

MR M.F_. ADAMS, QC: If the Court pleases, I appear with my

learned friend, MS T.P. KAVANAGH, for the
applicant, Georgiadis. (instructed by J.M.
Thompson)

MR J.R. WALLACE:

May it please the Court, I appear for the

respondents, the Australian Overseas

Peverill(2)

9/3/93

Telecommunications Corporation Limited.
(instructed by Sparke Helmore & Withycombe)

MR G. GRIFFITH, OC, Solicitor-General for the Commonwealth:

If the Court pleases, I appear with my learned friends, MR A. ROBERTSON and MR G.R. KENNETT, for the Attorney-General, intervening to support
validity. If the Court pleases, we have a similar

arrangement with Mr Wallace. (instructed by the
Australian Government Solicitor

MASON CJ: Yes.- Now, in Peverill.

MR GRIFFITH: If the Court pleases, before handing the Court

our contentions in this matter there are
preliminary issues dealing with the status of the
facts which are before the Court which we would
seek the Court to resolve, so that the Attorney is
in the position of knowing what factual substratum
is before the Court for the purpose of arguing
constitutional validity. If Your Honours pleases,
those facts are rather short compass; they are
really substantially embraced in the second reading
speech, which appears in the cause removed book at pages 136 to 141, with the explanatory memorandum. Perhaps it is convenient to the Court if I hand to
the Court the documents which we seek to rely upon, including those documents, so the Court has them in
a convenient form.

MASON CJ:

Yes, if you would.

Thank you.

MR GRIFFITH:

The Court will see that there is a two page

second reading speech which the Attorney wishes to
rely upon for the purpose of his argument for
validity as summarizing in a convenient form
matters as fact, given the legislative history of
leading to the 1991 Act which is under challenge in
these proceedings, and also summarizing what we
submit is the relevant matrix of facts leading to

the enactment of that legislation.

MASON CJ:

Now would you identify for us that part of the

second reading speech that contains the facts that
you would wish to establish or have admitted.

MR GRIFFITH: Yes, Your Honour. Your Honour, each sentence

down to:

I commend the Bill to the House.

On page 2465. I should add, Your Honour, that many
of these matters, which we say are matters of fact
to be before the Court, can be ascertained both
from the judgment appealed from and from the
several reported cases which are referred to in the
judgment. But, Your Honour, there are significant

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matters and the particular matter of great
significance for the purpose of the Attorney,
Your Honour, is the paragraph on page 2465, in the
middle of the page commencing:
Since amounts paid for ELISA testing -

down to the last paragraph ending on that page:
unaffected by this Bill.
Your Honours, there are three supporting

schedules which are attached after the explanatory
memorandum in this bundle which we also desire to

have before the Court. The first is a mere summary
of medical assessment advices which were purported
to be in force during the relevant periods
indicated but which were held by successive
judgments of Justice Burchett not to be in force
which set out in detail the effect of the matters
of fact which are summarized in the second reading

speech. I think I can indicate that my learned
friend, Mr Spigelman, has no objection to the Court
having regard to this document as a summary of the
position.

MASON CJ:

That is the document headed Appendix:

Summary of

Benefits?

MR GRIFFITH: Yes, Your Honour. There are supporting

medical assessment advices which we could hand to
the Court which support that this is a summary, but
I do not think we need trouble the Court about
those unless my learned friend desires those to be

before the Court. The second document is headed
Services Costed at Item 1345 at Benefit Level.
That document merely costs out what is the estimate
in the second of the three paragraphs I have
referred to in the left-hand column of page 2465

about what is expressed as a possible substantial
My learned friend, Mr Spigelman, referred this
windfall gain of about $100 million.
sum to the Court on the removal application, but
this is merely a yearly or quarterly breakdown
showing the difference between what was actually
paid under the what has now been determined
inappropriately promulgated medical assessment
advice amounts - that is the various sums one sees
referred to in the first appendix I have referred
to - and what would be paid as a full 1345 benefit

item as determined by Justice Burchett. The
arithmetical difference is shown as $98.5 million.
I understand my learned friend does not have any
difficulty about that document.

Peverill(2)

9/3/93

The third document is a document which does
require a little explanation. It is on the
letterhead of the Australian Association of
Pathology Practices Inc and is dated 8 April 1991.
It is a very short letter, and the Court will see
that it is signed respectively by the chairman of
the Australian Association of Pathology
Practices Inc and also by a Dr Fortune who is noted as the president of the RCPA.
The Royal College of Pathologists of Australia

is the professional body of individual pathologists
representing some 1400, and indeed, we would say to
the Court, the vast majority of pathologists in

practice. The Australian Association of Pathology
Practices represents incorporated pathologists,
although we understand from my learned friend,
Mr Spigelman, that the respondent, Dr Peverill, is
not a member of that association, and we do not
assert that he is.
Both these groups are active groups in respect of negotiating and fixing schedule fees, and
between 1986 and 1989 section 78D of the Act
established the Pathology Services Advisory
Committee as the committee responsible for making recommendations to the Minister on pathology
services table, and under section 78D(4) two of the
seven members of that committee were chosen from
nominees of the Royal College of Pathologists of

Australia. So that we put this letter before the
Court as indicating that a professional representative associations of most pathologists -
we do not include Dr Peverill in that description -
expressed the view and the conclusion which is
expressed in this letter. So, we would desire that
this letter be before the Court, not merely as
evidence of the fact that the letter was written on
8 April 1991, but also we would rely upon each
sentence of that letter - there are only four
sentences - as confirming the position indicated by

those three paragraphs I have referred to on
page 2465 of the second reading speech.
The difficulty for the Attorney intervening

upon the removal of this matter into this Court is
that- - -

MASON CJ: Stopping you there, I take it that Mr Spigelman

has an objection to this letter?

MR GRIFFITH:

Your Honour, I think Mr Spigelman does not

object to it as a letter which has been written,
but I think he -

MASON CJ: But objects to the content.

Peverill(2)	9/3/93
MR GRIFFITH:	To the content as a fact I think - perhaps

not.

MR SPIGELMAN:

Your Honour, we have no difficulty with the

Court looking at any of this material and deciding whether or not any of it is in a form that is

suitable to use as a basis of found fact. The
difference between myself and the Solicitor is that
there are numerous rhetorical flourishes in the
second reading speech and in this letter that are
not of that character. That is the only difference
between us, and that is a matter for the Court.

MASON CJ: Yes. So, you have no objection to the Court

looking at this material - - -

MR SPIGELMAN:	Not at all.
MASON CJ:	- - - hearing argument on the basis of the material and eventually deciding what use can appropriately be made of the material?
MR SPIGELMAN:	That is so, Your Honour.
MASON CJ:	Thank you.
MR GRIFFITH:	If the Court pleases, that would seem to have

been also the position before Justice Burchett
because the second reading speech and the
explanatory memorandum were tendered as evidence

and they were - handed up. They were admitted,
subject to relevance. That appears from the cause
removed book at page 145. Certainly they were
relied upon as matters of fact by my learned
friend, Mr Jackson. That appears at page 213 to
page 214 of the cause removed book.
My learned friend, Mr Spigelman, submitted at

pages 227 to 228 that the circumstances outlined in
the second reading speech were not evidence, but

our submission would be that really this was too late to take the objection because the matters had
already been admitted only subject to relevance.
But together with the affidavit of a person named
Acton appearing on page 134, that material is
before the Court in the cause removed book at
pages 146 to 141.

The difficulty for the Attorney is that the issue of treatment of this material is a matter
which is in dispute. It is a matter subject to
ground 15 of the notices of appeal which appear on

page 272 and page 277. The two issues raised by
the respondent, firstly that Justice Burchett was
in error to reject this material as being evidence

of fact, and secondly, as in ground 14 of the notices of appeal, that there was a denial of

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natural justice, that Justice Burchett found that
there had not been something provided
comprehensively as to explanation of the
circumstances.
When the matter was removed by this Court on

7 May, the question of this outstanding issue of
how the second reading speech was to be treated was
raised by counsel for the respondent. That appears
on transcript, pages 9 and 10, and also in their
contentions, and Your Honour, at transcript page 15
on removal, referred to the possibilities of some
questions arising which may need to be remitted.
Now, absent removal to this Court, it may well

have been the Attorney would have appeared at the
appeal to seek to resolve finally the issue of
whether or not this material was before the Court
as fact, as part of the appeal or not. But, it
having been now removed to this Court, and the
Attorney intervening for the purpose of arguing in
support of the validity of the legislation, the
Attorney's position is that it is part of his case,
to support the validity of legislation, that these
matters are required to be before the Court as
fact, for the purpose of reliance by the Attorney
to support is argument for the validity of the
legislation.
That matter is put as a matter of fact to be

before the Court for the purpose of identifying the object and purpose of the legislation, to show that
the 1991 Act was not a circuitous device as an
attempt to avoid the acquisition's power,
particularly to show that the Act is what is
described in the United State's authorities, to
which we will take the Court, dealing with
equivalent provisions in the takings clause of the
Fifth Amendment of the United State's Constitution,
as a curative statute. And fourthly, to show that,

even if the Act did affect what is regarded as an
acquisition of property within the scope of the
acquisitions power, when one looks at all the
circumstances upon which the Attorney desires to
rely, it will be our submission, by reference to
those circumstances as facts before the Court,
there is a provision of just terms by providing, by
the form of the 1991 Act, a lesser payment under
another item to the item which, up to the passing
of the 1991 Act, the applicant has established his
right by reference to the item number determined by
Justice Burchett.
Your Honour, we do not seek to labour this

point but the Attorney's position is one of
difficulty unless, on the threshold of argument, it
is known that these matters, particularly the three

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paragraphs I have referred the Court to, are

accepted by the Court. We have sought to flesh
out, if you like, those matters by reference to the
letter of 8 April 1991 which, perhaps on one view,
Your Honour, says no more than it supports the
statements made in the second reading speech and it
may be that the statements in the second reading
speech is sufficient for the purpose of fact.
But the difficulty for the Attorney,

Your Honour, is that if there is a wait and see as
to how the Court regards these matters as matters
of fact before it, either proved fact or as matters
on which the Court has informed itself sufficiently
for the purpose of constitutional argument, the
Attorney is in perhaps a similar false position as
what in fact happened before Mr Justice Burchett, in that the view was taken on one side that those matters were before the Court as a fact and yet one
finds in the judgment, Your Honour, that that

submission is rejected, in effect. So that there
were no relevant facts and that fact of no relevant
fact is in turn relied upon by the determining
court from the point of view of deciding removal.
Your Honour, although as my learned friend

Mr Spigelman does point out, there are matters
which are not substantially in dispute, absent
agreement by my learned friends that these matters
are before the court as fact, the position of the
Attorney is that he would seek as a threshold
determination by this Court a determination as to
whether or not the Court does accept that these
facts are sufficiently before the Court as facts
whereby the Court has informed itself as to
relevant constitutional and background facts
germane to the issues of validity.
I could take the Court to particularly the

summary of the position of Justice Brennan in

Gerhardy v Brown, 102 CLR 292, but I do not think I
need remind the Court of His Honour's summation of
the position as regards to the Court being in a
position as a constitutional Court, not being shut
out by any agreement by the parties or the course
of the litigation from discharging its duty to
determine issues of constitutional validity by
reference to all facts which are relevant.
Of course, in the usual case, the parties
assist the courts to have relevant fact before

them. Even in the case of agreement by the parties
as to what were the facts, His Honour
Justice Brennan was quite correct to point out in
argument in the Blank Tapes Case that the parties
cannot, by agreement, foreclose the Court from
determining facts and determining issues of

Peverill(2)

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constitutional validity, whatever may be the agreed
position of the parties.

MASON CJ:	Mr Solicitor, there have been many cases in the past in which the Court has heard argument on the basis of material being handed up by the parties
without committing itself, either at the
commencement of the hearing or through the hearing
as to the status of the material as facts with a view, ultimately, to resolving the case without
deciding that question, if it can be so resolved
and, if it cannot be so resolved, then ultimately having those facts decided.
MR GRIFFITH:	Your Honour, that really was the point we wish

to move to, that absent certainty of these matters,
if these matters can, for the purpose of argument,
be treated as matters of fact which the Attorney
desires to have before the Court as fact, expressed
if found as facts by another judge on reference
from this Court in that form, Your Honour, that is
quite sufficient for the purpose of our argument,
so long as one has the opportunity, in the event
that those facts are found material to the issue of
validity, and the Court determines that the
statement of those facts is not sufficiently found
by the material before the Court, that there is
then an opportunity for the matter to be remitted
for there to be a finding on those facts. That
would be quite satisfactory, Your Honour.

MASON CJ: Subject to anything Mr Spigelman may say, that

seems to be a sensible way of proceeding. So that
you would present your argument on the footing that
these are facts.

MR GRIFFITH: Yes, Your Honour.

MASON CJ:

You would also present argument with a view to establishing that they are facts within the

proceedings, having regard to what has happened in

the past.

MR GRIFFITH: Yes, although, Your Honour, we do not wish

particularly to divert the Court too far down that
road because, at the end of the day, we say the
issue is for the Court to inform itself and what

has happened before does not matter very much. We
do not feel there is much point in us raking over
the ground of appeal, Your Honour, unless the Court
desires us to.

MASON CJ:

Mr Solicitor, unless there is any objection from

Mr Spigelman, and I do not imagine there will be,
the Court is content to hear the argument on that
footing.

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MR GRIFFITH:

If the Court pleases. Your Honour, I would

not propose to argue in extenso the ground of
appeal that would have been argued down below as to
whether Justice Burchett was correct in taking the
view he did because we see, as intervener, no
future in determining that. It is sufficient that
the Court is apprised of what are put as the
relevant facts and if there is an opportunity
given, if the judgment of the Court vindicates
these facts as being relevant and crucially
relevant, but our expectation is that, on the basis
Your Honour indicates, we should be able to deal
with all the issues and probably avoid even the
possibility of remitter after judgment.

MASON CJ: Yes.

MR GRIFFITH: If the Court pleases, in that case I will

proceed to hand the Court the outline of our

argument. The Court will see that there is an
annexure after page 8 headed "Note on United States

Cases". We will refer to that as one picks it up
in the outline of argument which appears before,
but we have taken the course of annexing that
because we do have a volume of American materials and the marginal notes on the annexure gives page
references to the volumes, so we thought that it
would be convenient for the Court to have that
summary of the United States cases before it in
that form.
If the Court pleases, the rather slow starting

point for the examination of the validity in
the 1991 Act is an understanding to the almost ten
years history of the background leading to the
enactment of the law. Although the second reading
speech, as we mention, does summarize briefly the
circumstances, it is necessary for the purpose of
determining validity to engage in a little bit more
distressing detail of the legislative and

administrative history, and to assist the Court in
following that, with the permission of my learned
friend who has seen this document, could I hand the
Court a document headed "Background to the
Legislation". If I could also support that
document by extracts of the relevant legislation,
which is referred to in this summary, together with
a copy of the 1991 Act itself, which is a very
short Act.

BRENNAN J:

Mr Solicitor, do you wish us to read these

documents before you enter upon your argument?

MR GRIFFITH:

Your Honour, it would probably be very

convenient if the Court were prepared to read them
because they are discursive and that would avoid,
in my submission, going through it and reading it,

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but I am in the Court's hands if they desire me to
read it, but this background does explain in what
seems to be a more comprehendible manner what one
picks up from the documents in the cause removed
book, and I think, subject to one or two comments
from my learned friend, Mr Spigelman, we are agreed
that this substantially does outline the

legislative background. So, I am in the Court's
hands; if the Court desires me to read it.

MASON CJ:

Mr Solicitor, the question arises is: are we

supposed to read all this before you commence your
argument?

MR GRIFFITH:

The answer is, yes, Your Honour, because our

argument is predicated upon the understanding of
this course of event.

MASON CJ: Well, it is going to take us a little time to

read it.

MR GRIFFITH: Well, Your Honour, I am quite happy to read it

quickly and try and save time, but I am not quite
sure which will save time.

DAWSON J:

Can you not summarize it?

MR GRIFFITH: Well, the difficulty, Your Honour, is to

follow the imperfections in administration which
gave rise to the need for remedial legislation, and
unless the step-by-step course is followed, it is
difficult, in our submission, to follow both the
manner in which the applicant has vindicated a
legal entitlement because of administrative error
and, therefore, the background factual matrix,
Your Honour, by reference to which the
legislature - - -

DAWSON J: Well, there was an administrative error which led

to what - to an item being provided which was at a

higher rate than it ought to have been?

MR GRIFFITH: Yes, Your Honour, and the result - - -

DAWSON J:

And most pathologists, according to the letter,

charged under another item which was the correct
rate.

MR GRIFFITH:

Your Honour, many charged on it - all were

paid by reference to other items which were the
intended items, Your Honour, but it is common
ground that they were not the correct items so far
as the legal form was concerned, because these
various purported amendments effected, as
summarized in the schedule of Medicare assessment
advices, were imperfectly effected; the procedures

of the Act were not followed. So that, when one

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had regard to the legal form the position was, as
described by Justice Burchett, that the only
relevant item was an item with a catch-all of
$3.60, or the higher item of $35-odd that
Mr Peverill established was legally the right - the
item number which applied.

DAWSON J: That is really enough for us for the purpose of

argument, is it not?

MR GRIFFITH:

Your Honour, it is really the detail that

gives rise to the appreciation of the extent of the
problem and also it gives rise, we say, to the
circumstance which is summarized on the second page
of the second reading speech that there was a
position over the years involving, as we have
indicated, expenditure of almost $100 million by
reference to something which, because of an
administrative error, was legally ineffective.

BRENNAN J: But this is all predicated on the acceptance of

a doctrine of curative legislation, is it?

MR GRIFFITH: Yes, Your Honour.

BRENNAN J:

Maybe we need to understand what this doctrine

is before we starting looking at - -

MR GRIFFITH:

Yes.

Your Honour did make what we thought was

appropriate comment ..... application that one has
to pay attention to the definition of what is the
property right involved here before one can move
far into the question of whether or not there has
been acquisition or acquisition other than just
terms or whether the acquisition power does apply.
Perhaps we could take a short cut. If I took

the Court to the two-page appendix that is attached
to the second reading speech bundle which I handed
up to the Court and then take the Court to

paragraph 18 on page 9 of this document. The
manner in which the operation of the Act was
administered - and perhaps it is sufficient for the
purpose of my argument to confess legal error for
all this administration as being one that was
legally ineffective, although intended and applied
during the relevant period up to the various
determinations of the Federal Court which
established the administrative error - one will see
from this schedule, if one goes to the schedule
fee, one test is $15.40.
What is meant by one test and tests in excess

of one, one picks up from this summary as meaning
that ordinarily when a physician requests a test
from a pathologist, there is a schedule item which
attaches, but the pathologist might, as a result of

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the first test for which there is a schedule item,
form the view it is necessary to have second or
more tests to follow through the results that have
turned up on the first test.
In the case of successive tests by the

pathologist, there is a separate item. Firstly, the OP item is a test which a pathologist really requests himself to do, and the SP is the item
which is requested by the requesting physician, and
then one can have successive test under those

items. They appear as each test in excess of one.
But for the purpose of the Court looking at this
issue, it is sufficient to look at the first item
in each case and one sees that on 9 May 1984, the one test item was $15.40, increased on 26 July to
$16.60, increased 1 July 1985 to $17.20 and then
increased again - the last item - 27 November 1987
to $18.40.
As is summarized in paragraph 18 on page 9 of the summary before the Court, it was by reference
to these items, item 2294, that payments were

processed and made to pathologist. I hope the
Court has also picked up from the summary the
circumstances that these schedule fees are fixed as
payable to the patient, as much to a pathologist

who takes an assignment under section 20A. But if
a pathologist elects to take an assignment under
section 20A, which is the matter within the patient
and within the pathologist's choice, in that case
only 85 per cent of the schedule fee is paid to the
pathologist, and the patient does not pay any

further amount. But the pathologist is free, and
was free at all relevant times, to make, in effect,
any charge the pathologist wished to the patient.
The patient then was entitled to a benefit by
reference to this same schedule and the same

schedule item as a refund from Medicare. But the
mechanism of the Act enabled there to be bulk
billing on the basis of an 85 per cent payment to a

pathologist who took an assignment, and all the
matters in dispute before the court in the Peverill
matter involved a case of assignments of that sort
where the fee payable would be 85 per cent of the
schedule fee, and the next document which is
attached after the schedule shows a costing based
on the costing of 85 per cent of this relevant fee,
not 100 per cent, because it deals with the
costings claimed by pathologists who have taken
assignments under section 20A of the Act.
As is summarized here, the effect of the various proceedings in the Federal Court were to
throw up the result that none of these purported
fees determined by Medicare assessment advices had
been validly effected to alter the schedule, so

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that when the matter was before Justice Burchett there was the stark choice between the catch-all
item 2294 unaltered, which was $4.60, and the
higher fee, item 1345, of $34.50 which the judge
held in Peverill v Meir as being the appropriate
fee.
None the less, the Act had been administered

and payments made on the basis of paying the higher
fee, so that, as a matter of payment actually made,
the choice was not the stark choice between $4.60,
a fee which Justice Burchett held did not even
cover ·the out-of-pocket costs of administering the

fee, and the 1345 item. But the relevant
differences in fact paid were those by reference to
this schedule which I have taken the Court to, and
the amount which Justice Burchett determined in
Peverill v Meir was that which was payable lawfully
under the terms of the Act of $34.50.
The effect of the 1991 Act is to substitute

for the ELISA test item under 1345 during the
relevant periods going back to 1 January 1980 the
amounts which were understood to be the relevant
amounts and which were applied as the relevant
amounts but ineffectively because of the course of
administrative error over the years.
If I could take the Court briefly to the 1991

Act, which I have handed up to the Court - it is
the separate and short Act No 57 of 1991 - the
effect of this Act retrospectively is to amend
schedules 1 and lA of the principal Act and to
substitute tables reflecting those tables by
reference to which the Act was administered and

payments made during this period. So the
items 2294, particularly item 3, and related items
in the table set benefit levels identical to those
which had actually been paid pursuant to the

advices. As I mentioned, that is, of course,

several times the amount of the catch-all item 2294
which is only $4.60 but, of course, significantly
less than item 1345.
The transitional provisions in this Act are

particularly section 6 on page 7 of the Act,
"ensure that no amount already paid becomes
repayable as an overpayment" and also "enables a person" - and that includes both individuals and
also pathologists - "to claim the difference if more is payable in respect of a service falling
under the relevant item than was actually
received".

So that, by way of example, if

Justice Burchett had held in fact that the
catch-all item of 2294 had applied at the rate of

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$4.60 rather than the higher item 1345, the effect
of the 1991 Act is to establish an entitlement to
be paid the higher amount which was intended to be
paid but was not lawfully effected because of the
administrative error.

BRENNAN J:

The administrative error consisted of the

Department sending out documents saying, "This is what will be paid in the future'' and, having done
so without any statutory warrant, paying those
amounts instead of the amounts that are specified
in the statute.

MR GRIFFITH:	Your Honour, in its bare bones, yes, but the administrative error was really a true error in
administration in regarding the mechanisms of section 11 of the Act as being available to ensure that the amounts which were determined by reference to consultations with pathologists by reference to
what was appropriate from time to time were
included in the schedule by a mechanism which, when one looked at the Act, Your Honour, was not the
mechanism provided by the Act.

BRENNAN J: There was no power to do what they did.

MR GRIFFITH: Well, as it turned out, Your Honour -

BRENNAN J:

And it turned out that way in 1988.

MR GRIFFITH: Yes.

BRENNAN J:

So then we have three years before any amendment

takes place.

MR GRIFFITH:

Your Honour, it was also necessary to establish what were the appropriate items, that the

effect of the Peverill v Meir decision was to, when

the consequences were as it were thought through,

Your Honour, were to make it clear that these

higher fees which had in fact been paid, were not

those lawfully fixed, that the catch-all item was

only $4.60. It was then necessary, Your Honour, we

say, for consideration to be given as to the

mechanism to ensure appropriate measures to provide

both for what had been done with reference to the
payment of amounts at higher levels than that
lawfully fixed and, of course, Your Honour, we
would say, to reflect the circumstance that the
operation of the Act was intended to provide
reasonable remuneration as a matter of legal
entitlement for the schedule item services

provided.

But, we emphasize, Your Honour, that the
mechanism of the Act is not a mechanism to provide
an enforced limit to what a pathologist could, at

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any of the relevant times, claim. The mechanism of
the Act was merely to provide an amount which the
patient was entitled to recover as a gratuity under
the Act, and which the pathologist could elect to
take with a 15 per cent discount in full
satisfaction of the pathologist's entitlement.
So, during this period, Your Honour, we would

point out to the fact that the amounts which were
paid by reference to the amounts which were not
effective, were amounts which were paid, both to
patients who did not assign their rights under
section 20A, and also as one can see from the
table, one which, by reference to which, it would
seem there were many services provided by
pathologists on the basis of taking the assignment

with the discount. We refer to that fact as
confirming what is asserted in the second reading
speech, that the fact that the fees intended to be
fixed, but not validly fixed, were regarded as
being at an appropriate level to provide reasonable
remuneration, even with the 15 per cent discount
arising from the operation of the bulk billing
provisions.

BRENNAN J:

The surprising thing is that section 11 was ever

thought to provide anything like the power that was
needed - - -

MR GRIFFITH: Well, Your Honour, we have in this summary

more or less spelt it out in a mea culpa way, but

that is how it happened. When one looks at it now
it seems surprising, but it seems, Your Honour,
that it was regarded as a matter of the appropriate
administration in circumstances where the fixing of
levels involve the participation of the committee
which had professional representation, but there is
no escaping the fact that when one looks at section
11 one sees that it just does not support this and
this summary makes it clear that once the decision
was made in one case, Your Honour, the view was

taken that it must be that all the matters were for

the same reason ineffective. But Your Honour is
quite correct that one does not have to pause very
long after reading section 11 closely to form the
view that it was just not available for the purpose
of the general mechanism to affix the schedule fee;
there were other mechanisms of the Act, including
section 4A, Your Honour, which was available but
just not used.
Your Honour, I am reminded in answer to

Your Honour's question about delay, that there was
in 1988, as Your Honour pointed out, that it was
necessary to address this issue. Your Honour, from
1 August 1989 new and appropriate schedules were in
proper legal form substituted, so that the time for

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correction is that which one picks up from the
schedule, the second, the next document after the
first one. In fact it runs back a bit further,

Your Honour; it runs back to 1980. One sees from
the Act, section 1, from 1 January 1980 to 1 August
1989. So that is the cut-off date; it did not

continue until the 1991 Act after 1 August 1989.
The proper fee was fixed under the proper procedure.
But, if I could indicate to the Court that it

is in that unfortunate context of administrative
oversight that one has the summary of the
circumstances appearing in the second reading
speech to which I have referred the Court and, in particular, one has a situation reached, which is
summarized on page 2465, if I could just take the
Court briefly to that. If I could indicate to the
Court, we do rely upon the entire second reading
speech, but starting at the top of page 2465:
The wording of pathology items in the

schedule reflects the highly technical nature
of a large number of the methods used in

pathology. The fact that a test procedure,
especially a new procedure, may be interpreted
to fit the description of a particular item
does not necessarily mean that it is the
appropriate item for that test. In fact, the
vast majority of pathologists did not use item
1345 for ELISA testing because they
acknowledge that it was not the correct item.

Then it refers to the possibility of further litigation raising the prospect that the fee will
be payable, 1345, so that every person, not just
pathologists who have been paid for ELISA testing under other items over the past six years will be
entitled to recover the difference. Then it goes
on:

Since amounts paid for ELISA testing
represent reasonable remuneration, as
determined by an expert advisory committee,
the amendments in this Bill are sought in
order to give effect to what was thought to be
the position at the time. That was accepted
and acted upon by both the vast majority of
pathologists and the Health Insurance right to payment in respect of these tests.
The effect of not making the Medicare

benefits assessment advices legally effective
will be to create a major danger to revenue by
giving pathologists a possible substantial
windfall gain of about $100m.

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I must emphasise that the purpose of this Bill is to validate the Medicare benefits
assessment advices dealing with the ELISA test so that claims and payments made in accordance with them will become valid and proper and to
bring the legislation into line with the
general practice in fact adopted at that time.
All other rights to benefits under the
schedule will be preserved and unaffected by
this Bill.
Then it summarizes the transition to operation that I have already dealt with in my submissions to the Court whereby the mechanisms under section 6,
which we would submit are now spent as well as
being, of course, valid, had the effect of enabling
payments already being made to be retained, giving

a further entitlement by reference to the now
correctly provided fee where there had been payment
not to that sum or possibly payment to the
incorrect but not amended catch-all item.
On the basis of those facts may we turn now to

our contentions. We, of course, refer in
paragraph 2, to the open scope of the operation of
the acquisitions power.

DAWSON J:

I am surprised to see that you concede that taxes

result in the acquisition of property,
Mr Solicitor.

MR GRIFFITH:	I beg your pardon, Your Honour.
DAWSON J:	I am surprised to see that you concede that taxes

involve an acquisition of property.

MR GRIFFITH:

We do not, Your Honour, we do not intend to do

that. Your Honour, really, I think the purpose of
this submission is to say that these are
matters - - -

DAWSON J:

You do say it is.

MR GRIFFITH: Well, Your Honour, if we do may I resile from

that and indicate, Your Honour, our submission to
the Court is that the acquisitions power just does
not attach to circumstances of the sort that
we - - -

DAWSON J:

The view has been expressed it does not do so because there is no acquisition of property.

The

creation of a chose in action does not involve the
acquisition of property and the satisfaction of the
chose in action, that is, the debt, does not
involve the acquisition of property.

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MR GRIFFITH:

Your Honour, we accept all of that so that we

accept this could have been more felicitously

worded. Your Honour, the basic thrust of this
proposition is intended to be, Your Honour, that
one has all sorts of categories of exercise of
primary legislative power where one can say that
the acquisitions power just is not relevant. If
the Court would accept our submission as being
intended direct to that, there is no need to take
the Court to any of those examples.
Could I mention one further example that we

have turned up and that is Allpike v The
Commonwealth and Others, (1948) 77 CLR, at page 63.
In that case there was an issue of the disposition
of the pay entitlements of a member of the
Australian Imperial Forces who died while a
prisoner of war in Borneo. At his death there was
an accumulated pay of 665 pounds, 18 shillings and

one pence. The War Services Estate Act provided
for the disposition of these moneys and the point
was taken in the High Court that it was beyond the
power of the Commonwealth to provide for the
disposition of these moneys which the deceased
soldier and his estate were absolutely entitled to
be paid.
Dealing with that argument

Chief Justice Latham at page 68 and page 69 had no
difficulty in holding - about point 6 on page 69:
In the case of the Commonwealth, therefore,
such right as there is is the creation of
Commonwealth statute or Commonwealth
regulation. That right may be altered by the
authority which created it.

If one goes over to the judgment of Justice Dixon
on page 77, His Honour there refers to the
acquisitions power and he says quite simply that:

there is no basis for the argument that
s Sl(xxxi) of the Constitution must be invoked
in order to support a legislative direction of
the course of devolution on death of property
when such a thing falls within the purposes of

the Commonwealth. Such a direction involves
no acquisition of property and raises no
question of just terms.

We refer to that as another example of the
situation which Your Honour Justice Dawson is quite
right to point out to me is not so much a question
of acquisition of property in the constitutional
sense of acquisitions power, but just a
Commonwealth law dealing with property within power
in circumstances where, as Justice Dixon said, no

Peverill(2)

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question of acquisitions arise, although the law
did have the effect of that case of fixing the
destination of what was expressed as an entitlement
under a statute for moneys to be paid to the
soldier.
We seek to enlarge in our submissions upon two

approaches which we submit are relevant to the
characterization of what has occurred in this case.
For convenience, we refer first to the statutory
gratuities argument, as we call it, which we say
affects how what on analysis are in fact gratuitous
statutory monetary benefits payable under social
security or Medicare benefits are to be regarded.
It is our submission that gratuities of that sort
should also be regarded as falling completely

outside the ambit of the acquisitions power. An
alternative approach which leads to the - - -

DAWSON J:

Why should it?

MR GRIFFITH:

Your Honour, may we enlarge on that.

We will

flag it. We seek to do it by reference to what we
say are well-established doctrines that are
analogous under the American Constitution, the

takings clause. Your Honour, if we could enlarge
on those materials and then come back to -

DAWSON J:

What do you say?

Do you say there is no

acquisition of property or it is an acquisition of
property that lies outside Sl(xxxi)?

MR GRIFFITH:

Your Honour, our first analysis is to say that

the acquisitions power has nothing to do with
legislation which deals with the disposition, even
the withdrawal, retrospectively of an entitlement
to be paid a gratuity.

DAWSON J: Notwithstanding that there is an acquisition of

property.

MR GRIFFITH:

Your Honour, we do not concede that it should

be regarded as an acquisition of property, but we
say that one should regard this entire issue of
statutory control and disposition of gratuities,
including retrospective revocation of an
entitlement previously expressed, as not involving
the acquisitions power at all.
Secondly, Your Honour, and we will enlarge on

that, we say that if the acquisitions power is
regarded as relevant, for the purpose of the
acquisitions power it is not property; it is not
property acquired. Of course, Your Honour, we say
finally that if one gets that far in circumstances
such as those here, if there is acquisition of
property within the acquisitions power, it is on

Peverill(2)

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just terms. This part of the argument really is
all supporting the view that, in our submission,
one is entirely outside the acquisitions power in
respect of any entitlement of Dr Peverill or any
other pathologist who took an assignment under
section 20A.

DAWSON J:

On some sort of principle that what the Lord

giveth, the Lord taketh away.

MR GRIFFITH: Yes, Your Honour, but may we enlarge that with

a bit more detail and a bit more authority. Our
position basically is that although Dr Peverill
might have rendered a service to the patient, we
say that the entitlement of the patient was no more

than a statutory gratuity. Dr Peverill chose, the
free choice being his, Your Honour, to take no more than the patient had, which was an expectation of a gratuitous payment, but may we enlarge on that.
The second approach we refer to as the curative statute argument and, also by reference to

American doctrines. Our submission will be, a law
which retrospectively cures some defect in
administration to give effect to what was
originally intended - and we can accept criticism,
of course, that the particular defect in
administration might have been one which could have

been avoided. We could accept the comment it
should have been avoided, as long as the fact is
clearly before the Court that it was not avoided -
we submit that when one has legislation that is
expressed retrospectively to cure such an
unfortunate state of events, so to, in effect, to
enact what were the expectations of all
participants during the time of the operation of
the relevant defective of administration, that such
legislation is valid and outside the acquisitions
power - even has the effect of depriving a person
of a cause of action, an entitlement to payment,

call it what you like. Even if one calls it, for
the purposes of argument a "specialty debt", and it
is by reference to this argument that we refer the
Court, in particular, to the factual matters which
we have relied upon as giving rise to the
circumstances of the 1991 Act.
But on either of these approaches our

principal submission, to adopt the words of
Justice Gibbs in Trade Practices Commission v
Tooth, 142 CLR, at page 408, we say no question of

just terms could sensibly arise. We say that
meaning whether it is just terms as just terms
under the acquisitions power, or more, that no
question of the acquisitions power, we say,
sensibly arises.

Peverill(2)

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Our submission is that the decided cases
really do not deal at all with these two possible
approaches, but our submission is there is nothing
in the decider cases which means that these
arguments should be rejected. To the contrary, our
submission is that examination of principle and the
scope and purpose of the acquisitions power will
support the acceptance in relation to circumstances
such as have occurred here; just as they have, in
our submission, been supported in the United States
in relation to the Fifth Amendment.
Of course, the acquisitions power is not to be

equated with the Fifth Amendment because the
emphasis of the acquisitions power is on the taking
of property - not so much the taking of property
but the acquisition of property for the purposes of
the Commonwealth and Your Honour Justice Brennan in
the Political Broadcast case, 108 ALR, at page 615,
referred to the comments of Your Honour the
Chief Justice in the Tasmanian Dam case, 158 CLR
145 - on the report of the Tasmanian Dam case to
this aspect.
But, in our submission, United States cases to

which we will refer do identify not only a useful
but the appropriate way considerations are equally
pertinent to the Australian constitutional context.
Turning first to our approach, the statutory
gratuities argument, our general proposition is
that the decisions of the United States Supreme
Court and Federal Court of Appeals established that
statutory benefits, such as retirement pensions and welfare benefits may be altered or withdrawn at any
time without any issue of the taking clause of the
Fifth Amendment arising.
It may be of convenience to the Court if we now hand up a volume of materials which extracts
the full report of what we refer to as the relevant

United States authorities, for the most part the
Supreme Court, but also supported by some decisions
at the Federal Court of Appeals level.
Now, the Court will see attached after the

index on page (ii) and (iii) a summary headed "Note
on United States cases", "Constitutional
provisions" which has, in marginal note, the page of this volume where the report or the particular

extract of the report appears. We have also
annexed, for ease of reference, this same document
to our outline of argument, so the Court has it at
that point.
This summary with extracts of an occasional

sentence at the page cited we rely upon as a
convenient summary for the Court.

Peverill(2)

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BRENNAN J: Is this intended to show that there is a general

legislative power to change social security or
other benefits?

MR GRIFFITH:

Your Honour, we had the next step

retrospectively without attaching the takings

power. The first statement, of course,
Your Honour, is so self-evident that it does not need support, but what we wish to do is to track
the takings clause through and then track it
through the extra step to say, in effect, "What you
give you can take away" and our basic proposition
is - - -

BRENNAN J:

Not what you give, but what you have given you

can take away.

MR GRIFFITH:

To put it another way, Your Honour: if one has

a present entitlement for a pension to be payable
for the rest of your life, one can say that that is
an entitlement, but that can be taken away tomorrow
or today, and our submission is the fact that you
say that the period for which I am claiming
includes the last three months period as well as
the next three months period, in our submission,
does not make the slightest difference to your

entitlement. Each can be taken away and the point
we desire to make by reference to the United States
cases is that that has been recognized.

DAWSON J:

And what is the theory behind it, that the right

you have is a right, since it is given by
legislation, is a right which is subject to
legislative change.

MR GRIFFITH: Yes.

DAWSON J:

And therefore the legislative changes does not involve the acquisition of property.

MR GRIFFITH:

Your Honour, if you have already received it

that is something else, but perhaps an analogy is
the imperfect gift. If the gift is completed
because you have received it, then the doctrines of
..... or Lloyd and whatever, Your Honour, that is
yours, but if it is imperfect, although one might
demonstrate the intention to make the gift and to
go some distance to make it, there is no
entitlement in equity, there is no entitlement in

conscious or justice, to have it perfected. And we
say, Your Honour, similarly with a statutory
gratuity, when you have something that is just
reflecting a balance of matters that the Parliament
takes into account for the proper provision, having regard to the interests of the entire community, it
must be the case that it is possible to have a
restating of those provisions, both to effect what

Peverill(2)

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are fully vested entitlements - and I give the
example of a pension for life - and, we say, to
effect what might be regarded as an equally vested
entitlement to recover money for a one-off service
or for, say, a pension period which has already
expired.
But we say, Your Honour, that truly analysed,

these situations of entitlement are no more than
entitlement to receive what the legislation
provides for so long as the legislation provides
for i~, with the capacity for the legislation to
cut off in any way that entitlement before payment,
even in respect of an entitlement for a payment for
the present sum.
Of course, Your Honour, we say that in this

case - we have run ahead a little bit to say that -
the position of the pathologist who takes an
assignment is that they get no better right than
what the person who made the assignment had, which
is that sort of gratuitous entitlement.
Your Honour, of course, one can say, "Oh there

is an expectation that what you will be paid will
be an appropriate sum", say, in the case of a
pathologist. Well, that might be so, but we say in
this case as a matter of fact an appropriate sum
was paid, but it is by reason of administrative
error the result has come that more than an
appropriate sum, perhaps twice the appropriate sum,
has become payable.

DAWSON J:

Why is there not a chose in action, a statutory

cause of action, which is acquired by the
Commonwealth?

MR GRIFFITH:

Your Honour, our submission is that one does

not find the answer by saying, "Could this sum be
recovered had one issued proceedings, obtained

judgment", that one should say, "Well, what is the
nature of the underlying right?". If it is
essence, the definition of the property right which
is claimed - - -

DAWSON J:

I am trying to define it. It is a chose in

action.

MR GRIFFITH:

Your Honour, we say it is a property right.

One can claim the money for so long as the
legislation supports it. If the legislation ceases
to support it, if you have not yet had the money
reduced into possession the payment then the
entitlement goes, it is part of the definition of
the chose to have - - -

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DAWSON J:

Why is not the legislation which causes it to

cease to exist an acquisition of the chose in
action that previously existed?

MR GRIFFITH:

Your Honour, we say it acquires nothing, it

extinguishes it, but Your Honour is running through
several alternative steps in our argument to deal

with the non-acquisition argument. But for the
moment, Your Honour, we are seeking to just deal
with the issue of what is the principle for
gratuitous statues of this sort, both prospectively
where there can be only no difficulty, and we
say -

DAWSON J:

But the .... extinguishment of the chose in action

is not the acquisition of the chose in action, is
that what you say?

MR GRIFFITH:

We say, Your Honour, one extinguishes it, one does not acquire it. It is a question of what

happens, Your Honour.

I mean, the Court in Mutual

Pools had a similar issue of extinguishment, and no doubt there are other cases such as the next one in

the list today, which give rise to that issues too.

But, Your Honour, we say, in this case, there is a

peculiarity because it is a gratuitous nature of

the right, and when it is put against us that the
pathologist has given full consideration, we say

that he has given no consideration to the

Commonwealth who is the payer, none at all.

If the Court pleases, it probably would be a
most convenient course if I treat this summary as
being before the Court, and that substantially
avoids the necessity to go through in detail each
of these cases which is set out in full transcript for the convenience of the Court. But we do refer
to the statement in Bowen v Gilliard which is in
page 58 of the volume we have given the Court; that
congress is not, by virtue of having instituted a

all, much less at the same benefit level, so it is social welfare programme, bound to continue it at
established the prospective right to support
payments is clearly subject to modification by the
law, be it through judicial decree, State

legislation or congressional enactment. And there
are various other decisions of the court to the
same effect, the decision of United States Railroad
Retirement Board v Fritz. Unless the Court
requires it, I will not give citations as I refer
to these cases because they are all here and with
the full citations.

BRENNAN J:

What is the principle though that we are looking

at?

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MR GRIFFITH:

Your Honour, the principle is, we would say,

that it creates no vested right. We say that the
benefits conferred by gratuities may be
redistributed or withdrawn at any time, and that it
is possible, Your Honour, to - - -

BRENNAN J: That seems to be a much broader statement than

appears at the bottom of page 2 and the top of
page 3 of your analysis in the book, which speaks
about:
to determine whether the retroactive effect of
the Repeal Statute rendered it a taking
requiring just compensation, the court looked

at -
et cetera.

MR GRIFFITH:

Yes.

I am sorry.

Your Honour, on page 2 of

our summary we have an extract from
Lynch v United States, which says:
The benefits conferred by gratuities may be
redistributed or withdrawn at any time in the
discretion of Congress.

But, Your Honour, our submission and summation of
these - - -

DAWSON J:

How does that work, that the benefit of its very

nature is subject to legislative change and so if
the benefit disappears as it could, of its very
nature, you cannot say that there is any
acquisition of property; is that the sort of
reasoning?

MR GRIFFITH: Yes, Your Honour, we say it just does not

attract the acquisitions power; it does not attract
just terms at all. It deals with something,

Your Honour, which can be analysed as a present

entitlement to recover money, including by way of
action for so long as the law remains to recover
that money. But, our submission is, Your Honour,
that when one is dealing with the gratuity of this
course, although one admits that one may recover
that amount by actions so long as the legislation
provides for its payment in an unconditional form
of present entitlement to a recipient, that we say
the concept of acquisition of property on just
terms just does not attach; it is not infringed by

the withdrawal of that benefit. And we refer to
these United States cases as establishing that
because they are provided gratuitously, such
benefits of their nature are not regarded as giving
rise to vested rights in the nature of property,

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the abolition of which is subject to, we say in the
case of -

DAWSON J: It goes something like, you cannot have a right

to legislation remaining unchanged.

MR GRIFFITH:

Yes.

The property right is your entitlement

as the legislation from time to time expresses it.
So if not changed, then you do have the right to
judgment and recover the money, or normally of
course the mechanism for recovery in disputed cases
is administrative review, and that was the course
taken here, but the mechanism perhaps does not

matter very much. We admit the right to recover
while the legislation remains unchanged, depending
on the form of the particular legislation.
In paragraph 5 of our outline we refer to the

terms of - - -

DAWSON J:

Why would that not allow you to also

retrospectively recover money that had actually
been paid over?

MR GRIFFITH: Well, Your Honour, we do wish to address a

and perhaps one analogy I mention is the perfect
submission to that; can I do that in course,
gift; that if one has the amount reduced into
possession, well then, using the American analogy,
one can see there could be an element of taking,
because then the obligation would be expressed as

one to repay. As to whether that would fall within
the acquisitions power, Your Honour, that is
another issue, because we would make the submission
that an obligation to pay money itself is not an
acquisition. But, Your Honour, that is perhaps
even a matter for another day, as to whether that
would be within power, having paid the benefit, to
decide two years later that you wanted it back.
There could be an argument about it, but one can

the one which we submit is before the Court in this see an obvious equity there which is different from
case.

MASON CJ:

Mr Solicitor, reading the materials you have

supplied, it does seem to me that the United States
doctrine is a good deal more complex than the
simple proposition you seem to be inviting us to
accept.
If you look at pages 114 and 115, in the

opinion in Hoffmann, where the court seeks to apply
what the supreme court has decided in earlier
cases, there seem to be three separate factors that
are taken into account.

Peverill(2)	27	9/3/93
MR GRIFFITH:	Yes.	Your Honour, I was going to refer to

them.

MASON CJ: Well, I am not suggesting you will not, but all I

was doing was to register at this stage, my
reaction to what you are saying, and my reaction is
that looking at the cases to which you refer, in
support of your proposition, they seem to indicate
that the situation is more complex than you have
been indicating in response to the questions put to
you by Justice Dawson.

MR GRIFFITH: I am sorry, Your Honour.

It is just that I

had not got very far, Your Honour. I thought I was
dealing with the sort of questions that, sort of a
chapeau ..... "Well there seems to be a problem about
all this."

MASON CJ: Well, I do not want to take you out of your

course, but I thought, perhaps I might indicate to
you at the moment that it seems to me a little more
complicated than you were suggesting.

MR GRIFFITH:

On the point Your Honour raises, our basic

proposition is that when one looks at the situation
here, one finds a fairly clear case that satisfies

all three.

MASON CJ: Well, maybe, but perhaps, if it is a matter of

looking at these three considerations, you will

explain to me what those considerations entail. I
can understand the third one, but I am not sure
that I entirely understand the first two, that is,
economic impact and the extent to which a statute
has interfered with distinct investment-backed
expectations.

MR GRIFFITH:

Yes. Your Honour, that expression itself is

one that get really separate force from the
contracts clause, which is a complication which

does not arise so much here because we do not have
a contracts clause. Your Honour, we do not seek to
simplify it to the point of saying, "Well, one just
says these American cases, they establish the

doctrine, and there it is". Your Honour, that is
why we have taken the course of giving the Court
the full text of what we see is these relevant
authorities. But, Your Honour, they are - - -

MASON CJ: Well, that is the risk you run. If you do that

then you invite somebody like myself to ask you
questions about what is in the materials.

MR GRIFFITH:

Of course, Your Honour.

Your Honour, of

course, we made a choice not just to give extracts
of the best page with the best quote, but to give
the Court everything and, Your Honour, this is a

Peverill(2)

9/3/93

new area to examine whether or not this question of
gratuitous statutory benefits has been dealt with
under - and, Your Honour, we want to make it clear
that there is far more law than this. We have just
tried to obtain expressions so far as we can at the
level of the Supreme Court, indicating that there
is this doctrine, and one has the problem then of
adapting it to, we say, from our point of view, the
easier threshold level of the acquisitions power as
compared with the takings power, and having regard
to things such as the absence of a contracts clause
here, the fact of the due process provision which
also makes it more difficult to take things in
America than here.
If one has a doctrine here that, having regard

to contracts clause, takings and due process, would
seem to establish that what can be expressed as
presently vested entitlements, can be removed at

will by a legislative alteration. Our submission:
one has a relevant starting point for consideration
as to whether or not this approach is one readily
to be adapted in considering, not the operation of
the Australian's acquisitions power, but whether
acquisitions power issues are - - -

DAWSON J:	I might have been the one at fault in trying to extract from you some basic, single proposition,
which underlay all the rest.
MR GRIFFITH:	Our basic proposition is that because they are

provided gratuitously, such statutory benefits
should of their nature be regarded as not giving rise to vested rights in the nature of property, the abolition of which is subject to the

acquisitions power. We just say it is right
outside the acquisitions power. So what we submit
is that when one looks at the plenary powers under
placita (xxiii) and (xxiiiA) of section 51 to
legislate with respect to invalid, old age
pensions, unemployment, pharmaceutical, sickness

and hospital benefits, et cetera, that necessarily
includes the power to increase, reduce, abolish and
otherwise amend the nature and amount of benefits
including, we say, to effect what might be up to
the time of the amendment to be expressed as a
present entitlement to a payment which could, until
amendment, be enforced by administrative or other
court process.
We submit that a law such as the 1991 Act

which amends or repeals, alters entitlements to
gratuitous statutory benefits just does not fall
within the acquisitions power.

DAWSON J:

Does the same apply, for instance, to the

acquisition of a copyright by the Commonwealth?

Peverill(2)

9/3/93

MR GRIFFITH:

Your Honour, we await the judgment of the

Court on some matters pertaining to the copyrights
power, but our submission for the purpose of this
case is confined to this gratuities point where
there are moneys payable by way of a statutory
gratuity to which there is no entitlement other than the fact that the legislation expresses it
as - it is the only way to describe it,
Your Honour - a gratuitous payment.
The person who is entitled to the payment is

the patient. The patient no doubt required the
test to be made, and the patient's obligation was
to pay the pathologist for it. The legislative scheme entitles the patient, whether or not the
patient has a taxable income, has paid any Medicare
levy or not as part of the annual tax assessment,
to receive a sum of money, we say as a gratuitous
entitlement, so long as the amount paid by the
patient is equal to or greater than the amount
which is paid.

McHUGH J: But an entitlement itself may have value.

Supposing you take away a politician's gold pass.
Is that an acquisition of property?

MR GRIFFITH:

Your Honour, that is an interesting question.

From the point of view of analysis here, the threshold question is: is this a gratuitous
benefit or is it something that has been earned?
If it could be put that it was postponed
remuneration that had been earned, there could be a
different principle, because our principle depends
on the amount being established as a gratuity. If
Your Honour postulates on that example it has not
been earned but it is a parting equivalent of the
gold watch only it does not work but produces
results, then a different consequence could follow.
My learned friend, the former Solicitor-

General of Victoria, I think told me one anecdote that a Solicitor-General of Victoria was asked to
return his gold pass on the basis that he would be

issued with a plastic one instead. He refused to
do that on the basis that he had a gold pass in
possession and it was not going to leave his
possession till his death. Your Honour, issues
might arise as to whether he could be forced to
hand it over or not. Certainly when Solicitors-
General of the State leave office, someone asks
them to hand in their gold pass, but it depends,
Your Honour, in answer to that case, as to whether
it can be regarded as a gratuity or not.
So, that is our principal submission, that we

say that legislation which repeals and amends
entitlements, gratuitous statutory benefits of this

Peverill(2) 30 9/3/93
sort, is just not within the ambit of the
acquisitions power. Alternatively, we say that
there are four approaches which lead to the same

result. The first is that if one has regard to the
acquisitions power, we say such benefits and
entitlements are not property within the meaning of
the power because they are mere gratuities.
Secondly, we say, the extinguishment or reduction of the right to be paid a benefit which
is so gratuitously conferred by a Commonwealth law
in respect of a service is not an acquisition of
property within the meaning of the acquisitions
power in these circumstances, because we say this
legislation is curative, and we are going to come
to the curative legislation argument as a separate

argument. And, thirdly, we would say that this
acquisition is not for any purpose in respect of
which the Parliament has power to make laws, but it
is merely to vindicate the administration by the
Health Insurance Commission of the Commonwealth
Medicare scheme.
Of course, we would submit to the Court that

an acquisition that provides no compensation can be
on just terms, but in this context our submission
is legislation reducing or repealing an entirely
gratuitous benefit is not unjust for the very
reason that the benefit is gratuitous and,
alternatively, because the legislation providing
for it in these circumstances is curative.
So that, even if there were a Commonwealth law which provided, on conferring a gratuitous
statutory benefit that the benefit would be a right
to property within the meaning, one would say, of
the acquisitions power, we say that none the less
the acquisitions power would not apply to a law

which extinguished or diminished that right. It is

our submission that the gratuitous statutory
benefit is not property for this provision and
Parliament cannot legislate to make it property for
the constitutional purpose.
So that the characterization of the benefit as

a gratuitous benefit, in our submission, depends on

its substance and not its form. And as I mention,
we refer to in paragraph 5 of our contentions
various other statutory forms of expressing
entitlement to gratuitous benefits. Veterans'
Entitlements Act, section 13(1) provides:
the Commonwealth is ..... liable to pay -

a pension.

Peverill(2)

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McHUGH J: But if you look at the substance of a case like

the present, having regard to the terms of
section 20A of the Health Insurance Act, the
substance of the transaction is the doctor was
providing services knowing he is going to get an
assignment and have a right of reimbursement from
the Commonwealth.

MR GRIFFITH: Well, Your Honour, it is a question of what

his right is, and what we say is the right, as
defined from the legislation from time to time.
Now, Your Honour, if one had, as it were,
retrospective legislation acting as will to take
away present entitlements and reducing no
entitlement or entitlement that only enabled a
service to be rendered at a loss, Your Honour, well
then, one would imagine the scheme would not work
very well. Firstly pathologists would not
voluntary take a transfer under section 20A in
assignment because they would not want to expose
themselves to the risk.
So one, Your Honour, must have an assumption

of reasonable administration and, Your Honour, we
say that if one has that approach here there is no
difficulty because it is our submission to the
Court that in the circumstances, as they are before
the Court, it is clear that as the scheme operated,
albeit with administrative error that has made the
legal operation ineffective until the 1991 Act made
it the legal operation retrospectively, was to
produce the result which did operate for those who
participated, both patients and pathologists who
took an assignment under section 20A, to produce a

reasonable fee. And we say, Your Honour, the
purpose of the 1991 Act is not to deny that
expectation, but to vindicate it.
The 1991 Act did not reduce the entitlement of pathologists that had already been paid by

reference to a higher sum than that lawfully fixed.
It validated that entitlement but validated the entitlement not by reference to that which was held
because of the administrative error to be that which legally applied, the 1345 item, but that
which was intended to apply as the appropriate sum
as amended from time to time to reflect what was
regarded as an appropriate remuneration and, we
say, demonstrated by its operation over those
years, including some almost $100 million worth of
discounted payments by reference to the incorrectly
regarded schedule item over the period from 1980 to
1989.

McHUGH J: This branch of your argument depends upon

categorization of payments, but is there some

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principle which distinguishes property generally
from this type of "property"?

MR GRIFFITH:

Your Honour, our submission is that the

principle, if you like, is if one characterized it
as being a statutory gratuity one then is within an
area, in our submission, Your Honour, where one
says that what otherwise would be the analysis by
reference to conventional considerations of what is
the property right, what is the entitlement, is it
a presently vested chose in action which entitles
you to. recover by way of legal proceeding if the
obligation is not met, is just, in our submission,
Your Honour, not apposite.
We say that when it is a gratuitous benefit

the expression of the right is expressed in terms
that the right is no more than an entitlement to
whatever the right is expressed as expressed from
time to time and subject to being expressed in
different terms, including to effect what would
have been the present entitlement absent that
alteration.

GAUDRON J: Is that an argument that it is not property, or

an argument that it has no value even equivalent to
that of the paper that the Act is written on?

MR GRIFFITH:

The first, Your Honour, because whilst the Act

is there, then the entitlement is there. One can
see from the operation of this Act, for example,
that it does give entitlements which enable the
statutory scheme providing for gratuitous benefits
to work in the public interest to ensure that there
is a mechanism which enabled patients gratuitously
to receive a refund and enable pathologists
voluntarily, because they accept that it is an
appropriate and reasonable sum of remuneration for
that benefit provided for the patient, to take an
assignment under section 20A was an entitlement

then to receive 85 per cent of the sum which the
patient would recover otherwise.
If there is no assignment the patient receives

100 per cent as an individual. Individuals are
affected just as much by this 1991 Act as are
pathologists who have taken the assignments, as
indicated by the schedule showing the payments of
$81 million since 1984 till the end of the third
quarter 1990.

BRENNAN J:

Mr Solicitor, I do not want to take you out of

your course of argument if you are going back to those three elements in the United States cases, but your reference to gratuitous payment focuses
attention upon the provisions of 20A(l)(b) which
requires the pathologist to agree to accept the

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assignment in full payment. So that under the
statute unamended the pathologist gives up his
cause of action against the patient.

MR GRIFFITH: If he takes an assignment.

BRENNAN J: Yes.

MR GRIFFITH:

The choice is up to him whether to take it or

not.

BRENNAN J: Right. Having taken the assignment, he is given

then a cause of action, it would seem, if you call
it that, or at least it is payable to him under
subsection (3) the amount of 85 per cent.

MR GRIFFITH: Yes.

BRENNAN J:

The question is whether that amount is

gratuitous in the relevant sense.

MR GRIFFITH: Yes, Your Honour. Well, our submission on

that is really a stream rises no higher than its

source. We say that the whole scheme of the Act is
to provide for payment of gratuities by reference
to medical expenditure.

BRENNAN J: Well, there are two sources, are there not: one

goes to the patient, the other goes to the doctor.

MR GRIFFITH:

Your Honour, the services are the pathology

service. The patient is the person who requests

the service and who is obliged to pay. The
pathologist has a choice as to whether to take an
assignment of the patient's rights with a
15 per cent discount or not. We say, Your Honour,
that that choice of the pathologist is, of course,
influenced by the pathologist's assessment of the
operation of the Act.

Part of the operation of the Act, Your Honour,

is to vary scheduled items from time to time and
our submission is that, in the context of a
provision of a gratuitous payment, part of that
statutory matrix is the circumstance that the

amount provided may be increased as well as reduced
from time to time and, we submit, that may be
effected retrospectively to effect what might have
been expressed to have been the entitlement at the
time the assignment was taken.

BRENNAN J:

I understand that broad general way of describing it.

As I understand it, Dr Peverill

claims, under section 20A(3) a payment and he is no
longer entitled to what was an assignment of a
Medicare benefit at the time he took that
assignment.

Peverill(2)	34	9/3/93
MR GRIFFITH:	He is entitled, Your Honour.	He is entitled

under the operation of the retrospective Act to be
paid at a higher sum than that - - -

BRENNAN J:

I appreciate that, but at the time that he took

the assignment he was entitled to X dollars under
subsection (3).

MR GRIFFITH:	As has been vindicated, yes, Your Honour.
BRENNAN J:	And in order to acquire the right to be paid

X dollars, he had to accept the assignment in full
payment, so that he lost his cause of action
against the patient.

MR GRIFFITH:	Yes, Your Honour.
BRENNAN J:	So for X dollars he gave up his cause of action against the patient.

MR GRIFFITH: Well, Your Honour, we submit that is really to

answer the question, saying "for X dollars". What
we say is, he took the right which he has under
this Act to be paid whatever sum is provided under
the Act to be paid, and we submit part of the
definition of that right is to express it by
reference to the Act as it expresses that right
from time to time, at least up to the time of
payment.

BRENNAN J: That does not seem to give any weight at all to

the opening words of 20A(l):
Where a rnedicare benefit is payable to -

then an assignment may take place. Now, surely
that is a Medicare benefit that is payable at the
time of the assignment.

MR GRIFFITH:

Your Honour, the submission I was just corning

to, when we started this discussion, is to say that
it is our submission the terms in which such
benefits are granted, that does not determine
whether they can be reduced or abolished from time
to time. It is not a question of looking at the
precise Act, and I just was referring to the
Veterans Entitlements Act where it says that the
Commonwealth is liable to pay a person a pension.
Our submission is that the term of the Act does not determine the circumstance that the amount can be
varied from time to time, its characterization is a
statutory gratuity which determines it, in our

submission. So that however expressed in the Act,
our submission is that, in truth, it is no more
than an entitlement to be paid what we characterize
as statutory gratuity as the law may express it
from time to time and subject to amendment which

Peverill(2)

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may affect, as we have submitted, both the payment
of present entitlements not yet paid and also
future entitlements.

BRENNAN J:

Do you say gratuity means gratuitous as between

the person to be paid and the Commonwealth?

MR GRIFFITH: Well, Your Honour, we say the entire

legislation provides for a gratuity; that the
principal gratuity referred to Your Honour is that
between the Commonwealth and the patient - - -

BRENNAN J: But it is not the relevant gratuity here.

MR GRIFFITH: Well, Your Honour, we submit that the entire

Act deals with payments of gratuities; moneys
which - there is no service rendered, we submit
Your Honour, to the Commonwealth, there is nothing
rendered to the Commonwealth at its request - - -

BRENNAN J: That is why am asking you is it between the

payee and the Commonwealth, because here, as I
understand it, the payee acquired to claim as
against the Commonwealth, only by providing the
service and giving up his cause of action for the
debt.

MR GRIFFITH:

Yes.

Your Honour, we say that the person

acquired no better right than that which the person
assigning the right had, namely, entitlement to a
gratuity as expressed under the legislation then in

force. And we say that the pathologist,
notwithstanding the form of words Your Honour takes
me to in subsection (3), received nothing better
than that, Your Honour, and that that in the
context of an administration of the Act which is
intended by its statutory scheme to provide
appropriate remuneration, including the capacity to
have assignments and bulk billing with a discount,
which we say, Your Honour, in the circumstances

before the Court, is demonstrated to be what has

occurred here. So that - - -

DAWSON J:

You would say that in the case of an award rate

you could not retrospectively reduce it, because it
is not gratuitous?

MR GRIFFITH:	An award to an employee, Your Honour?
DAWSON J: Yes.

MR GRIFFITH: Well, Your Honour, then it would be earned and

there would be different considerations. Our
doctrine only applies to gratuities.

DAWSON J:

One factor, that it is earned or not earned?

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MR GRIFFITH: Well, Your Honour, what we refer to the

American cases is establishing, is that statutory
gratuities of this sort, pensions, social welfare
benefits, in our submission, are to be to treat it
differently. That they do not come, in our
submission, within the acquisitions power because
of the fact that they are basically a statutory
gratuity that can be administered in the interest
of the community as a whole, including variations
which effect what up to that point might be
expressed as unconditional entitlements.

McHUGH J:

Do the American cases draw any distinction

between benefits payable out of general revenue and
benefits payable out of levies raised on particular
sections of the community? For example, the
Medicare levies paid in respect of this particular
statute. In other cases, it might be woolgrowers
who pay a particular levy.

MR GRIFFITH:

Your Honour, my answer at the moment is no,

but could I assure Your Honour about that after the
luncheon break? But, Your Honour, as to the other
point of your question about a funded Medicare
levy, we say that there is no funded Medicare levy.
Your Honour, although there is a levy on your
income tax in respect of what is expressed to be
Medicare, all moneys recovered go indiscriminately
into the consolidated revenue and all obligations
to pay Medicare amounts, including those under the
1991 Act and those which were incorrectly paid,
because there was no lawful appropriation until the
1991 Act by reference to higher amounts, are paid
out of consolidated revenue.
So there is no balancing of a fund there,

Your Honour, and of course the full entitlement
exists whether or not one is a taxpayer or not;
whether one has ever been a taxpayer or not, but
merely because one is - I think in Australia,

Your Honour. I do not think you have to be an
Australian citizen even. So, really, Your Honour
it is a form of making the extra taxation levy more
palatable to call it a Medicare levy. There is no
fund here, so that the moneys paid are paid, in
effect, from consolidated revenue and if it be
assumed, as we submit, that there could be
$98.5 million paid out over what is regarded as a
reasonable sum for these services from time to time
rendered, as we assert is a fact, that would be a
depletion of the consolidated revenue to that
extent. It will not be funded by any levy
referable to money paid by taxpayers as a Medicare
levy.
So, perhaps to return to this point of

difficulty, we submit that, however expressed,

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including the forms of section 20 dealing with
assignments, the law which in substance confers a
gratuitous benefit is a law, the subsequent repeal
or amendment of which entirely falls outside the
acquisitions power. And, for our submission, it
matters not that the law states that the recipient
has a right or entitlement to receive that benefit,
or the Commonwealth is liable to pay the benefit.
The right, in our submission, exists only in

the entitlement to receive such a gratuitous
benefit to the extent, and for so long as the law

remains in force, the payment being enforcible
either by review of administrative action or
possibly in a court of law, during such time as the
right continues to exist. In our submission, such
a present entitlement, so expressed, does not mean
that the entitlement is to be regarded as property for the purposes of the acquisitions power, or its
extinguishment as an acquisition of property, and
we refer to analogous provisions of the
Veterans' Entitlements Act in paragraph 5 of our
contentions, Social Security Act, Austudy
regulations and Health Insurance Act, which
similarly have references to entitlements in the
form such as right to payment or liable to pay, or

terms such as that sort. Our submission· is that
none of these various forms of wording confers a
right, the legislative reduction or abolition of
which would be subject to the acquisitions power.
We support this argument by reference to what

we say are strong policy reasons. We say, firstly,

of the acquisitions power for according the holder
of a right to payment of a gratuity from the

that there is no reason derived from the language upon the holder of a private property right. Of course, the complexity of the administration of a
comprehensive social welfare scheme is such that it

must be desirable that Parliament is able to adjust the bounties that it has provided so that the most
common good can be done by sound and economical
administration of the scheme, without the potential
necessity of imposing additional burdens on tax
payers to vindicate a legal entitlement of holders
of rights of payment, who have not yet received
payment, that might in truth be purely windfall.
It is of the essence, in our submission, of

democratic government that laws be made and unmade.
If gratuitous benefits were property for the purpose of the acquisitions power, successive governments would be bound by the requirement of
just terms, not to reduce benefits payable under an
extant law, unless the concept of just terms is
treated as being a broad principle.

Peverill-( 2)

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One effect, could be that it might be
suggested that, for example, something like a
pension under a Veteran Entitlements Act, the
obligation would require the continuation of
benefits indefinitely. In effect, Parliament would
be bound by an earlier Parliament, because it would
not, save by paying full value, be able to alter in
any way what might be unreasonable and even
impossible burdens on the public purse which
necessarily must be re-constituted in the interests
of the community as a whole. Or even if Parliament
took a view which might be regarded as not
reflecting the entire community interests, it is
our submission that Parliament does necessarily
have this freedom to consider whether or not
gratuities such as the payments under this Act
should continue at the same level, or continue at
all.
We perhaps refer briefly to the decision of

Flemming v Nestor, at page 291 of the volume,
particularly at page 610 of the report, which
appears at page 298, where it said:
It is hardly profitable to engage in conceptualizations regarding "earned rights"
and "gratuities." ..... Integrated treatment of
the manifold specific problems presented by
the Social Security program demands more than
a generalization. That program was designed
to function into the indefinite future, and
its specific provisions rest on predictions as
to expected economic conditions which must
inevitably prove less than wholly accurate,
and on judgments and preferences as to the
proper allocation of the Nation's resources
which evolving economic and social conditions
will of necessity in some degree modify.
To engraft upon the Social Security

system a concept of "accrued property rights"
would deprive it of the flexibility and
boldness in adjustment to ever-changing
conditions which it demands.

Here the court was concerned with the due process clause but we submit that this comment is equally
pertinent to the takings clause.

DAWSON J: In that sense gratuity does not mean free or

giving no consideration; it simply means that the
right is one which has an inbuilt capacity to
change, and if that capacity is realized, then
there is no acquisition of property, it is just an
adaptation of something which by its very nature
was capable of that adaptation.

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MR GRIFFITH: Yes, Your Honour.

DAWSON J:	The word "gratuity" is misleading, and that would be so with any statutory right, whether or not it
was earned or otherwise.

MR GRIFFITH: Yes, that is so, Your Honour, but we have a

little extra saying that one can retrospectively effect that entitlement as part of, if you like,
the definition of the property itself up to at

least any time up to payment. We say that one is
dealing with the articulation of what is the
entitlement and that is all part of the one
definition. It is not a property right that
exists, so then it is a property right for the
purpose of acquisitions which is removed if it is
changed in the way Your Honour indicates. But, of
course, our propositions run to the alteration or
abrogation of that right up to any time, at least
before payment.
Could I give the Court two further references

to cases that are also included in our materials.
National Passenger Railway Corporation v Atchison,
470 US 451, particularly at pages 465 and 466. It
is on page 310 of the volume, and the quotes are at

page 324 and 325. And Connolly v Pension Benefit
Guarantee Corporation, 475 US 211, and the
particular quotation is at pages 144 and 145 of the
volume, page 223 and 224 of the report. It goes
over to page 147 from page 145, particularly 146
and 147. Perhaps I should indicate to Your Honour
the Chief Justice that Connolly at this reference
is discussing the three factors that Your Honour
referred me to earlier.
So, in our submission, the United States

Supreme Court has treated gratuities -

BRENNAN J: Is there any development of this notion of

investment-backed expectations?

MR GRIFFITH:

Your Honour, the notion seems to have come, as

I mentioned, more from the contracts clause.

BRENNAN J: Maybe it does.

It is just that if this has any

relevance to us, for my part I would be interested
to know what the American thinking is about the
meaning of the phrase "investment-backed
expectations".

MR GRIFFITH: Yes. Your Honour, one finds on page 147 a

reference to this, and this is in the context of a
pension provision of considering whether or not
there was, one could say, an investment by the
potential pensioners in the fund, by reference to
which one could say that in the circumstances,

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Your Honour, there was more than a characterization
of the statute regarded as providing for a
gratuitous benefit.
Your Honour, at page 148 there is a reference

to a citation from FHA v Darlington Incorporation,
saying that:
"Those who do business in the regulated field
cannot object if the legislative scheme is
buttressed by subsequent amendments to achieve
the legislative end."

Your Honour, that is really dealing with the issue
of pension plans where there had been contributions
by employers during a period - - -

BRENNAN J:

The relevant question is: does the yielding up

of the debt by the pathologist to the patient fall
within the notion of investment-backed
expectations?

MR GRIFFITH:	Your Honour, the answer we make to that is no.
BRENNAN J:	Can you tell me why.
MR GRIFFITH:	Your Honour, our first answer is to say because the whole mechanism of the Act is providing for the payment of a sum in respect of which the
Commonwealth is not involved at all other than by
way of making a provision for a - - -
BRENNAN J:	I appreciate that, but if there is some notion

that in order to avoid the taking clause in the
United States Constitution, a retrospective
provision which eliminates a gratuity must show
that it does not attack an investment-backed
expectation, it seems to me that you need to show
that this does not fall within that notion, because
we are not talking then about other than gratuitous

payments.

MR GRIFFITH:

Your Honour, we have make one submission as to

why we say it does not fall within the notion,but
we also say that the whole scheme of the Act is on
the provision of voluntary participation by the
service provider, by the practitioner, and that
that is in the context of the service provider
electing to take a particularly expressed right
under the legislation in substitution for what
otherwise would be a right to be paid whatever sum
the practitioner chose to fix from the patient.
Your Honour, our submission is the exercise of

that choice by the practitioner in the context of
the operation of the mechanisms of the Act is a
matter of a choice by reference to an entitlement

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which, in our submission, is one expressed, however one analyses it, by reference to an entitlement to,
as we have referred to it, a gratuitous payment,
being by definition, in our submission, one which
can be amended from time to time.

BRENNAN J: If that argument is right, there can be

legislation providing, for example, for export
bounties, on the faith of which there is an
investment of a large order in a new industry, and
that investment having been made and the industry
having come on stream, the bounty can be revoked.

MR GRIFFITH:

Your Honour, it might depend upon the precise

terms of the scheme in that situation. One does
not know how it might be expressed. It might have
some provisions so that it cannot be characterized
as, we would say, a gratuity. It might depend -
there might be consideration, there might be an
agreement. Usually in those sorts of schemes,
Your Honour, one does have to have a verification,
an agreement, to become entitled to a bounty. One
just does not turn up at the end of the day and

say, "I've exported these many things; I claim so

much." Your Honour, with respect, it is not all
that much assistance in dealing with this question
of what we put as a social welfare type gratuity to
examine what would be the situation in hypothetical
circumstances involving what might be quite
separate business arrangements, if one likes to put
it like that.
Your Honour, really Your Honour's questions do

identify the point of our submissions which are to
say that, in our submission one characterizes what
is done here as something which, for all
participants, is voluntary; we say for the patient
and we say also for the service provider. And if
the service provider does not wish to take a risk
that in the ordinary administration of the Act

there will be a sum payable which is a reasonable
sum for all the circumstances, subject to
adjustment, possibly upwards, possibly downwards,
if the sum which is provided at a particular time
is an inappropriate sum, well then, it is a matter
of free choice for that service provider not to
take the assignment and not to take that risk.
But our submission is the definition of what

is taken falls within the ambit of an expression of
an entitlement as it may be fixed from time to time
by the relevant law, including, we submit, as it

may be expressed by reference to benefits, an
entitlement to which has already accrued under the
law as it is expressed, but which is subject to
being varied at least up to any time before payment
to be increased or reduced and so express a

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different entitlement from that which existed at
the time of assignment.

So, really we are in agreement with

Your Honour that that is - Your Honour has
identified to us and we accept, Your Honour, that
there is a point where one says, in our submission,
there is not an absolute entitlement when
section 20A attaches on the assignment at the time
of rendering the service. Our submission is there
is an entitlement by reference to the Act, as it
might expect it to remain, but one can see,
Your Honour - perhaps it might be of assistance if
I hand, or even wave, to the Court a number of these medical assessment advices that lead to

alterations. They are as thick as your arm.
One feels almost sick with reading some of the ailments that are tested and treated and dealt

with. They include medical and surgical procedures
as well as pathology ones, but when one is dealing
with all the interstices of illnesses and treatment
of the human body one is in an area where there is
not certainty and one picks it up on the first page
of the second reading speech, the development of

new procedures changes things. A test which - and
the second reading speech does it by reference to
this test - that might have taken 15 minutes 10
years ago, with new equipment one can test 98

samples in two minutes. So, fixing a fee at a
certain level by reference to a manual test becomes
inappropriate with new procedures and then, of
course, one has to fix a fee having regard to the
costs and utilization of a machine which can do
this, and that must be a function of dealing with
variables which, as we have seen, does not operate
perfectly, but we submit the Court should regard as
having been sufficiently informed to see that it
operates quite effectively.

It does provide, in operating, a way for the

entire community for a reasonable system of
recruitment by way of voluntary, we say, gratuitous
statutory payment to patients, with a mechanism
enabling service providers to bulk bill, or
recoupment of some of the expenditure of the
patient in respect of the service rendered by the
service provider, who may be a physician, a surgeon
or, as in this case, a pathologist.
So our approach is to refer to these United

States, mostly Supreme Court, decisions of treating
gratuitous payments as not being property for the
purpose of the takings clause.
Now, we would submit that it is not necessary

here to consider whether or not the position is the

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same, whether the Commonwealth is liable under the
acquisitions clause in respect, for example, to
legislation which abrogated a statutory right such
as a television broadcasting licence. Your Honour
Justice Dawson referred to that in the Political
Broadcasts case, 108 ALR 641, and I think
Your Honour, for the purpose of argument, said "Well, treating the licence as property then", but, in our submission, one does not have to consider those sorts of issues here because we are dealing
with something entirely different from examples
such as that which might obviously fall within the
example of an investment backed expectation.
We also refer to Lynch v United States,

292 US 571, in particular at pages 576 to 579,
which commences at page 91 and goes over to page 94
of the volume. At page 577, in the opinion of the
court, it says:
Pensions, compensation allowances and
privileges are gratuities. They involve no
agreement of parties; and the grant of them

creates no vested right. The benefits
conferred by gratuities may be redistributed
or withdrawn at any time in the discretion of
Congress.

And then the court refers to, in its opinion:
On the other hand War Risk policies, being
contracts, are property and create vested

rights. The terms of these contracts are to
be found in part in the policy, in part in the
statutes under which they are issued and the
regulations promulgated thereunder.

We, of course, would submit here that there is no contractual relationship created by the transfer provisions of section 20A of the Act.

We now go to the next step of submitting that

this gratuitous benefits approach applies to
retrospective operation as well as prospective
operation and our submission is that this applies,
so far as United States authorities are concerned,
without violating the takings clause of the
Fifth Amendment. We refer first to Hoffman v City
of Warwick, which is on page 105 of our materials,
and in particular at pages 114 to 115.
The reference on page 114 is to the

plaintiff's argument that the:
Repeal Statute's effects are not limited to cutting off prospective benefits: the statute

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also revokes benefits that plaintiffs earlier
became entitled to, but never received -
and it goes on -
To determine whether the retroactive effect of the Repeal Statute rendered it a taking requiring just compensation, we look at three facts the Supreme Court has found of
"particular significance," -

and there are the three factors Your Honour the
Chief Justice referred me to from Bowen and
Gilliard and also, as I mentioned, Connolly. It
says:
First, the Repeal Statute's economic

impact on the plaintiffs is not so severe as
to render it a taking.
This, I should indicate, involved legislation

where the entitlement was an entitlement for
enhanced seniority for returning war veterans,
which meant that you started at a higher rate of
pay and therefore you would have been entitled to a
higher pension entitlement at the end of your
service because of the higher level of service
during your period of service.
Particular workers were not granted that right

because of, one could say, administrative error and
when it became clear that were they to take this
entitlement there would be a liability on the
public revenue, there was retrospective legislation

to remove that benefit. So that although it was a
vested entitlement to seniority that would have
produced enhanced pension entitlements as well as
higher salary, the effect of the retrospective Act
was to remove all rights and the court argued, or
the court held, that:

First, the Repeal Statute's economic
impact on the plaintiffs is not so severe as
to render it a taking.

It referred to the fact:
Although the repeal deprived plaintiffs of a preference they previously were entitled to
invoke, it did not deprive them of monetary
benefits already paid over ..... left them in
the same employment relationship ..... At that
time, they were not granted the benefit of
enhanced seniority, nor were they apparently
aware of any such right.

They say, well -

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After the repeal, their position was no
different economically -
although, of course, they had lost their legal
entitlement.
Secondly, by reference to the second test the

court took the view that it did not deprive them of
contractual rights and here is the reference to

investment-backed expectations. And we would
submit, as we have, that in the circumstances of
the operation of this Act, that the issue of
investment-backed expectations just does not arise.
Thirdly it said that:
the nature of the government action ..... was
not to "physically invade or permanently
appropriate any of the (plaintiffs') assets
for (the State's) own use." Instead, by
removing an advantage previously extended to
certain veterans -

and this is -
an adjustment of the benefits and burdens of
economic life, not a taking requiring
government compensation."
So we refer to that decision as what we submit

is an acceptance of the operation of this principle
where one could clearly say that the particular
workers, had they vindicated the rights they had and which were abrogated under the retrospective law would have had a direct and continuing
financial benefit to them, not merely their
enhanced seniority during a time of employees but
also enhanced pension benefits.
In Lynch in the United States, to which I have

already referred, the Supreme Court said that such

gratuities may be distributed or withdrawn at any
time, and I have also referred to Connolly v
Pension Benefit Guarantee Corporation where the
Supreme Court upheld the validity of legislation, the effect of which was to impose a liability on
employers in respect of periods of employment prior
to enactment of the law, and thereby to destroy
express contractual rights excluding such
liability, and in Connolly's case also, the
legislation was held not to violate the taking
clause.
So, our submission is that the acquisitions

power should be interpreted as not applying to a
law which reduces or abolishes a gratuitous benefit
to which a person has become entitled but has not
yet received, and we submit that there is no

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material difference between repeal of future
benefits, all pre-conditions of which have been
fulfilled, and repeal of benefits in a period in the past, all pre-conditions for which have been
fulfilled.
In any event, legislation, in our submission,

which simply abolishes the entitlement to be paid a
benefit in respect of a period in the past, none
the less operates prospectively, it removes the
present and continuing right to receive a payment
of that benefit. It does not undo the effect of a
payment already made. It merely says, "In future
you are not entitled to receive that amount."
Dealing with the issue before payment, it is

our submission that because such benefits are
gratuitous, as we have mentioned, we would regard
legislation providing for such benefits should be
regarded as analogous to the situation where one
has an incomplete gift. Until the gift is
completed by actual payment, it may be revoked at

any time. If I could refer the Court briefly to
the Federal Commissioner of Taxation v Clarke,
40 CLR 246, at pages 281 to 284, and one can see
this principle perhaps sufficiently summarized, for
example, in Halsbury, 4th Edition, volume 20,
paragraph 62.
Now, we admit, of course, if a gratuity is

provided to be paid for by a law, it can only be
revoked by a law. So, as long as the legislation
remains in force, the entitlement to the benefit
may be able to be legally enforced.
But our submission is that a law which

provides only for the repeal of benefits which have
not been paid does not interfere, in our
submission, with investment-backed expectations
because we say the expectations are, by the

definition by which we approach this principle,
gratuitous. It does not physically invade or
permanently appropriate any person's assets for the State's use, but merely, in the terms of Hoffmann v
City of Warwick which we refer to, makes an
adjustment for the benefits and burdens of economic
life.
It is not inconsistent with the sanctity of

settled economic expectations, and that is what is
referred to as a relevant factor in both the
Connolly case and Bowen v Gilliard which we have
referred to.
Dealing with the issue of what is the position

after payment, then a Commonwealth law
retrospectively repealing the benefit and providing

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for the recovery of money paid possibly could be
regarded as a tax; it might be regarded as falling
within the acquisitions power. But our submission
is that is an issue for another day. If one
provided for the money to be paid, then what would
be acquired would be the requirement to pay the sum
of money and not the right to receive the benefit,
because the benefit would have already been
received.
Whether that is an acquisition of property or

something that can only be justified by reference
to being a tax or in some other mechanism outside the acquisitions powers, the law being within the
power of the Commonwealth, it would depend upon the
precise circumstances. But we would refer at this
point to our submission that we made in the Blank
Tapes case that a Commonwealth law merely requiring
the payment of the sum of money, in our submission,

does not fall within the acquisitions power. We
refer then to MacCormick v Federal Commissioner of
Taxation, 158 CLR, at pages 638 to 639, and Trade
Practices Commission v Tooth, 142 CLR, at

pages 453. We say again that that is an issue for
another day.
On this issue of gratuitous payments, our

principal submission is that the acquisitions power
does not apply. Further or alternatively, we say
that gratuitous benefits are not property for the
purpose of the acquisitions power. Thirdly, we say
legislation amending or repealing, even
retrospectively, such gratuitous benefits is never
unjust because no person has a right to such
payment, a vested right.
Our submission is that the benefit here is

like an aged pension or an unemployment benefit of
gratuity. It is not the subject of any contract
between the patient and the Commonwealth and we

submit it is not a subject of any contract between
the Commonwealth and a pathologist who takes an

assignment under section 28. I will not revisit

the reason why we say that. We say that the
practitioner, the service provider, does not give
the Commonwealth any consideration or quid pro quo,
if you like, for the payment.
The conferring of the entitlement is entirely

based on the execution of a social policy rather
than a question of obligation and the benefit
comes, not from even the Health Insurance
Commission, which is the party referred to under
the mechanisms of the Act, but comes from the
Commonwealth; the payment is made from consolidated
revenue by the Commonwealth. See particularly,
sections 20, 125(1) and section 129AC of the Act.

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So, it is the patient who, as the eligible person,
consults a medical practitioner and incurs the
debt. It is the patient who is legally obliged to
pay that debt and all that the Part II of the
Health Insurance Act provides is a payment
gratuitously of part of the costs of the
practitioner's fee.
We have dealt sufficiently in answering

Justice McHugh's questions to our submissions as to
why we say the Medicare levy is in no way funded or
that payments represent a payment from an
appropriated fund. The level of benefits is in no way linked to the level of contributions and if we
could on that point make a reference again to
Flemming v Nestor, 363 US, in particular at
page 609 to 610 of the report of that 1960 decision

of the Supreme Court. I will give the Court the
page references in our volume in a moment. It
starts at page 291 and the quote is at page 297 to
298.
In our submission, there can be no acquisition

of property in the case of legislation providing
for reduction of future medical benefits and we
say, for the same reasons, not also in the case of
reduction of claims in respect of treatment given
before the date of operation of the amending Act
where moneys have not yet been paid.
We submit also, by reference to the consideration of whether the acquisitions power
applies, that when one refers to the convention
debates one finds really there was no reference
whatsoever that the founders had any view that
acquisitions of this sort could fall within the
acquisitions power.
On this matter, the convention debates are

perhaps as unsatisfactory as they mostly are, but

debates, particular Melbourne 1898, pages 151 to if I could hand to the Court an extract from the 154 and volume 5 at Melbourne page 1874. The last
page is probably the only page of even passing
comment and it is almost in one column. So, I will
avoid debate with Your Honour Justice Deane by not
seeking to rely particularly on this, other than to
say that there is nothing there. It seems they
were just was just talking about - to leave section
20A, most of the points we would seek to make in
respect of its operation I have already made in
exchange with Your Honour Justice Brennan, but our
position remains that the practitioner gives
nothing to the Commonwealth or the Health Insurance
Commission on taking an assignment under the
provisions of that section. Services are rendered
to the patient; the eligible person is legally

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liable to pay the practitioner and we say that the
service provider gets no more than what is provided
to be paid for from time to time under the Act.
We would take issue with the view of the trial

judge down below that whereby he analysed in his
judgment the circumstances to conclude that the
Commonwealth procured the rending of pathologist
services and it was on that basis, we would
discern, that the learned judge treated the
statutory right to receive payment as a statutory
debt, but our submission is that neither the
Commonwealth nor the Health Insurance Commission procured the services and that, although one might say that there was an entitlement under the terms
of Act to be paid, and even to recover by the
appropriate procedure, the amount, it remains that
the right is to be characterized, in our
submission, as a mere statutory gratuity, not a
statutory debt.
We say it does not assist the inquiry to say

that the pathologist has given, as Justice Burchett
said, full value for the assignment. In our
submission, the relevant inquiry, if one is to
engage in a consideration of value, is what is the
actual value of that which is given? In other
words, what was the value of the service performed?
And in that way we would refer to the evidence
which we say is before the Court, sufficiently for
the purpose of determining this case, to indicate
that what is provided, and provided by the 1991
Act, as the amount finally to be paid, is a sum which represents full, appropriate and reasonable value for the service performs, having regard not
only to the disappointed interests of a
practitioner who discovers the possibility of
windfall payment because of the administrative
error in administration during a long period of the
Act, but also having regard to the interests of the

Act but also having regard to the interests of the
community as a whole and the interests to which
Parliament had regard in determining that it was
appropriate to make retrospective provision to
produce a result which ensured that,
notwithstanding the administrative oversight and
administrative error, that there was paid
throughout the period, and it was a recalculation
by reference to amounts which, from time to time,
represented appropriate and reasonable sums for
that particular service.

BRENNAN J:	What do you say about 85 per cent of that sum?
MR GRIFFITH:	Your Honour, the 85 per cent really stands outside this argument, but we would refer to that
as indicating that when the entire system of the

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schedule operates on the basis that pathologists
can choose under section 20A assignment to take an
assignment with a price of receiving only
85 per cent of the sum which a patient would be
entitled to receive, it does, in our submission, go
to confirm that the sums fixed in the schedule are
reasonable sums. If pathologists, by and large,
Your Honour, will accept 85 per cent of those sums,

we submit, it is a reasonable inference to regard
the mechanisms, including the amounts provided by -
time to time in those various complicated
schedules, as operating in circumstances where they
operate in proper form to produce reasonable
remuneration in respect to any particular item.
And, of course, Your Honour, if a particular item
does not produce reasonable remuneration there are,
firstly, the mechanisms under the Act of
section 11. Secondly, Your Honour, there is the
mechanisms of the committee which has professional
representation to recommend appropriate alterations
and, of course, pending any alteration of any item
which a pathologist finds unsatisfactory, it is
entirely with the scope of each pathologist's
choice to protect that pathologist's financial
position by not taking any assignments for that
item.
So, we would submit, Your Honour, the fact

that pathologists do take assignments, and
particularly at 85 per cent of that item, confirms
the mechanism of the operation of the Act from time
to time to work in the context of intending to
provide, and by the 1991 Act rectifying the
administrative error, in fact providing a mechanism
across the scales, particularly in respect of these
items dealing with ElISA testing appropriate
remuneration.

I would proceed now to the curative

legislative point. Perhaps this is an appropriate
time?

MASON CJ: Very well, Mr Solicitor, we will adjourn until

2.15.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

MASON CJ: Yes, Mr Solicitor?

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MR GRIFFITH: If the Court pleases, in answer to a question

from Justice McHugh before the break, we made the
point that there was no equalization of levy
between the levy receipts and the outgoings in
respect of the Medicare system. Perhaps if we
could build on that by submitting to the Court that
the Medicare scheme is not an insurance contract
between the Commonwealth and the patient or, we
would say, between the Commonwealth and any service
provider.
Participation in payment of the levy, of course, is involuntary for those who pay it and the
benefits are derived both by those who pay it and

those who do not. I have already sufficiently made
the point that participation by the service
provider also is voluntary.
We return to that matter to enlarge upon the

issues raised by Your Honour the Chief Justice and also Justice Brennan as to the aspects regarded by the Supreme Court as relevant, particularly the
question of investment-backed expectations. It may assist the Court if I take the Court to the summary which is attached both to our contentions and also
to our volume of materials, wherein we refer in
particular on page 2 to a discussion of the
Hoffmann case, which is set out in full of course
at page 105 of our materials.
There, if Your Honours please, we do summarize

at the foot of the page and over the three elements
that Your Honour the Chief Justice took up with me
and then analyse, by reference to the Connolly
decision was already referred to in Bowen v
Gilliard already referred to, and particular page
reference citations are given in the margin, how
these factors were regarded as applying in the
Hoffmann case. Perhaps it is instructive to go to
the page of the Hoffmann case where this discussion takes place, in particular pages 114 and 115 of the

volume. It is quite clear there, we would submit,
that the discussion of investment-backed
expectations is in the context of deprival of
contractual rights.

So it is a contractual relationship, we would

submit, that the courts are referring to. At the

foot of the right-hand column on page 617 of the
report, which is 114 of our volume, it is said:
Second, since the statute does not

deprive plaintiffs of contractual rights, it
does not interfere with "investment-backed
expectations." See Fineman, 842 F.2d at 603
(statutory change of state retirement age as
applied to persons who were state employees

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prior to the change "did not interfere with
investment-backed expectations," "since there
were no contractual rights").

MASON CJ: Is it confined to cases of contractual rights?

If so, why not confine it to interference with contractual rights?

MR GRIFFITH: Well, Your Honour, perhaps it is not for us to

tell the Americans how to express it, but it does

seem to have that context. Can I take Your Honours
to the Connolly decision at page 148 of this

volume. We revisit this later on when we are
dealing with the acquisitions argument, but it
would seem appropriate to perhaps tease out this
point here. Pages 147 and 148 is a discussion of
investment-backed expectation, I think we referred
to it briefly this morning, and this deals with the
alteration of a statutory pension plan and the

amount of employer contributions. And one sees
there in that discussion a discussion by reference
to contract and the point on page 148 is:
It was also plain enough that the purpose of
imposing withdrawal liability was to ensure
that employees would receive the benefits

promised them. When it became evident that
ERISA -

which is the pension plan -
fell short of achieving this end, Congress
adopted the 1980 amendments.

and imposed the greater liability.
Prudent employers then had more than
sufficient notice not only that pension plans
were currently regulated, but also that
withdrawal itself might trigger additional
financial obligations.

And then there is the reference to Darlington I
mentioned this morning, which I emphasize now by
revisiting in this context.
Those who do business in the regulated field
cannot object if the legislative scheme is
buttressed by subsequent amendments to achieve
the legislative end.

And we say that the sort of situation here,
directly in the context of the operation of
section 20A, including subsection (3), is in the
context of that aspect of persons who do business in the regulated field, where they cannot expect,
we would say, to be immune from review as to

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consideration as to whether the payments being made
are appropriate payments or whether they are too
high or, we would say, too low. We would submit
that this is an area where consistently with the
discussions in the American authorities to which we
have referred, particularly the Supreme Court, one
is outside this area of separate investment-backed
expectations and we would say, contract.
There is one other citation in the Penn

Central case, which seems to be the font of this
sort of discussion at page 28 of our extracts, if I
could take the Court really briefly to that.
In engaging in these essentially ad hoc,

factual inquiries, the Court's decisions have
identified several factors that have

particular significance. The economic impact
of the regulation on the claimant and,
particularly, the extent to which the
regulation has interfered with distinct
investment-backed expectations are, of course,
relevant considerations. So, too, is the

character of the governmental action. A
"taking" may more readily be found when the
interference with property can be
characterized as a physical invasion by
government ..... than when interference arises
from some public program adjusting the
benefits and burdens of economic life to
promote the common good.
There follows discussions of various

authorities which seem to be more directed to
issues such as affecting direct property rights,
for example, on page 31 the Pennsylvania Coal Co v
Mahon case of 1922. But we refer to this as
indicating the nature of the approach and that far
from requiring any consideration of investment-
backed expectations as being a decisive and
necessary element to any characterization, in our
submission, it is merely one of the factors to be

taken into account. Very much so in the situation
where one has, as it is expressed here, some public
programme adjusting the benefits and burdens of
economic life, or - I will not take the Court again
to the precise words - the manner in which the
contrast was made in the Connolly case at page 148,
referring to the regulated field where persons do
business.
We do necessarily return to this contractual issue in dealing with the acquisitions part of our
argument but it would seem appropriate for us to
return now to those items that the Court identified
as causing difficulties before lunch.

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Turning then to our curative legislation
approach to determination, we submit, of this issue

outside the acquisitions power. We would submit
that before the Court it is sufficiently
established that during the period to which the
legislation under view relates, that is from 1980
to August 1989, it was possible for the level of
Medicare benefits in respect of ELISA test to have been set and amended by an administrative Act.
It could have been done by regulation under

section 4 of the Act or by a ministerial
determination under section 4A. But, of course,
what seems to have happened here is that the
Department itself purported to change the relevant
schedules by itself issuing the Medicare assessment
advices as if they were a change pursuant to

section 4A. On one view, it could be said that
this case does not involve an defective exercise of
an existing power but the purported exercise by a
department of a non-existent power.
In our submission, that does not affect the

substance of our case on this issue of the

application of curative legislative doctrines. We
will refer and we will take the Court in a little
more detail to it: United States v Heinszen, which
is referred to both in our summary sheet, which I
have just taken the Court to, commencing at page 4,
and also, of course, the full report appears at
pages 150 to 171 of our volume of materials.
That case concerned a purported exercise of a

completely non-existing power, a power of the
executive to impose duties of custom without

congressional authority. So that even in the case
where there was no relevant power, none the less
the court held that the application of the curative
doctrines will apply. I will return to Heinszen in
a minute, but if I could summarize what we regard
as the relevant factual background for the purpose

of consideration of these doctrines.

BRENNAN J:

Can I just interrupt you for a moment?

You said

section 4A, was that in the Act at the relevant
times? It does not appear to be in the photocopy
that you handed us of the original Act.

MR GRIFFITH: It was not in the original Act, Your Honour.

I will find the date when it was introduced.

BRENNAN J: Yes, thank you.

MR GRIFFITH:

I am in error, Your Honour. Paragraph 9 of

our summary shows that it was introduced in 1977,
and I am told it is in the 1981 reprint which was
part of the bundle which I handed to Your Honours.

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It is one difficulty about this legislation, to
keep track of it, but we would hope, Your Honour,
that even after the hearing, most of these
questions could be answered by reference to our
summary which is an attempt to refer to the
relevant parts.
It is conceded, Your Honour, that there was no

attempt whatsoever to use the power under
section 4A at any time, and that any attempt to
refer to section 11 was really hopeless from the
start, Your Honour, and not supported in any way,
once the defect was exposed.
We also submit, Your Honour, that between 1984

and 1989, the level of Medicare benefits in respect
of these ELISA tests, and those levels are
according to the schedule we have given to the
Court, the two page schedule, were purportedly set
and amended by administrative Act, although this
was legally ineffective, and we say that these
ineffective administrative Acts were in fact acted
upon, both by the Health Insurance Commission, and
pathologists generally, during the period they were
in operation. So, the claims and payments were
made in accordance with them at that time, both
with pathologists who took an assignment under
section 20A and to members of the public who had
not assigned their benefits, of course, received
the full amount without the 15 per cent deduction.
We submit that it is clear on this material

that the HIC regarded these ineffective
administrative Acts as providing an increased
payment in respect of these tests, over and above
what in fact, as the decision of Justice Burchett in Peverill v Meir, 95 ALR 401, revealed, was the
unaltered relevant item of 1294 of $4.60, and the
various amounts actually paid are those set out in
that same schedule just referred to.

That decision determined that, as a

consequence, the invalidity of those administrative
Acts, pathologists who had taken assignments under
section 20A and some patients stood to make what we
submit to the Court is demonstrated as a windfall
gain by reference to the payment of the higher $35
level of the item 1395, rather than the intended
item which was that ineffectively purported to be
fixed by reference to the medical assessment
advices.
The legislation under review, in our submission, seeks merely to correct this defect in
the administrative Act to give effect to what the
Government purported to do, and what, we submit, it was capable of doing effectively had the proper

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form been followed, but which had not been done
effectively. And we refer to the provisions of the
Act which would have enabled this to have been done
in correct administrative order, but for the
purpose of our submission, we would say it does not
matter whether or not the Act at that time did

enable it to be done in effective form. What
matters was that it is within power for the
Parliament to have so provided.
The second reading speech, at page 2464, that

we have referred the Court to, states that the
purpose of the bill is to validate the
recommendations made by the Medicare Benefits
Advisory Committee, and on my next page it states
that the purpose of the bill is to validate the
Medicare benefit assessment advices dealing with
the ELISA test.
So the effect of the legislation under review

is to bring about the position which, we submit, it has demonstrated the Government originally intended
should pertain and which, for the relevant periods,
was assumed to pertain by those who participated in
the operation of the benefit scheme under the Act.
And I have referred the Court to the particular
three paragraphs at page 2465 and will not take the
Court to those particular words again other than to
say that those are matters which we rely upon as
establishing the curative intended operation of the
Act so to bring, what we say, is the legal position
in accordance with what was the general practice
adopted and accepted, as it is there said by the
vast majority of pathologists, as well as the
Health Insurance Commission and the public as being
the actual right to payment in respect of these
tests.
The legislation does not seek to recover any

moneys paid by the Commission, which of course were
overpaid during the period of the administrative

error in force, and merely provides, in substance and effect, that the level of payments to be made
in future by the Commission in respect of the
services during this period will be fixed at the
amount which was ineffectively purported to be

fixed during this period. And we submit that there
is sufficient material before the Court to show
that these amounts were ones which were reasonable,
both at the time they were paid under the invalidly
amended schedule from time to time, and we say also
inasmuch as they are fixed retrospectively by
reference to the successive periods, by operation
of section 4 of the Act.
The Court will see, on the second page of the

print of the 1991 Act which I have handed to the

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Court, and over to the fourth page, successively
for periods 1 January 1980, 1 March 1984,
15 June 1984, there is a substitution of the
increasingly higher amounts for item 2294,
particularly (3), and that coincides with the
summary schedule, the two page schedule, which
indicates the relevant matters. And, of course, the Act at the same time remedies what we say is the administrative error and excludes these items
from the 1345 item wherein the high amount of in
excess of $35 otherwise would be obliged to be paid
under the terms of the Act.
Now, the applicant on the removal application

said that the issue here is a pristine
constitutional question untrammeled by issues of

fact. And as, of course, the applicant had
established that the Medicare assessment advices
were void and of no effect, his case before this
Court seems to be that the underlying circumstances can be completely ignored and, for the purpose of
his submissions, there is no difference between a
law which, as it were out of the blue,
retrospectively amends the entitlement under
item 1345 to the lower amount, only. entitling a
payment of the difference, and a law which, as in
this case, provides we say reasonably and fairly
for the rectification of the administrative error
which the litigation involving the applicant has
disclosed.
It is our submission that the Court cannot

ignore the fact the during the relevant period
these Medicare advices were acted on, as valid, in
the way in which we have described, and all the Act

does is to bring about the position, we submit,
that was was previously thought to exist; that is,
namely, that reasonably payment has been made and

is obliged lawfully to be made for the service. We
say there is nothing in the way of confiscation
about the substance of this operation; it is merely

remedial to bring legal form in accordance with
intended operation.
Now, when one looks at this situation, we

submit, there are two ways one can treat what is
done. The narrow view perhaps is to treat whether what has happened as something whereby one can say
there has been just terms for a relevant
acquisition of property but, for the moment, our
broader proposition is that as a curative statute a
1991 law just does not constitute any acquisition
falling within the ambit of the acquisitions
clause.
To support that submission, we do again refer to the American authorities, this time to support

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what we refer to as the doctrines wherein validity
of legislation enacted to cure administrative
error, to cure legislative oversight, have
consistently been regarded by the United States
Supreme Court and also by others of the American
courts, particularly the Court of Appeals, as not
involving in any way an issue of takings or an
infringement of due process or, we would say, any
problem with respect to the contracts clause of the
Fifth Amendment.
The principal authority which we have summarized on page 4 of our annexed summary is the
Heinszen decision which appears on pages 150 to 171
of the volume. There the Supreme Court held that
the curative statute did not violate the takings
clause. It would probably be most convenient if I
could take the Court to the summary at page 4, the
question there was whether there could be
retrospective validation of what was demonstrated

to be the unauthorized collection of import and
export duties over a four-year period in the

Philippine Islands. As one sees from our summary,
it was argued that there would be in effect a
takings by imposing this retrospective obligation.
In the extract of the court's judgment which
appears at page 4, if I could go to the second
sentence:
Indeed the contention goes further even that
this, since it entirely disregards the
important consideration that although the
duties were illegally exacted the illegality
was not the result of an inherent want of
power in the United States to have authorized
the imposition of the duties, but simply arose
from the failure to delegate to the official
the authority essential to give immediate
validity to his conduct -

It was argued that as the duties had been illegally

exacted at the time of payment, then the appellants had a vested right in the money and that that right
to recover the money could not be taken away
without violating the Fifth Amendment, because that
would deprive them of their property without due
process of law or would appropriate their property
for public use without just compensation. So the
claim in essence was the claim for the unlawfully
imposed tax liability and a claim that it would be
a taking to eliminate that claim by the creation of
a retrospective taxation obligation in the equal

sum. On the top of page 5 one sees a further
extract from the opinion of the court:
" ... the argument disregards the fact that when
the duties were illegally exacted in the name

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of the United States Congress possessed the
power to have authorized their imposition in
the mode in which they were enforced, and
hence from the very moment of collection a
right in Congress to ratify the transaction,
if it saw fit to do so, was engendered."
This decision, much of which is concerned with the
due process clause of the Fifth Amendment, has been
applied in numerous cases upholding the validity of
curative legislation - I am sorry, not so much this
decision is so much concerned with the due process
clause, but others of the decisions where it has
been referred to have been. Could I refer the
Court to Graham & Foster v Goodcell which is
extracted at pages 198 to 221 of our material - it
is reported at 282 US 409 - and in particular at
pages 218 to 219, the court says:
It is apparent, as the result of the decisions, that a distinction is made between
a bare attempt of the legislature
retroactively to create liabilities for
transactions which, fully consummated in the
past, are deemed to leave no ground for
legislative intervention, and the case of a
curative statute aptly designed to remedy
mistakes and defects in the administration of
government where the remedy can be applied

without injustice. Where the asserted vested
right, not being linked to any substantial
equity, arises from the mistake of officers
purporting to administer the law in the name
of the Government, the legislature is not
prevented from curing the defect in
administration simply because the effect may
be to destroy causes of action which would
otherwise exist. "The power is necessary,
that government may not be defeated by
omissions or inaccuracies in the exercise of
functions necessary to its administration."

We would submit that clearly in cases where a

defect in administration relating to a law imposing taxes or fees remains undetected for many years, it could eventuate that many millions or, in the case
for example, of the Anniston case referred to in
argument in Mutual Pools - that is Anniston
Manufacturing Company v Davis, 301 US 337 which is extracted at page 262 to 282 - more than a billion
dollars was collected, and that was in 1937 values.
In situations such as these, the moneys would

have been lawfully collected absent the
administrative defect, and given that both the
public and government - assume that the money was
lawfully collected at the time it was paid, we

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submit that it is quite clear that such possibility
of the government being obliged in all circumstance
to repay the money, because it would be impossible to provide just terms in such circumstances, given
that the just terms would be measured, as is
asserted in this case, by a sum equal to the money
sum, could lead to a result that governments were
in a position of not being able to enact
legislation to cure retrospectively such a defect
in administration.
Our submission is the same reasoning applies

in situations such as the present, not concerning
collection of money by the government, but the
payment of a benefit by the government or a
governmental authority. Could we take the Court to
the two extracts from the articles which are
contained on page 7 of our extract of American
materials. These articles also appear in full text

as the last two documents in the materials. The
article by Hochman appears at page 365 to page 400,
and the article by Slawson commences at page 355,
but if I could take the Court merely for the moment for convenience to the extract here in the summary.
Hochman concludes:
The (Supreme) Court's favourable treatment of
curative statutes is probably explained by the
strong public interest in the smooth
functioning of government. It is necessary
that the legislature should be able to cure
inadvertent defects in statutes or their
administration by making what has been aptly
called "small repairs." Moreover, the
individual who claims that a vested right has
arisen from the defect is seeking a windfall
since, had the legislature's or
administrator's action had the effect it was
intended to and could have had, no such right
would have arisen. Thus, the interest in the
retroactive curing of such a defect in the

administration of government outweighs the individual's interest in benefiting from the
defect.

Similarly, the extract from Slawson, if I may refer
the Court to that extract, on the same page: Long-continued and substantial administrative
and private conduct pursuant to what is
believed, at least by the administrative
officials, to be the law is on occasion
undercut by a tardy discovery that the law is

invalid in some respect. The Court has almost
always upheld "curative" legislation designed
to restore what was believed to have been the

status quo. The situation usually arises when

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government officials assert that some duty
must be performed, e.g., to pay a tax, toll or
tariff, and their authority is later found
invalid. It can be seen that these cases are
included among those in which the Court has
given weight to reliance or its absence;
curative legislation forms an even stronger
case, however, for it does not merely deny
that which was not expected, but restores a
situation that was affirmatively anticipated
and provided for.
We submit that this concept of defects in
administration encompasses both legal defects in
action taken by the executive, and also defects in
legislation. So, for example, if money is
collected pursuant to the Tax Act which is
unconstitutional but which could have been enacted
constitutionally, it should be possible for
subsequent legislation to cure that defect
retrospectively. That, of course, is an issue
outstanding from the Mutual Pools argument reserved
before the Court.
We refer the Court briefly to

Wiggins v Commissioner of Internal Revenue,
904 F 2d 311, and the full extract is at page 255
to page 261 of our materials. But, could I take
the Court briefly to page 260, the penultimate page
of the report.
One can see the court examined these issues by

reference to whether it can be said in the
circumstances what is done is harsh and oppressive,
and in the left-hand column at the foot, 3.4:
We think the ttharsh and oppressivett test of
Welch v Henry does not limit retroactivity to
one year, but instead requires a case-by-case
analysis in which the length of the period
affected is but one factor to be

considered ...... Where legislation is curative,
retroactive application may be constitutional
despite a long period of retroactivity.

And they refer to Canisius College v United States,
I will not read that citation, and also to Fife v
Commissioner, which is summarized and the
conclusion of the court is:
Because the amendment is curative, the fact that the effective date is some eighteen
months before enactment does not make its
retroactive application harsh and oppressive.

We have already referred to the Anniston case and
that is cited by Slawson in the article which we

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have referred to at page 357 of the volume of
materials, where his article is extracted, as being
a typical example of a case concerning a curative
statute and one last citation of this, if I could
take the Court briefly to Graham & Foster v
Goodcell, 282 US 409, extracted at pages 198 to
page 221 of our materials, in particular page 218 to page 219. In the last paragraph commencing on page 218:
It is apparent, as the result of the decisions, that a distinction is made between
a bare attempt of the legislature
retroactively to create liabilities for
transactions which, fully consummated in the
past, are deemed to leave no ground for
legislative intervention, and the case of a
curative statute aptly designed to remedy
mistakes and defects in the administration of
government where the remedy can be applied

without injustice. Where the asserted vested
right, not being linked to any substantial
equity - - -

MASON CJ:	Mr Solicitor, I think you have read this before.
MR GRIFFITH: I am sorry, Your Honour.	If that is the case,

I apologize, Your Honour. The words had a
refreshing application to the situation in hand, so
I am sorry that my enthusiasm led to reiteration.
Different considerations, of course, may arise

where moneys collected pursuant to an
unconstitutional tax Act which could not be raised
constitutionally, say, for example, if one had a
tax-imposing property - tax on property of the State, but there there would be a defect which
would not be within the power of the Parliament to
cure, so that it could be that legislation
providing for retention of moneys collected may
itself be unconstitutional. But we submit that

that is certainly not the situation here.
Defects in administration, of course, are not

necessarily always the result of carelessness or
poor administration. Often the best legal advice
available at the time of the action in question
taken has indicated that the matter is legally
effective and it might only emerge some time later,
as a result of, for example, subsequent judicial

decisions, that action is defective. So, one
example of this would be, for example, if one were
considering the status of State lands alienated
after 1975, it would not be at least until after
the first Mabo decision, if not the second Mabo
decision, that there would be any perception that
there could be any difficulty arising from a point

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of view of validity of what, at the time, might
have appeared to have been an unconditional and
lawful alienation falling within State power.
This is the sort of situation which happened

in the Heinszen case and the Goodcell case I just referred to for the second time. But we say that
even if the error, as here, is regarded as a defect
arising from purely administrative oversight or
demonstrated error, it none the less is possible
for the defect to be cured by legislation.
The law itself does not impose a retrospective obligation; it does not take away, for example, a
contractual right bought for full value; but merely
gives effect to administrative action already taken

and assumed to be valid. The legislation does not
upset any settled legal expectations, we submit. It merely deals, in this case, with the fair and appropriate allocation of what either would be an
unfair loss if $4.60 remained to be the correct
fee, as was the residual 1294 item without the
lawful alteration during the period or, we say,

windfall if item 1345 amounts remain payable. And
we submit legislation resolving this sort of error,
no matter how much one might be critical of the
fact that the error arose from a clear
misconstruction of what might be obvious provisions
of the Act to which resort should have been had to
ensure the intended result at the time, none the
less, in our submission, should not be regarded in
any way as falling within the acquisitions power.
We have referred to the material which we say demonstrates, both internal to the Act itself and
also external to it, how this legislation is
directed very much to merely providing a curative
resolution of these disclosed problems.
United States decisions established that even

when suits are pending at the time the curative

government of a power to enact curative statutes, legislation is enacted, this will not deprive the
which destroy the causes of action on which those

suits are based. And if I could refer the Court to
the Heinszen decision again, particularly in our
materials book page 167 to 168; the Goodcell
decision, particularly at page 217 of our materials
book and thirdly, Long v United States Internal
Revenue Service at pages 243, in particular.
We submit that it is unnecessary here to

consider whether the position would have been any
different had the curative legislation purported to
extinguish a judgment debt where a judgment based
on an extinguished cause of action has already been

obtained. Of course, Peverill v Meir, which we

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have referred to, was merely an administrative law
matter where the determination did not have the
consequence of adjudging that the applicant was
entitled to payment of any fixed amount as a result
of showing that the relevant item was in fact item
1395, rather than the other items contended for by
the Health Insurance Commission.
We have summarized in the annexure of the

United States authorities on curative legislation
both other decisions of the Supreme Court in
paragraph 5 on page 5 of that summary and also
recent decisions of the Court of Appeals taking the
same attitude that curative Acts of this sort do
not violate the takings clause, and it is
sufficient for our purposes if we refer the Court
to those decisions which are included in our
materials and we give page references in the margin
to the particular parts of the materials where that
appears.
So, in our submission, when one has regard to

that doctrine which we say is perfectly apposite to
the situation, indeed, it rests somewhat more
easily with the construction of the acquisitions

clause of our Constitution compared with the
broader scope under the United States Constitution, both as to the operation of the various elements of
due process, contracts clause and the takings
clause and the whole issues of limitations on
retrospective legislation under the American
Constitution, that one has an apt situation of
analogy, in our submission, to find that this
situation is another one of those yet not fully
identified list of cases where legislative action
which does affect, in this case, an entitlement to
payment of money, and none the less, in the
particular circumstances, does not constitute in
any way a matter which falls within the ambit of
the acquisitions power.

Alternatively, looking at the acquisitions

power itself, we would submit that the 1991 Act has
not affected any acquisition of property for the
purpose of the acquisitions power, and we say that
one reaches the same result, no breach of the
acquisitions power as one reaches, if one adopts
the preliminary approaches on the two other bases
we have put that the acquisitions power does not
apply.
If it is assumed for the purpose of argument,

as did Your Honour Justice Dawson in the Political
Advertising case, that in this case the service

provider's right to receive the payment is regarded
as property for the purpose of the acquisitions
power - and we make it clear why we submit that it

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should not - we submit, as we have, that the
legislative definition of that right embraces
modification by later legislation. Section 10(1)
of the Health Insurance Act provides that Medicare
benefits are "payable, subject to and in accordance
with this Act", and the expression, of course,
"this Act", we submit, speaks of the Act in the
form which it may be from time to time, the form it
may thereafter assume, as well as at the time of
enactment, and that form, of course, may include
provisions which do have, we say, within power a
retrospective effect.
On this question of construing the expression

of "this Act" as so embracing the form from time to
time, could we give the Court a short reference to

His Honour Justice Taylor in Ocean Road Motel Pty
Ltd v Pacific Acceptance Corporation Ltd, (1963)
109 CLR 276, in particular at page 280, and
His Honour there said:
But, in my view, it is not open to question
that where by amendment a new provision is
inserted into a principal Act and that
provision speaks of "this Act" it speaks of
the whole Act of which from the time of
amendment it forms part and, of course, of the Act in the form which it may from time to time
thereafter assume.

So, we have already submitted sufficient to the
Court to make it clear that we say that the
property right to receive a Medicare benefit is not
absolute, but itself defined by reference to the
law from time to time, as it may be amended and, of
course, this happens often enough. One only has to
go to the various alterations which were attempted
to be effected by the ineffective advice, as to see
the number of alterations which are required to
administer such a complicated mechanism for
recoupment of moneys paid in respect of medical and

pathological services, to effect the intention of
the Act to provide a mechanism for payment of
reasonable sums as gratuitous payments to those who
incur such expenses.
We submit that this construction is not dependent upon having an expressed reservation such

as in section 10(1). We say that this result is
necessarily implicit from the nature of a law such
as this which can confers a gratuitous benefit. We
make the proposition that all such benefits are
provided subject to the obvious reserve right of
Parliament to amend or to appeal the statute
providing for the terms of payment. Although
section 20A provides that the practitioner or the

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service provider must give up something of value, the right to receive payment from the patient, in
return for taking the assigned right to receive
payment of the Medicare benefit, we submit that
none the less there is no contractual obligation on
the Commonwealth to pay any particular minimum
benefit.
There is no grant to the service provider of a

vested right to receive the benefit from the
Commonwealth at a particular rate. Here one has
regard to the underlying circumstances because of

this admitted defect in administration. The
consequence of applying the rate which in fact at law applied at the relevant time, rather than the

rate which was intended to apply, as the Court will
see, would give rise to what is put as a windfall
payment in excess of reasonable compensation and
payment for the service provided, even allowing for
the 15 per cent discount of some $98 million with
perhaps the applicant himself being entitled to
$7 million payment by reason of this matter.
In our submission, those circumstances are ones where Parliament may recognize that having taken - we say reasonably taken the view that the
service provider, including the applicant, has been
paid a reasonable fee by reference to their
expectations at the time, fixed by the amounts
ineffectively provided to be paid under the
schedules as promulgated, it is appropriate that it
be recognized that the Parliament does have power
to correct without exposing itself to the
obligation of paying just terms in the form of a
sum equal to the amount of the correction arising
from correcting this exposed administrative error
or oversight.
We wish to refer briefly to United States

cases again as demonstrating that a constitutional
court should be very slow to characterize statutory

rights, even a statutory right which arises under

section 20A(3) as contractual in character. I
hesitate to detain the Court too long by reading
several extracts from the United States cases, but
perhaps it is sufficient if I give particular page
references to three of those cases extracted which
indicate the very strong approach in court that one
should not, in these sort of circumstances, find
some contractual rights which are incapable of
being abrogated.
The first is Dodge v Board of Education,

302 US 74. This is an extract which commences on
our materials at page 283, the case appears, and we
refer particular to what was said at page 287 to 288
in the sentence beginning on page 287:

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In determining whether a law tenders a
contract to a citizen it is of first
importance to examine the language of the
statute.
And following on to the phrase:
the grant of them creates no vested right -

at page 288. This case concerned a State statute
reducing annuities paid to retired teachers and the
courts found that it did not violate either the

contracts clause or the Fourteenth Amendment. The

second case is National Railroad Passenger reproduced at page 310 of our volume and, in
particular, we refer to page 324 to page 325, the
sentence beginning:
For many decades, this Court has maintained
that absent some clear indication that the
legislature intends to bind itself
contractually, the presumption is that "a law
is not intended to create private contractual
or vested rights but mere declares a policy to
be pursued until the legislature shall ordain
otherwise." ..... This well-established
presumption is grounded in the elementary
proposition that the principal function of a
legislature is not to make contracts, but to
make laws that establish the policy of the
state. Policies, unlike contracts, are
inherently subject to revision and repeal, and
to construe laws as contracts when the
obligation is not clearly and unequivocally expressed would be to limit drastically the
essential powers of a legislative body.
Indeed, the continued existence of a
government would be of no great value, if by
implications and presumption, it was disarmed
of the powers necessary to accomplish the ends

of its creation."

And the third reference is to Bowen v Agencies
Opposed to Social Security Entrapment, 477 US 41.
That is extracted at page 339 and we refer
particularly to page 350 to 351 of our materials
where it said:
The decision -

of the District Court -
heeded none of this Court's often-repeated
admonitions that contracts should be
construed, if possible, to avoid foreclosing

exercise of sovereign authority. Those

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admonitions take on added force when the
arrangement pursuant to which the Government
is claimed to have surrendered a sovereign
power is one that serves to implement a
comprehensive social welfare program affecting
millions of individuals throughout our Nation.
We say that it is inherent in the Health Insurance Act in its scheme that its provisions may
be amended from time to time and, of course, the
likelihood of amendment is high in a case such as
this where one has fees fixed by reference to what
are the governmental views as to an appropriate
social services policy applying relevant and
diverse amounts in respect of a multitude of
medical, pathological and surgical services.
In Flemming v Nestor,363 US 603, in our

materials at page 291, in particular 298 and 299,
the Supreme Court noted that the provisions of the
Social Security Act expressly reserve to Congress
"(t)he right to alter, amend, or repeal any
provision" of the Act -

and added that:
That provision made express what is implicit
in the institutional needs of the program.

Similarly, in Connolly v Pension Benefit Guarantee
Corporation case already referred to, which is
extracted at page 132, but in particular at
page 227, the Supreme Court said:
"Those who do business in the regulated field
cannot object if the legislative scheme is
buttressed by subsequent amendments to achieve
the legislative end."

So our submission is, where statutes confer rights

to gratuitous benefits, the statute must be
presumed in the absence of clear contrary intention
to reserve the right of Parliament to alter or
revoke that right at any time before payment, and
we say such amending legislation is consistent with
the right conferred, not destructive of that right,
and we refer to the fact that the United States
Supreme Court has held that Congress does not have
power to repudiate its own contractually based
debts which constitute property in the creditor
simply in order to save money, and that the takings
clause will apply to any attempt to deprive a
person of fruits actually reduced to possession of
contracts lawfully made. That phrase "actually
reduced to possession" comes from the Bowen case
which I have just referred to and is found at

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page 353 of our extracted materials, page 55 of the

report in 447 US. And I should say that there are
authorities there cited for that proposition.
However, in applying the criteria, for

example, applied in the Bowen case, we submit that
the right assigned to the applicant under
section 20A of the Health Insurance Act is not of a
right which could constitute property within the

meaning of the takings clause. The applicant's
right to receive a Medicare benefit is not a debt
of the Commonwealth, we submit, for the reasons we
have given, nor an obligation on the Commonwealth
to provide benefits under a contract for which the
applicant has paid a monetary premium. This right
is not unique to assignments taken by the

applicant. The applicant gets exactly the same
right, less 15 per cent, as what the patient had
under the provisions of the Act, namely an
entitlement to be paid a sum by reference to the
schedule fee because the patient had incurred
expenditure of that sum.
The 1991 Act, of course, is not an Act

directed to pathologists who may have taken an
assignment under section 20A. It is an Act which
applies universally in respect of all patients and
all service providers to have the effect, we say,
of reinstating what was the intended fee to operate
during the period embraced by the retrospective
expression of the insertion of schedule items

contained in the Act. And we say that this right
to a Medicare benefit was simply part of a
regulatory programme over which Parliament retained
authority to amend in the exercise of its power to
provide for the general welfare of the community.
And if we could refer again to page 353 of our
materials to the citation in the Bowen case that we
just referred to.
Turning to the way in which the applicant was

successful in his argument before the learned judge
below, the argument which was accepted - and
perhaps in-chief it is not necessary for us to deal
with the argument that was not accepted - was that
by extinguishing part or all of the applicant's
right to receive Medicare benefits, the
Commonwealth acquired that part or all of the
benefits.
It is our submission that an extinction of the

right to receive a balance of the full amount
provided for under item 1395 in excess of that
which was that intended to be provided and in fact
lawfully provided by the Amendment Act does not
constitute, inasmuch as it extinguishes the right
for that additional sum, an acquisition of property

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either as a matter of ordinary language or, we
submit, of authority.
If we could first deal with the issue of what

property is said to be acquired, we of course admit
that consequent upon the applicant performing each
of many of the ELISA tests during the period, he
became entitled to a benefit which, because of the
administrative error, was calculated at the rate
specified for item 1345. His payment, we submit,
was partly satisfied by payment of the lesser
benefit by reference to the purportedly amended
scale.- But the Act merely, we submit, on one view
has extinguished - the respondent says acquired but
we say extinguished - these rights completely and
replaced them with less valuable rights equivalent
to the amount actually paid or the amount paid
referable to the intended schedule item.
Another view might be that the Commonwealth has reduced the value of the respondent's rights under item 1345 to a value equivalent of this
lesser sum, so that it has extinguished part of his
rights and, it is put against us, given nothing in

return for this part extinguishment. We would
submit that the former view that there has been a
complete extinction and replacement with lesser

rights is probably the correct analysis. The
respondent's entitlements accrued under item 1345.
That item has been retrospectively amended so that

the relevant tests do not fall within it. The
original rights have gone and new items have been
retrospectively inserted to cover the relevant
tests, so new rights have been created.
But for the purpose of our submissions, in

either case the issues are essentially the same,
both in respect to whether there has been an
acquisition and also whether there has been an
acquisition on just terms. It is perhaps easier to
characterize what is done as a complete extinction

and replacement with a lesser right rather than a
partial extinction with nothing in return.
Looking at that consequence, we would submit

that the acquisitions power, in fastening on an
acquisition of property, distinguishes between the
vesting of particular proprietary interests and the
genuine enhancement of the Commonwealth or perhaps

some .other person's financial position. So it is
our submission that the extinction or diminution of
a person's right, even if it results in a benefit
to another, is not thereby an acquisition of
property. For there to be an acquisition, we
submit, that other person must acquire a
proprietary interest.

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We submit that this view is supported by

recent authority of this Court. We would admit
that the Court has not authoritatively determined
this issue, but we say authority in this Court does
support the natural construction of the words of
the acquisitions power, that an acquisition is
required to attract the acquisitions power. This
was a matter which was subject to our submissions
in our Mutual Pool's argument to the Court and we
have set out in our contentions, paragraph 15, the
same authorities that my learned friend, Mr Rose,
took that Court to in his submissions to the Court
in that case and, unless the Court desires me to, I
will not take the Court again to each of those
citations of the Commonwealth v Tasmania, R v
Ludeke and Australian Capital Television cases;
they are the same passages that my learned friend, set out in paragraph 15 of our contentions.
Mr learned friend, Mr Rose, also referred to

Werrin v Commonwealth, whereby it was old authority
that extinguishing rights against the Commonwealth
does not constitute an acquisition of authority and
I give the Court the page references of that:
Werrin v Commonwealth, 59 CLR 150, in particular page 161, Justice Rich; 163 to 164, Justice Starke;
165 to 168, Justice Dixon. Justice Starke at
page 163 did refer to the acquisitions power, but
the other judgments of Their Honours, we would
submit, are inconsistent with the view that the
acquisitions power could apply in that
circumstance.
Now, we would accept that because of the

acquisitions power referring to the acquisition of
property, that this point in United States
authorities, bearing on the question of what is
taking of property, have to be viewed with some
caution, and so are other cases under American
documents, for example, dealing with deprivation of

property. We would accept then the warning as to
reliance on United States authority on that point
as stated by Your Honour the present Chief Justice
in Tasmanian Dam's case, 158 CLR at pages 144 and
145, and Your Honour Justice Brennan at page 248.
we would also refer to the useful analysis of
His Honour Justice Gummow in Smith Kline & French v
Secretary, Department of Community Services and
Health, (1990) 22 FCR 73, in particular at
pages 116 to 119, where His Honour does, by
reference to no less than nine factors, support the
view expressed in the Tasmanian Dam case, and I
should add - I am sorry that I omitted - that
Justice Deane in Tasmanian case at page 284,
counselled to the same effect, and Justice Gummow

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heeded such counsel and supported it with nine
points of support, which we would accept.
Contrast, and we do not take the Court to it in any detail, the decision of the House of Lords
in Societe Universal Docks v Government of
Mauritius, (1985) AC 585, dealing with the question

of deprivation as a different term. We just
mention that to really highlight the difference.
We would submit that extinguishing a debt,

including a debt created by statute, does not vest
any property in the debtor, rather it confers a

purely monetary benefit. You do not have to pay

the money. What the Commonwealth has achieved by
the 1991 Act, if it is valid, is to reduce the
amount payable by its agent to the applicant.
Ordinarily after an acquisition of a right to
receive a payment there would be a person who had
the right to receive the payment, but the
extinction of the obligation to make the payment
does not create an entitlement to the payment in
some other person; the Commonwealth does not become
entitled to the payment and no other person becomes
entitled to the payment. It may improve the
Commonwealth's financial position; it does not have
to make the payment, but it does not vest,. in our
submission, any proprietary interest either in the
Commonwealth or in any other person.
The acquisitions power, of course, speaks of

acquisition from a State or other person. In our
submission the plain meaning of this expression is
that the acquisitions power applies only to a law
which transfers an interest in property from one

person to another. Any benefit obtained by a
debtor from the extinction of a debt, we submit, is
not acquired. It is not transferred from the
creditor to the debtor, but arises as a result of a
consequence of the extinction of the person's

right. So in no ways can one characterize what has

occurred here as being a law effecting the

assignment of the debt. The debt which was owed to
the applicant is not transferred to someone else.
No other person gets the benefit of it.
The learned trial judge, and one picks this up

at page 257 of the cause removed book, regarded the
acquisitions power as a constitutional guarantee
which he said:
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.

So His Honour took the view that:

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If the property is acquired from his, its
transmutation into some other form in the
hands of the Commonwealth is not really to the
point.
But we would submit the proposition that the
inquiry ends with the effect of the transaction on
the person from whom property is taken by way of
extinction, contradicts the principle established
in this Court that the acquisitions power only
operates where someone acquires a property interest
from that person, and equates acquisition, for this
purpose, with taking.
So, in that context, cases such as Allina Pty Limited v Federal Commissioner for Taxation,
referred to at page 257 by His Honour the trial
judge, which established that for some purposes a
person can be said to acquire an interest, which is
never in the possession of the grantor because it
was only brought into existence by the grant, does
not overcome the difficulty, we submit, in
His Honour's reasoning. It merely serves to
illustrate that ordinarily after there has been an
acquisition of something there will be someone who
is in possession of the something which has been
acquired.
In the present case the Commonwealth and the

respondent have not acquired an interest which was

held by the respondent. They have not acquired any
property at all. So, at page 256 of the cause
removed book the trial judge asks rhetorically:
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?

This question, of course, can be answered in the

negative because, on the ordinary meaning of
acquisition, we say there are a bundle of rights
associated with the land some of which may be held
by different persons, and in cancelling the
interests in that case the Commonwealth would take
more of the bundle to itself, and in doing so could
be said to have acquired the rights which those
interests comprise.
Contrast, we say, the situation of extinction

of a debt which may be said to have achieved the
same result for the debtor as a transfer of a chose
of action, but we submit it does not follow that it
is thereby an acquisition of property for the

purpose of the acquisitions power. To so hold, we
submit, would be a distortion of language. It

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cannot be the deprivation of some interest, even if
that interest is a property interest, in the
acquisition of some other benefit which is not a
property interest or not the same property
interest, is an acquisition of property in any
ordinary sense and, we submit, it should not be so

regarded for constitutional purposes. The
principle that section 5l(xxxi) is to be
interpreted broadly does not justify, in our
submission, giving the words meaning which they do
not and, we would submit, cannot bear.
If the acquisitions power had such extended

applications applying to extinction of property
rights, and if it is accepted that it applies to
legislative acquisitions for persons other than the
Commonwealth, and for the purpose of argument we
accept that that is so - refer to various judgments

of Your Honours in the Tasmanian Dam case, for
example, 158 CLR 146 Your Honour the Chief Justice,
page 247 Justice Brennan, page 282 Justice Deane,
and also the cases cited by Your Honour
Justice Deane at that page - we submit it would
follow in that circumstance that any law which
adjusted existing rights and liabilities would be
called into question as to whether it provided just
terms. So, for example, a consumer protection law,
inserting an implied term into an existing
contract, would be asserted as a law which required
just terms to be given by the Commonwealth to
whichever party's contractual rights have been
impaired. This, we submit, would take the
acquisitions power well beyond its proper scope.
I will not detain the Court by referring to

the convention debates which are always handed up,
which give no reason whatsoever, we would submit,
to suppose any other intended operation beyond
merely the acquisition of physical property by the

Commonwealth for Commonwealth purposes. But be
that as it may, we submit that it would paralyse

governmental action in the exercise of Commonwealth
plenary powers under the Constitution to give the
acquisitions power such effect.
We say, what the acquisitions power does is to

ensure that the Commonwealth can acquire land and
other recognized forms of property for Commonwealth
purposes. It has been extended, we would submit,
by decision of this Court to provide for
circumstances where there might be acquisition by
other than the Commonwealth, by laws which are
passed for purposes of the Commonwealth, and which
in those circumstances are required to give fair
compensation for the acquisition.

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We, of course, do accept that Your Honour
Justice Deane, at the same part of the
Tasmanian Dam case, particularly from page 282 to page 284, expressed a view as to the extent of
relevant interest which might be required as
falling within the acquisitions power. But, we
would submit that the principle that one is to
construe the acquisitions power broadly should not
be used to give the acquisitions power a meaning
which, we have submitted, ordinarily it does not
bear, and that on any view of extended operation of
interference with interest, that a statutory
abolition or diminution of a property right, we
submit, does not result in a benefit to the
Commonwealth or another person, which raises an
acquisition issue in relation to all and any
legislation which merely has the effect of removing
or reducing statutory rights.
So, referring to Your Honour's statement in the Tasmanian Dam case, we would say that the
obtaining of a direct and measurable benefit from
the restriction of another persons property rights,
if that can be regarded as an acquisition of
property, no person here has obtained a benefit of

the requisite kind. Any benefit obtained by the
Commonwealth or by the Health Insurance Commission
is not sufficiently specific or related in nature

to the property interest abridged. We submit it
cannot be regarded as equivalent to an acquisition
of property. The benefit is simply an improvement of the Commonwealth's financial position. It does not relate in any way to the nature of the
particular property which is said to be acquired.
For a benefit to have obtained from the diminution
of property rights be regarded as equivalent to
acquisition of some part of the property, we would
submit, at the least the benefit must be of a kind
which directly relates to the particular property,
so that the person gaining the benefit gets the
equivalent of ownership of the particular property.

For example, if it was put in the

Tasmanian Dam case that by restricting use of
certain land, the Commonwealth obtained a benefit,
the achievement of certain policy objectives which
depended on the use of the particular land.
The applicant, in its argument below,

evidently relied upon the submission that the court
should look to matters of substance rather than
form, but we submit that an approach of having
regard - a generous approach to the operation of
the acquisitions power does not enable the
acquisitions power to be extended to cover new
ground by constructing a relevant acquisition when
in truth there is none. Extinguishing property,

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instead of acquiring it outright, is not here used
as a gratuitous advice for avoiding the operation
of the acquisitions power.
One might describe a gratuitous advice as being a law whereby the Commonwealth or some other
person was given the benefits of ownership of
property without actually having the property
vested in it, the sort of law considered in
Dalziel's case, but in our submission it cannot
attach to a law which simply extinguishes the

property. Our submission is the acquisitions power
is concerned not with the diminution of a person's
estate. That aim can be achieved in any event by
taxing laws without the need of just terms, but
with laws which take that person's property and
give it and the benefits of owning it, to either
the Commonwealth or, we would admit, the

possibility to someone else. But the acquisitions

power deals with acquisitions. We would submit,
the acquisitions power does not deal with matters
which are truly not acquisitions.
I turn then to the issue of just terms and of course, just terms unlike - - -

BRENNAN J: Before you leave that aspect of the matter, does

section 125 have any part to play in your argument?
That is the provision which deals with
appropriation of consolidated revenue.

MR GRIFFITH: Yes, Your Honour, I had intended to refer to

- Your Honour, this section, of course,
that as part of my submission in answer to of the
provides us with the structure, as I referred to
this morning, that the amounts are paid out of the
consolidated revenue and there is, of course, an

automatic appropriation. Of course, Your Honour,
in the circumstance absently invalidating the
validating Act, the appropriations which in fact

have been made or paid, the payment from the
consolidated revenue, in fact would not have been
made according to law, so that part of the effect
of the 1991 Act is to validate that which has been
done. But I am not sure if Your Honour's question
is referring to this - - -

BRENNAN J:

What I was wondering about is whether the

necessity for appropriation has a particular relevance to welfare payments which are made pursuant to statute. In other words, whether the
welfare payment power, whether there is such a
thing that one can describe, is coextensive with
the appropriation in force from time to time and no
more.

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MR GRIFFITH:	I suppose, Your Honour, the statutory context here where the administration was not in accordance with what was required at the time, one has some difficulties in reconciling what occurred to what was required by section 125.
BRENNAN J:	I appreciate that but, as I understand your argument, you are saying that may have been so but
once the Act is changed retrospectively, then
nothing is taken away, there is no expropriation of
property, and this is not to be regarded as a piece
of property, that is that which was acquired under
the old Act.
MR GRIFFITH:	Yes.

BRENNAN J: Well, my question, which I do not think is

antipathetic to your case, is whether, when one is
dealing with a voluntary payment made under a
statute, one can ever construe a statute making
such a provision as doing other than appropriating
a payment as the statute stands from time to time,
so that if they did not get their money then they
cannot get it now because there is no
appropriation.

MR GRIFFITH: Yes, Your Honour, we would submit that is so,

but perhaps that can be reconciled with our
submissions with respect to section 10(1) and also
what we have submitted, quite external from that
reservation under the Act, that we submit that is
no more than how the rights should be characterized
in any event. But we would say, Your Honour, that
that is consistent with that approach, of the
definition of that approach.

McHUGH J: Under this legislation, is the appropriation an

annual appropriation or a standing appropriation?

MR GRIFFITH:

Your Honour, it would seem that it is just a

standing appropriation by operation of this

section. That really answers your funding
question, Your Honour: whatever moneys have to be
provided are provided. That is why this section
operates. So that if in fact there is a windfall
payment of $98 million, it is not a Medicare fund
that is depleted, it is the consolidated revenue.

BRENNAN J: But put that to the test. Let it be assumed

that it is now held that there was a Sl(xxxi)
expropriation of property.

MR GRIFFITH:

I am sorry, Your Honour, I should have

analysed it more directly. If it were held that
there was an acquisition, it would be held that it
was an acquisition other than on just terms
presumably, because there was not payment of the

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full amount taken away. I am coming to this
argument as to how can one ever acquire a monetary
debt on just terms because the just terms
presumably, where one asks a question that way, has
to be the same as a monetary sum.
But apart from that conundrum, Your Honour,

the argument would be therefore the retrospective
law would be ineffective to affect the full right
of the entitlement of the higher sum under
item 1345. Therefore the Act as it stood would

stand still unamended. We suppose this is how it
would follow through, Your Honour. From the point
of view of its retrospective operation, we say the
Act is spent so far as prospective operation is
concerned because, although it has been introduced
by way of amendment into the principal Act, its
whole operation is one that is spent on its
introduction.
But in that case, one would have the position

because this Act was held to be invalid because it
was not an acquisition, one would suppose, other
than on just terms, then in its unaltered form
there would be an entitlement to the payment of the

higher sum. One would suppose the section 125
appropriation would attach to that sum.
Here, Your Honour, it is not as simple as

that, because there are a lot of other defences in
the cause removed before there is any final

entitlement determined. Does that answer
Your Honour's question?

BRENNAN J: Yes, thank you, Mr Solicitor.

MR GRIFFITH: Well, turning to what "just terms" may entail

if the legislation is regarded as an acquisition so
it is required to be on "just terms", we would
submit that since the Commonwealth is acting in its
governmental capacity in the interest of the

community as a whole, this is a matter which is of
significant regard in considering whether or not
the provision, we say in essence of the payment of
a lesser sum in substitution for the higher sum -
the lesser sum under item 1294, 2 or 3 as amended,
which is in the sum of somewhere in the range $15
to $18 over the period for the higher sum under
item 1349 in the order of $35 each item, is
something to be tested by reference to the
interests of the public interest, and we submit
that if there is a clear public interest which
support the divesting of a person's property for
less than its market or replacement value or
acquisition for what seems to be the appropriate
market value, that none the less can be regarded as
just.

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If I can put it on one side for the moment:
the problem here where what is alleged is to be
acquired is, in effect, the sum of money, because
what is the market value of a sum of money?

McHUGH J:

You might acquire it under some scheme whereby

somebody is entitled to something else or some
payment which is postponed or paid in instalments.

MR GRIFFITH: Well, yes, Your Honour, but that perhaps still

does not answer the question which is, are you
obliged to pay something which, in moneys worth, is some form of equivalence or discounted equivalence. I mean, our basic position in this, to be blunt, is that the entitlement is limited to being an
entitlement that represents what was regarded at
the time, during the time of administrative error,
and we say on the material for the Court, excepted
by all participants, if one likes, except the
applicant here, as being a fair and reasonable sum
for this test and we confirm that submission by
saying that, by and large during this period when
it was being administered on the basis of payment
of the lesser sum in the order of $15 to $18,
pathologists did elect to take their assignments
under section 20A with the 15 per cent discount, as
a test as to whether or not it was regarded as

being reasonable. But perhaps there is no need to
enlarge on that because, as needs be, if this
remains an outstanding issue for the Court to be
satisfied as a matter of fact, well then that can
be the issue.
But we refer to the often enough cited

statements in firstly, Grace Brothers
v Commonwealth, 72 CLR 269, particularly
Chief Justice Latham at 280 to 281, and also
His Honour Justice Dixon at page 290, where
His Honour says:

"Just terms" doubtless forms a part of the definition of the subject matter, and in
that sense amounts to a condition which the
law must satisfy. But the question for the
Court when validity is in issue is whether the
legislation answers the description of a law
with respect to acquisition upon just terms.
In considering such a matter much assistance
may be derived from American judicial
decisions and juridical writings dealing with
analogous difficulties, but they must be used
with care and, in my opinion, cannot be
applied directly to section 5l(xxxi). Under
that paragraph the validity of any general law
cannot, I think, be tested by inquiring
whether it will be certain to operate in every
individual case to place the owner in a

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situation in which in all respects he will be
as well off as if the acquisition had not

taken place. The inquiry rather must be
whether the law amounts to a true attempt to
provide fair and just standards of
compensating or rehabilitating the individual
considered as an owner of property, fair and
just as between him and the government of the
country.
Also, if I could refer the Court to what those
two Justices said in Nelungaloo v The Commonwealth,
Honour Justice Dixon said:
(1948) 75 CLR 495, in particular at page 541, where His
the standards of duty supplied by the law as a
result of general considerations can never be
precise. When the question is one of fairness in any community the standard must depend upon the life and experience of that community,
rather than upon the changing fortunes of
other countries and the exigencies which beset
them. Unlike "compensation," which connotes
full money equivalence, "just terms" are
concerned with fairness.

Now, we would submit that other factors may also influence the question of whether an acquisition of property for monetary compensation, substantially less than the case here of an entitlement to a
particular monetary sum, is just, and we make a
submission where that is put against us that the
claim was for the difference so that the entire
monetary sum has been acquired for nil, or whether
the claims for the fact that there was an original
entitlement under 1345 item $35 and more in a
substituted claim of the order of half of that

during the relevant period. And we say that other
relevant circumstances are how a person came to
have that property, maybe a windfall gain at the

expense of another, and that is something which was
debated before the Court in the Mutual Pools
argument - whether or not there is a legislative
scheme which creates other rights to compensate for the loss of the property, and that is another issue which is before the Court in the Australian Tape
Manufacturers case, the Blank Tapes case.
We seem to be opening a lot of drawers or

cupboards and finding many of them still require
definitive answers. But we would also refer the
Court to the decision of this Court in Poulton
v The Commonwealth, 89 CLR 540, in particular,
page 574, where Justice Fullagar, having referred
to the well-known statement of Justice Starke in
Dalziel at page 574, goes on to say - and also

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Justice Williams saying each case must be judged on
its merits - he says:
In what follows his Honour makes it very clear
that the circumstances of acquisitions will,
in the nature of things, vary infinitely, and
that the circumstances must vitally affect the
question of what terms are just. If it is to
be accepted that on the justice of the terms
of an acquisition by the Commonwealth depends
the validity of the acquisition, any other
view than that expressed by Starke J. in
Dalziel's Case would turns. Sl(xxxi) into a
stultifying restraint on power, because, in
such a case as the present, no man could say
with confidence a priori that any given terms
represented ideal justice.

So, our submission is the question must be asked in
each case whether in all the circumstances there
are just terms, and we have argued, at length I am
afraid, that all the 1991 Act does is amend item
1345 so as to extinguish rights to payment in
excess of any sum which was intended to, what we
submit, is the demonstrated reason or appropriate
and fair sum to be payable, referable to the
particular service provided by the service

provider. Even if the 1991 Act is regarded as
affecting a completely uncompensated acquisition of
the difference, we submit the Court still should,
in the circumstances, if it is necessary for it to
proceed that far, characterize that acquisition is
just.
On this issue of characterization of course,

we say that principally it is a matter of what is
just terms within limits is a question for
legislative judgment.

McHUGH J:

Is that not inconsistent with what was said in the McGinnis case Was it not said in the McGinnis

case that the terms must actually be just and not

what Parliament thinks is just?

MR GRIFFITH:

Your Honour, we submit that a court does not approach these issues on the basis of considering

whether some more perfect scheme could be devised,

but whether or not the court considers the terms of
the acquisition fall within the range of what

reasonably may be considered just.

We would

submit, Your Honour, that that does not mean - and

perhaps we fall into argument on that in the next

case listed before the Court - that merely because

it might have an unsatisfactory operation in

respect of one person, even if that person be the

applicant before the Court, that does not in itself

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mean that in its whole application what is provided
is anything else but just.
Could I give Your Honour three citations which

we say would erode such a blanket proposition that
Your Honour cites from McGinnis' case and we would
perhaps then have to leave it to Your Honours to

reconcile or explain the difference. We say that
when one is considering - - -

McHUGH J: There is certainly a conflict between what was

said in McGinnis and what Mr Justice Starke said in

Dalziel's case.

MR GRIFFITH: Yes, Your Honour.

I was going to cite, of

course, what Justice Starke in 68 CLR at 291, but
can I also give the Court again the references to
Grace Brothers v Commonwealth, 72 CLR, in
particular Chief Justice Latham at 279 to 280,
Justice Starke again at 285 and Justice Dixon at
290 to 291 - that is where we have already referred
to Justice Dixon's remarks - and Nelungaloo V
Commonwealth, 75 CLR, at page 569, Justice Dixon
again.
We submit that in this case the uncompensated

removal of the benefit is not unjust merely because
we say the benefit was gratuitous. Additionally,

we have advanced the argument that we have already
relied upon to show that the Act was a curative

statute. So that we say that those matters we
relied upon as showing it is a curative statute
also demonstrate that what has occurred is in all
the circumstances just terms.
We say that all that a service provider, including the applicant, could say he was entitled
to is a reasonable payment for the service
rendered, and that is what has been provided by the
curial operation of the 1991 Act retrospectively to

cure the administrative error that we say has

resulted in windfall. Of course, if one approaches
it from the point of view of saying what the
applicant has vindicated is his unconditional right
for a further sum of $7 million which we say in no
way represents reasonable payment for the service
rendered because that has already been paid in
full, one could come to a different view.
That is what we see as the applicant's

approach to this Court to say, "If you're entitled
to 7 million as a result of demonstrating that this
sum remained that which was lawfully obliged to be
paid before the 1991 Act, there could be no just
terms other than payment of $7 million dollars", if
that be the sum at issue between the applicant and
the Health Insurance Commission in this case or

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some equivalent, if you like. But if one starts
delaying, one then does not have an equivalent.
It would seem from the applicant's submissions

there can be no discount that the just terms mean
you pay cash, the sum, which we say means, in
effect, there cannot be acquisition of a right to a
monetary payment because it must follow by
definition that the amount paid in just terms is
equivalent to exactly that which it is said you
cannot validly acquire without just terms.

McHUGH J: But I have some difficulty with this part of your

argument. Is it not a question of valuing the
right which is being taken? That is the hypothesis
upon which the just terms provision has got to
apply. If the chose in action has a particular
value, the question is - and if you have taken it -

have you given just compensation? And the answer
would seem to be: no, you have not.

MR GRIFFITH: Well, Your Honour, I suppose this is where

part company approach, because our starting point
as we say is, you entered this voluntary scheme to

take an assignment. The whole scheme operates in
the interests of the public as a whole, to
provide - - -

McHUGH J: But does that not go to the other limbs of your

argument?

MR GRIFFITH: It does, Your Honour, of course, and that is

why logically we have done the other limbs first
but, as it were, if we were out the door and this
is the only one we have left, we still say,
Your Honours, that this is a matter where the Court
has regard, not merely to the interests of the applicant, saying I am entitled to that sum of money, but to the whole interests of the community.

McHUGH J: Well, no doubt the case is saying that you have

one would have thought that the principal purpose got to take into account the public interest, but
of section Sl(xxxi) of the Constitution was that it
was to protect individuals from having to bear the
burden of public expenditure.

MR GRIFFITH:

Your Honour, where it is just that they should

be protected, but what we say, by reference to the
factual situation that we have referred to as fact,
preliminary in our submissions, there is no
relative injustice in the applicant other than if
one says, having, we say, because of demonstrating
this administrative oversight, he established that
he is the unintended beneficiary of $7 million out
of a total sum of $98 million which will be paid as
a windfall to pathologists who were not expecting

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to receive it for the services which, we would
submit - for the purposes of our submission we say
that pathologists other than the applicant have
accepted the sum they paid as being appropriate and
reasonable, we submit, Your Honour that if one is
weighing up the question of justice and injustice
there, there is no balance of justice in the
applicant's favour. We say that there is no - in
the context of this statutory scheme - justice to
be entitled to $7 million for nothing.

McHUGH J: But justice must be concerned with the value of

the right, must it not? If somebody buys a
property at the bottom of the market and you
acquire his property at the top, well, you have got
to pay in accordance with values at the top of the
market.

MR GRIFFITH: Well, Your Honour is right in that pursuing

this point in isolation one can get to the point of
saying that is an approach, he was entitled to a
sum, the Act gives him only half that sum. But,
Your Honour, we submit this is to be regarded in
the context of our series of submissions, and
alternate ones, which we say get to the point where
it is demonstrated one is not dealing with a
simple, as it were, legislation out of the blue
taking away right, but merely an Act which, in the
public interest, was designed to ensure the
vindication of the principles of the scheme and to
prevent a windfall payment out, of large moneys
from consolidated revenue at the expense of the
community to, we say, undeserving beneficiaries.

McHUGH J: Well, it may be a mistake to analyse these

elements because, I think it was Mr Justice Dixon
said, it is a compound conception.

MR GRIFFITH:

Your Honour, this perhaps throws it up in a

stark way because of the fact you can put immediate
monetary value on it: each item there is a $15

difference swinging in it, so there is the sum of

money. And perhaps that starkly puts up our
proposition, Your Honour, that we stand up and say,
"Well, what is just?" and form a view as to the
justness of that claim. It might in statutory
form, absent this amending Act, be a legal claim,
but we say it positively 100 per cent has no
justice in it as against the community who is being
asked to bear it. It is a present of $7 million of
public funds is how we put it, and we say that is
demonstrated by the material. If the Court is not
satisfied by that material, we would desire an
opportunity to prove it, should the Court say that
is a relevant issue to justice or unjustness.

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It is perhaps, Your Honour, a proposition that
does not improve on repeating it and it does really
underline, we say, this aspect of reference not
from the point of view of a particular person but
in the entire context of the community and
governmental action, what is appropriate and what

would be regarded as not unjust. And we do rely
upon the fact that we say all relevant parties
proceeded on the basis that what was done was valid
and was appropriate and was reasonable payment and
we say that there is no balance of justice
requiring compensation on the elimination of this
windfall.
And we say, Your Honour, that it cannot be

said that this Act does not provide just terms
because at the end of the day the result is that
the respondent and all other pathologists are being
placed in the same position as if they received a
reasonable level of remuneration for services that
they performed and we say, properly characterized,
that was the higher limit of their expectation on
taking an assignment under section 20A. Again,
that is confirmed by the fact that so many years
went past in administration under that mechanism
before the error was exposed and we have already
referred to the materials which indicate that the
levels of remuneration which have been paid and
retrospectively provided for by the 1991 Act were
determined by an expert committee on which relevant
professional bodies were represented.
So we do submit, Your Honour, that when one

looks at this Act and says that it reduces the fees
otherwise payable which would have been a level of
gross overpayment to a level which is fair to the
service provider, we say in the circumstances that
is fair and we say, for the operation of - if one
need go that far - the acquisitions power, not
unjust; in other words, just.

MASON CJ:	Do you dissent from the proposition that Sl(xxxi) requires that provision of full and adequate
compensation for that which is acquired?
MR GRIFFITH:	Your Honour, if that proposition means that it

provides just terms, we agree, Your Honour. But we
say that it is more than a question of having
regard to a single person as a claimant in

answering that question. So perhaps I am evading

MASON CJ:	I think you have got to meet the situation that in Johnston Fear and Kingham that was the formula
which the Court decided was the appropriate measure
of compensation.

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MR GRIFFITH:

Your Honour, the problem with going back too

far in these cases, of course one gets overwhelming
dicta to the effect that it only applies to

acquisition by the Commonwealth. So that one has
to move on - - -

MASON CJ:	But that is water long flowed under the bridge.
MR GRIFFITH:	We have not detained the Court in seeking to restore the tide there, Your Honour.
DAWSON J:	Why would it not be money paid under a mistake if

Dr Peverill got this money so that it would be
unjust enrichment of him?

MR GRIFFITH:

Your Honour, one problem about that is that it

has been held that he has been lawfully entitled to
it. But of course I suppose there are other
ways - - -

DAWSON J: Taking a broader view, you would say it is.

MR GRIFFITH:

Your Honours might say why not a taxing Act to

recoup the amounts but this is the mechanism which

we submit is very appropriate. The American Acts
confirm that, that the error has turned up after
many years, everyone has acted on the basis that
the legal operation was the same as the factual
operation and all the Act does is to restore the
party's expectations to exactly what they were at
the time. Perhaps to answer Your Honour the
Chief Justice's question, we say that the whole
issue narrowed down to whether it is not unjust or
whether it is just depends on all the
circumstances, not a complete attempt to identify
in respect of a particular claimant what is the
equivalent in money to that which has been
acquired.

BRENNAN J: The hypothesis is: what has been acquired is

the difference between $7 million and the new

figure. What is it that makes anything just except
that sum?

MR GRIFFITH: Because, Your Honour, it is a complete

windfall out of the public purse. The community is
making a gift -

BRENNAN J:

I appreciate that. Well, put it another way:

what is it that the Commonwealth then gives to the
claimant, in exchange for that which has been
acquired, identifying the "that" in the way in
which I have indicated?

MR GRIFFITH:

Your Honour, we say exactly what he and every

other pathologist took an assignment over the
relevant period under section 20A, namely a

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reasonable sum, including the 15 per cent discount
for the service provided, it being the choice in
the pathologist whether to charge a higher sum of
the patient, or to take that.

BRENNAN J:

But that is not what is acquired. What is

acquired is the difference between the old

statutory rate and the new. What has the
Commonwealth given, anything has the Commonwealth
given in respect of that?

MR GRIFFITH: Well, Your Honour, there is a problem about

even saying what has been acquired. We say
absolutely nothing has been acquired, so that - - -

BRENNAN J: Well, I appreciate that, but the hypothesis on

which you are arguing the just terms is that
something has been acquired.

MR GRIFFITH:

Your Honour, we say that in circumstances just

terms are providing absolutely nothing can be just,
and if one says in this case it is a bare case of
taking away the property right of the difference,
that is not unjust.

DAWSON J:

What you really do say, he did acquire this

right

- if it is a right - he acquired it unjustly. You
really do put it that he acquired it under a

mistake. Maybe he got the right, despite the

mistake, but you say it was unjust because of that,
and therefore justice requires you not to pay him
what he got, for what he got, but what he was
really entitled to.

MR GRIFFITH: Well, thank you, Your Honour. Yes, we do say

that.

DAWSON J: That is a sort of modified form of unjust

enrichment.

MR GRIFFITH:

Your Honours, we say it is an imposition on

the conscience of the community for $98 million to
go as a free gift to pathologists who, because of
this oversight, have established at one stage a
legal entitlement which has now been rectified by
legislation. Perhaps this exchange turns up very
starkly the issue in this case which has meant that
I have been unusually absent my usual brevity, if I
could put it like that, in making a submission to
Court, but could I detain the Court a minute longer
by making a submission that I find a little bit
difficult to put, but it seems to be right so I
will have a shot at it, and that is on the burden
of proof.
Now, we say it is for the applicant to establish that the amended amount is unjust, and

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not for us to produce facts establishing an amount
is just, so that, for example, if you had a
Commonwealth Act which said, "We will appropriate,
say a motor car, for a $1000 compensation", it
would be for the person challenging that
acquisition to say that a $1000 was not enough, it
was worth $10,000.
Now, we say that the position is the same. If

the Commonwealth first provided a just amount,
$10,000, and then it amended the legislation and
provided only $1000, we say that also would result
in the position it would be for the applicant to
show that $1000 was not enough, it was unjust; not for the Commonwealth to show that it was just. So
that, if this is not right, if the contrary view is
right, then it would be put that once a price is
agreed between the Commonwealth and a person to
acquire goods and services, any unilateral
Commonwealth reduction is necessarily unjust.

Well, we would deny that. It might be that the
Commonwealth has made a mistake; it has agreed to
pay 10 times too much for a computer or stationery
or something like that, and although - - -

McHUGH J:

But if the respondent gets over the early

elements, it is just a case of expropriation, is it
not?

MR GRIFFITH: Well, we are doing our best to deny that,

Your Honour, by saying that this submission
really ..... saying that the applicant has not got
over even the last hurdle, because we say that at
the end of the day, even in this case, it is for
the applicant to show that this final payment he is
entitled to, namely that the sum referable to the
sum that was intended to be paid and in-fact paid,
is unjust, rather than for us to have to establish
it is just. Now, perhaps this is not going to be
decisive for the purposes of the case, but seeing
we have had initial problems about the evidence

before the Court -

McHUGH J:

The substance of it is that you have put your

hand in his pocket and taken part of his money and
put it in consolidated revenue, is it not?

MR GRIFFITH: Well, Your Honour, we say the substance of it

is he has put his hand in the community pocket
because of the way the Act has operated and he
wants to extract 100 million from the community.
That is who is going to pay; the government will
not pay anything, Your Honour, the consolidated
revenue will lose 100 million.

McHUGH J:

He had a bit of paper that he is entitled to cash

in. You have torn up part of his paper.

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MR GRIFFITH: Well, Your Honour, we seem to identify the

problem in our exchanges but not necessarily

identify the correct answer. But what we are
seeking to submit on this last submission on this
issue is that in this case, at the end of the day,
it is still for the applicant to show it is unjust
although, if the Court takes the view if you are
entitled to $35 and you get 15, it follows that is
unjust, that is the answer to that question; but we
say that in the context of curative legislation it
is not enough to show that the original statutory

entitlement has been reduced. We say it has to be
shown ·that it has been reduced to a level that is

no longer just. So that if it is not adequate for
factual information to demonstrate that the level
of benefit actually provided retrospectively by
this Act is not just, we say then the applicant has
not discharged the onus, not us. I appreciate that
that submission has to be worked in the other
submissions, but that is our submission on that
issue.
There is also a section 55 issue in this case

which was argued briefly down below and which has
been the subject-matter of the notice of cross
contention which appears in the cause removed book,
and rather than detain the Court at the moment with
anticipating what might be put against us on
section 55, could I hand to the Court what are in
essence written submissions both on section 55 and
also we make submissions on the Air Caledonie point
and basically the Air Caledonie points are that
there is no problem on Air Caledonie, we say, even
if this is regarded as a taxing Act, because the
effect of - all this Act does is impose the impost,
if it is regarded as an impost, which our first
part of our submissions say it is not, and its
effect is spent once it is assented to and comes

into effect. So that as part of the amended Act it
does not have any operation to impose a tax;
therefore, even if it is regarded as a taxing Act

we say it does not fall under the second limb of

Air Caledonie. I hope that is not as obscure as my
last submission on onus of proof, but the
submission can speak to itself about that and we
hope we do not have to detain the Court long on

reply when we hear what the tax argument is. If
the Court pleases.

MASON CJ:	Thank you, Mr Solicitor.	Mr Jackson.
MR JACKSON:	Thank you, Your Honours.	If the Court pleases,

I am content to adopt the submissions made on
behalf of the Attorney by my learned friend, the
Solicitor-General.

MASON CJ:	Thank you.	Mr Spigelman.
Peverill(2)	90	9/3/93

MR SPIGELMAN: If the Court pleases, could I hand up an

outline of submissions which grew and accordingly
we have also got a summary, a one-page summary, of
the outline. Perhaps in view of the hour I would
only invite the Court's attention to the summary at
this stage.

MASON CJ: Yes.

MR SPIGELMAN:

As the Court will see, we put our case in two

ways. The first is that the relevant acquisition

of property is the acquisition by the doctor from
the patient of the statutory chose in action. That

is our primary submission. The alternative way is
that there is an acquisition by the Commonwealth of
the doctor's assigned claim. With respect to both
those ways of looking at it, the issue of "Is what
is acquired property?" arises.
With respect to the first, no question of

acquisition arises. There is an acquisition under
the statutory assignment, namely from the patient
to the doctor. Plainly with respect to the second,
the question of whether this is or should be
characterized as a mere termination or extinction
and accordingly not an acquisition, does arise with
respect to the proposition that the Commonwealth
has acquired the right to payment.
In each case, we say that there is property

and the essential issue, as we see it, is whether
or not there is some intrinsic infirmity in the
statutory right, intrinsic by nature of there being
a right in the Parliament to pass retrospective

legislation. The Court will recall, and I do not
propose to take the Court to the authority, the
Heneling Station case which involved statutory grazing licences. In that case it was found not to
have the relevant degree of permanence to qualify
as property by reason of a discretion in the
minister to cancel the licence.

DAWSON J:	What do you say the Commonwealth acquired?
MR SPIGELMAN:	The first way we put the case is the

Commonwealth did not acquire anything, the first
way we put the case is that we acquired the
statutory chose in action from each patient, and in
that regard we have acquired the entirety of the

chose. And there is no authority binding on
Your Honours that Sl(xxxi) extends to third party
acquisitions, but most members of the Court have
expressed the opinion that it does do so.

In the second case, we say that the

Commonwealth has acquired the balance, that it has
paid us a certain amount and acquired the balance.

Peverill(2)	91	9/3/93
DAWSON J: Acquired money?

MR SPIGELMAN:

Yes. Sorry, it has acquired the balance of the chose in action, part of the chose as distinct

from - there are two ways of looking at it, as my

friend put it, that it has either acquired the
whole of the chose and replaced it with the chose
of a lesser value, or it has acquired part of the

chose, and we say they have acquired, in the second

way we put the case, part of the chose.

But we do

not think anything will turn on the

characterization in that regard.

DAWSON J:

So the chose was not extinguished in part or in

whole?

MR SPIGELMAN:

Not in the second way we put the case, no.

DAWSON J: It still exists and the Commonwealth has it, in

part?

MR SPIGELMAN:

I am sorry, Your Honour, no, it has acquired

our claim on it and, yes, it is extinguished by
reason of the force of the legislation. There is
no extant chose.

DAWSON J:

You see, that is the difficulty, how you acquire

something which is extinguished.

MR SPIGELMAN:

If we get to our secondary submission, which

is that the Commonwealth has acquired it, it has
either acquired a chose and then replaced it with a
chose of a ..... of value, but it no longer has the
chose in the sense that it was always a claim on
itself. It is in the position of a - well, if
Your Honour pleases, one can think of analogies of bills of exchange and the like, but there is no
doubt that the only way we put the second way of
putting the case is a question of substance and
form and that is the way we put it; it is not based
on the same kind of analysis as we think applies

properly to the first way we put the case where
there is a plain chose where it has been acquired.
If I could just return to the point I was

making about the intrinsic infirmity - my friend
used different language - that in all statutory
entitlements there is such a characteristic, but
makes it subject to subsequent legislation, we say
there is a simple answer to that and that is that
it is subject to subsequent legislation which does

not infringe a constitutional guarantee. Now, we
appreciate there is a certain chicken and egg
quality in that submission, but that is the
function of constitutional guarantees, to answer
the question, what comes first. In the current
context, the guarantee that Parliament can only

Peverill(2)

9/3/93

pass laws with respect to the acquisition of
property on just terms comes first and determines
the ability of the Commonwealth to affect a past
acquisition; even an acquisition which has been
effected under a statutory scheme.
It really amounts to the proposition that the

Constitution has the consequence that once the
Parliament creates a right of a proprietorial character, it cannot take away that right with
retrospective effect.
If the Court pleases, is that a convenient

time?

MASON CJ:

Yes.

We will adjourn now, Mr Spigelman.

We will

resume at 9.45 tomorrow morning.

AT 4.16 PM THE MATTER WAS ADJOURNED

UNTIL WEDNESDAY, 10 MARCH 1993

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[1993] HCATrans 52

Key Legal Topics

Areas of Law

Administrative Law

Constitutional Law

Statutory Interpretation

Legal Concepts

Judicial Review

Jurisdiction

Standing

Statutory Construction

Procedural Fairness

arrangement with Mr Wallace.	(instructed by the
Australian Government Solicitor

advices.	As I mentioned, that is, of course,
several times the amount of the catch-all item 2294

taken that it must be that all the matters were for
the same reason ineffective.	But Your Honour is

outside the ambit of the acquisitions power.	An
alternative approach which leads to the - - -

the one which we submit is before the Court in this	see an obvious equity there which is different from
case.

explain to me what those considerations entail.	I
can understand the third one, but I am not sure
that I entirely understand the first two, that is,
economic impact and the extent to which a statute
has interfered with distinct investment-backed
expectations.

which extinguished or diminished that right.	It is
our submission that the gratuitous statutory

service.	The patient is the person who requests
the service and who is obliged to pay.	The

before the Court, is demonstrated to be what has
occurred here.	So that - - -

there would be different considerations.	Our
doctrine only applies to gratuities.

say, "I've exported these many things;	I claim so
much."	Your Honour, with respect, it is not all

pages 453.	We say again that that is an issue for
another day.

assignment under section 28.	I will not revisit
the reason why we say that.	We say that the

submit, that the courts are referring to.	At the
foot of the right-hand column on page 617	of the
report, which is 114 of our volume, it is	said:

is obliged lawfully to be made for the service.	We
say there is nothing in the way of confiscation

administration of government outweighs the	individual's interest in benefiting from the
defect.

rights, even a statutory right which arises under
section 20A(3) as contractual in character.	I

contracts clause or the Fourteenth Amendment.	The
second case is National Railroad Passenger reproduced at page 310 of our volume and, in

purely monetary benefit.	You do not have to pay
the money.	What the Commonwealth has achieved by

right.	So in no ways can one characterize what has
occurred here as being a law effecting the
assignment of the debt.	The debt which was owed to

possibility to someone else.	But the acquisitions
power deals with acquisitions.	We would submit,

entitlement determined.	Does that answer
Your Honour's question?

reconcile or explain the difference.	We say that
when one is considering - - -

cure the administrative error that we say has
resulted in windfall.	Of course, if one approaches

have you given just compensation?	And the answer
would seem to be: no, you have not.

one would have thought that the principal purpose	got to take into account the public interest, but
of section Sl(xxxi) of the Constitution was that it
was to protect individuals from having to bear the
burden of public expenditure.

difference swinging in it, so there is the sum of
money.	And perhaps that starkly puts up our

acquisition by the Commonwealth.	So that one has
to move on - - -

windfall out of the public purse.	The community is
making a gift -

- if it is a right - he acquired it unjustly.	You
really do put it that he acquired it under a
mistake.	Maybe he got the right, despite the
mistake, but you say it was unjust because of	that,
and therefore justice requires you not to pay	him
what he got, for what he got, but what he was
really entitled to.