Queanbeyan City Council v ACTEW Corporation Ltd

[2011] HCATrans 177

[2011] HCATrans 177

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  No C2 of 2011
  No C3 of 2011

B e t w e e n -

QUEANBEYAN CITY COUNCIL

Appellant

and

ACTEW CORPORATION LTD

First Respondent

THE AUSTRALIAN CAPITAL TERRITORY (DEPARTMENT OF TREASURY)

Second Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 21 JUNE 2011, AT 10.16 AM

Copyright in the High Court of Australia

MR P.J. HANKS, QC:   Your Honours, I appear on this occasion with MR J.K. KIRK and MR P.D. KEYZER for the appellant.  (instructed by Williams Love & Nicol)

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR C.L. LENEHAN, for the first respondent.  (instructed by DLA Piper Australia)

MR J.T. GLEESON, SC:   May it please the Court, I appear with MS C.C. SPRUCE, for the Territory, the second respondent in each appeal.  (instructed by Australian Government Solicitor)

MR R.G. ORR, QC, Acting Solicitor‑General of the Commonwealth of Australia:   If the Court pleases, I appear with MR S.P. DONAGHUE and MS C.G. BUTTON for the Attorney‑General of the Commonwealth, who intervenes in these proceedings under section 78A of the Judiciary Act.  (instructed by Australian Government Solicitor)

MR R.J. MEADOWS, QC, Solicitor‑General for the State of Western Australia:   May it please the Court, I appear with my learned friend, MR A.J. SEFTON, on behalf of the Attorney‑General for Western Australia, intervening in both matters.  (instructed by State Solicitor (WA))

MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales:   If the Court pleases, I appear with my learned friend, MR J.G. RENWICK, for the Attorney‑General for New South Wales who intervenes in the proceedings.  (instructed by Crown Solicitor (NSW))

MR W. SOFRONOFF, QC, Solicitor‑General of the State of Queensland:   May it please the Court, I appear with my learned friend, MR G.J.D. DEL VILLAR, for the Attorney‑General for Queensland intervening.  (instructed by Crown Law (Qld))

MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia:   If the Court pleases, I appear with my learned friend, MS E.F. HANDSHIN, on the instructions of the Attorney‑General for South Australia intervening.  (instructed by Crown Solicitor (SA))

MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia:   If the Court pleases, I appear with my learned friend, MR S.D. GATES, on the instructions of the Attorney‑General for Tasmania intervening in support of the respondents.  (instructed by Crown Law (Tas))

MR S.G.E. McLEISH, SC, Solicitor‑General for the State of Victoria:   If the Court pleases, I appear with my learned friend, MS K.L. WALKER, for the Attorney‑General for Victoria, intervening in both matters.  (instructed by Victorian Government Solicitor)

FRENCH CJ:   Yes, Mr Hanks.

MR HANKS:   It is our understanding that the Court wishes to deal with the issue that has been raised by ACTEW, stimulated by the Chief Justice of the Federal Court, Justice Keane.  As we understand the point that we have been asked to address it is that there is an argument that for a government to impose a charge on a wholly owned corporation, such as ACTEW, it is not to impose a tax.  The way in which it is caught, as we see it, is that such a charge, an impost is no more than a financial arrangement internal to government.  That is how the first respondent puts it in paragraph 50 of its written submissions.  The Chief Justice below said:

it is a charge imposed by one organ of government upon another organ of government.

His Honour said that at paragraph 51 of the judgment, which appears at page 2776 of the appeal book in volume 6.  Your Honours will be familiar with that short paragraph.  The Attorney for Queensland puts it ultimately in paragraph 42 of the written outline as follows, that the WAC is properly:

an internal financial arrangement of the ACT.  It is not a tax –

That is the point that we need to address.  Our point is that the water abstraction charge, or WAC, is a fee that is imposed by the Australian Capital Territory on any person who takes water, whether for the purpose of urban water supply or for another purpose, and your Honours will have in our written submissions copies of what we describe as the relevant determinations made by the Minister.  They appear starting at page 33 ‑ ‑ ‑

GUMMOW J:   But do we not need to find the statutory text which authorised the ‑ ‑ ‑

MR HANKS:   We do, your Honour.

GUMMOW J:   Where do we see that?

MR HANKS:   I will take you there very shortly, but I wanted to make a very short point about the determinations.  I would ask, for present purposes, that we assume that the determinations are valid, that there is authority for the Minister so to determine, and one can see, for example, if one goes to page 34 in our submissions where we have the 2003 ministerial determination, there at the bottom of the page is a reference in the first column to section 35.  Second column:

Licence to take water abstraction fee for water taken for the purposes of urban water supply –

and one can see in the third and fourth columns the differential rates that apply to different periods.  But the point we make simply is that this is a fee that is payable on a licence to take water for the purposes of urban water supply and that flows through every one of the determinations.  This is not a fee that is aimed at a particular entity or confined to a particular entity.  It is a general fee imposed on those who engage in certain conduct.  That is true, as I said, of every determination.  If I take you then to page 51 as part of our written submissions, that is the 2008 determination and on that page, again one can see, towards the bottom of the page – it is the second‑last entry – section 30:

Licence to take water abstraction fee for water taken for the purposes of urban water supply –

Again, one sees two rates depending on the relevant period – 55 or 51 cents per kilolitre. By this stage, of course, we have the reference to section 30 – by this stage the original Water Resources Act 1998 had been replaced by the Water Resources Act 2007. I think I will go now, I trust, to dealing with the point that Justice Gummow raised. It is clear that the intention of the Minister is to impose this charge on a person holding a licence under section 30 and that currently - that is, under section 30 of the 2007 Act. Formerly, it was imposed on a person holding a licence under section 35 of the 1998 Act.

We know, from section 30, that such a licence authorises the taking of water. One of its consequences is that the issuing of the licence lifts what is a significant prohibition on the taking of water, that prohibition to be found in section 28 of the current Water Resources Act.  Your Honours will see that one of the penalties that is imposed on the unauthorised taking of water is a term of imprisonment of six months. 

GUMMOW J:   Wait a minute.  Ordinarily “A person” would not include the Territory itself. 

MR HANKS:   No.

GUMMOW J:   This is a criminal provision, is it not?

MR HANKS:   Quite so.  We are not dealing – I will come to this in a moment, your Honour – but we are not dealing with ‑ ‑ ‑

GUMMOW J:   You say the licence lifts a prohibition?

MR HANKS:   It does indeed.

GUMMOW J:   The prohibition is attended by criminal sanctions and criminal sanction cannot easily be seen as applying to the Territory itself.

MR HANKS:   One would expect – might I divert your Honour’s question a little.  One would expect that an entity such as ACTEW, which is a Territory‑owned corporation, would conform to the law.  That is a simple proposition, your Honour.  Whether there is a real prospect that it will be prosecuted and subject to those penalties is another question.  The simple point is that there is a prohibition on the taking of water in the Water Resources Act.

GUMMOW J:   The question is prohibition upon whom?  It says “A person”.

MR HANKS:   There is no reason, if one looks – perhaps I need to take your Honour immediately to the Territory Corporations Act ‑ ‑ ‑

HAYNE J:   Before you do that, the Territory does not prohibit the Territory from taking water, does it?  You do not advance that proposition, surely?

MR HANKS:   No, but it – I do not need to advance that proposition, your Honour.  The proposition that I advance is that it would prohibit ACTEW, in the absence of it holding a licence under section 30, from taking water.  Now, perhaps the shortest route to the answer to that very question is found in the Territory‑owned Corporations Act which is referred to in the Queensland Attorney’s written submissions.

FRENCH CJ:   The Territory Water Act is not expressed to bind the Territory, is it?

MR HANKS:   No, it is not, your Honour, but, with respect, that proposition is not engaged by this legislation.  What we are concerned with here is the amenability of this particular Territory‑owned corporation, ACTEW, to the restrictive provisions of the Water Act.  The Territory‑owned Corporations Act 1990 declares, as is common ground, ACTEW to be such a Territory‑owned corporation. That is the product of section 6 and of Schedule 1. Consequently, its status as a Territory‑owned corporation does not entitle it to any immunity or privilege of the Territory, nor ‑ ‑ ‑

GUMMOW J:   ACTEW was incorporated under the Corporations Act 2001 (Cth), is that right?

MR HANKS:   Quite so, your Honour, with shares held in trust for the Territory.  I accept all of that, your Honour.

HAYNE J:   It is now picked up, presumably, by the 2001 Act.  Presumably it was incorporated by some earlier legislation and there has been a succession.

MR HANKS: Quite so, your Honour. Yes, quite so. But section 8(2) of the Territory‑owned Corporations Act makes it clear that it does not enjoy any immunity that might attach to the Territory.  That is a simple point.  Therefore, it is subject to the constraints to be found in the Water Resources Act 2007, just as it was subject to the constraints in the Water Resources Act 1998, that is, it could not, unless it held a licence, take water in the Territory. Section 8(2) also tells us that it is not “exempt from a tax, duty, fee or charge payable under an Act”.

GUMMOW J:   Does that mean that the Territory corporation is subject to the criminal law, in respect of the prohibition and the licensing structure?

MR HANKS:   In our submission, it does mean that, yes, your Honour.  It has no immunity. 

GUMMOW J:   It might be alarming news for the Minister who holds the shares.

MR HANKS: That is our submission, your Honour. It follows directly from section 8(2).

HAYNE J:   Be it so, what follows from that fact; be it so that this entity of the Territory is subjected by Territory legislation to a requirement to obtain a licence; be it so that it is said in the Territory‑owned Corporations Act not to be exempt from payment of tax, charges, et cetera, how does that confront the more fundamental observation that here is a creature of the Territory where money is being taken from one pocket to another pocket of the Territory?

MR HANKS:   I will no doubt answer that question, your Honour, but may I proceed a little more gradually than cutting immediately to the killing ground that your Honour has chosen.

HAYNE J:   I should never have used that expression, should I, Mr Hanks?

MR HANKS:   No.  I cannot forget it, your Honour.

GUMMOW J:   Bearing in mind, though, that we are enjoined to apply considerations of substance in these debates.

MR HANKS:   Yes, I appreciate that, your Honour.  What has happened here is that this Territory‑owned corporation, ACTEW, obviously has applied for a licence under the Act, as it is entitled to do.  There is provision in the current Act in section 29 for an application to be made.  It has been granted a licence under section 30.  There is no dispute as to that.  The licence was in evidence before the primary judge, Justice Buchanan, at trial.  Having applied for the licence it is engaging in a particular activity, namely the taking of water for urban water supply.  That is what it is doing. 

By engaging in that activity, entering into what one might describe as a transaction, then it has subjected itself to the legal consequences that attach to the engagement in that transaction.  The transaction is the holding of a licence and the taking of water pursuant to the licence, taking of the water for a particular purpose.  To put it another way, if your Honour will just allow me to make one more proposition, the Territory, through its legislation, has chosen to attach legal consequences to particular activity.  ACTEW, whether as an instrumentality of the Territory or whether as a semi‑autonomous entity, has chosen to engage in that activity.

We had in mind just to draw an analogy, perhaps at the highest level of generality, with the problem that confronted this Court in the Residential Tenancies Tribunal Case in 1997.  Your Honours will recall that one of the issues there was whether a Commonwealth entity established for the purpose of providing Defence housing was subject to the constraints in the Residential Tenancies Act (NSW).  Could I just draw your Honours’ attention to something that Justice McHugh said on page 455 at about point 2 on the page, where his Honour talked about:

State law including the common law will govern the creation of a relationship between the Commonwealth and a subject even when the creation of the relationship arises from the Constitution’s grant of executive power.  If the Commonwealth chooses to enter into the relationship without negating the consequences of relevant State law, it necessarily submits to the State law governing the incidents of the relationship.

Only at the broader sense is this an analogy, but it is nevertheless an analogy.  The Territory here, we say, has chosen – as we understand its argument – through ACTEW, to enter into a particular transaction.

HAYNE J:   But government instrumentalities have been a commonplace in Australian life since before Federation. 

MR HANKS:   Yes.

HAYNE J:   See the Railways Commissioners.  The question that emerges is here we have a government instrumentality, in effect, dealing financially with it, the polity that controls it.  We are not in the realm of Defence housing where an instrumentality of one polity was intersecting with the law in that case of a State.

MR HANKS:   Yes.  We are not, but we are in a situation where, in our submission, the arguments against regarding ACTEW as subject to the Territory tax are weaker because it is the one polity.  We do not have the federal complications that were present in the Residential Tenancies Case.  That is all.  We only drew attention to this because there is a basic proposition, we think, that can be teased out of what Justice McHugh said that is applicable here.

That basic proposition is that the Territory has chosen, through ACTEW, to engage in this activity.  It has chosen to do it through a corporation in which it is the sole shareholder.  But it is a corporation which is expressly under Territory law declared to be not entitled to the Territory’s immunities and to be subject to Territory taxes.  Having chosen to do that, then it is entirely appropriate to see the application of the provisions of the Water Resources Act that authorise the imposition of the fee as applying directly, as law – not as some internal financial adjustment – to ACTEW.

As we understand it, there seem to be two reasons that are advanced against us as to why this internal financial arrangement is not a tax, or would not be a tax.  We understand that the first respondent, ACTEW, and Justice Keane suggest that it is because in truth it is not a compulsory exaction and, therefore, does not have the first positive ‑ ‑ ‑

GUMMOW J:   By a public authority upon something other than a public authority which is the public authority imposing the tax.

MR HANKS:   Well, we had thought that might be the second justification, your Honour.

GUMMOW J:   One can understand a situation where the public authority is the Territory and the object of the tax was some local government body if they had them in a particular territory and an elected local council if there was one.

MR HANKS:   Yes.

GUMMOW J:   That is not this case.

MR HANKS:   No, it is not this case.  But, what this case is – the entity is a corporation.  Undoubtedly, all of the shares are held in trust for the Territory.  It has that association with the Territory.

GUMMOW J:   It is not just the ownership of the shares.  It is the direction of the activities, is it not?

MR HANKS:   Yes, your Honour.  Yes, indeed.  I think those are matters that are teased out in the submissions made on behalf of the Attorney for Queensland. 

GUMMOW J:   And the payment of moneys.

MR HANKS:   Yes.

GUMMOW J:   Under section 32.

MR HANKS:   Yes.

GUMMOW J: Borrowing powers under section 31, et cetera.

MR HANKS:   Indeed.

FRENCH CJ:   Application of government policies, I think.

MR HANKS:   Indeed, your Honour, and yet it has no immunity.  It does not share the Territory’s immunity from law and it does not have any immunity from tax.  That is what ‑ ‑ ‑

HAYNE J:   By injecting reference to immunity, are you entering into a realm of discourse that is either irrelevant to or at least not directly relevant to the issue that now arises?  The reason I put that to you is what was said by the whole Court in Deputy Commissioner of Taxation v State Bank of New South Wales 174 CLR 219 at 230 where the State Bank case was a question about section 114 of the Constitution. At page 230 the whole Court, speaking of a submission that the relevant question was to be determined by asking whether the State Bank was entitled to the privileges and immunities of the Crown, Townsville Hospitals Board, et cetera, concluded that the question which arises here, in that case about 114, was not to be answered by reference to a doctrine which had evolved with the object of answering questions of a different kind.  Are you not inviting us by your argument to go down the path which the Court rejected in connection with 114?

MR HANKS:   Yes, of course.

HAYNE J:   Why should we go down that path here, but not in 114?  It is forensically convenient, yes, but more than that, why as a matter of principle?

MR HANKS:   I suppose the shortest answer would be this case is not concerned with 114.  This case is not one in which one of the polities within the federation seeks to impose a tax on the property of another polity.  That is not this case.  This is a case where a question is whether, in enacting the Water Resources Act and the Territory-owned Corporations Act and they interact with each other, it can be said that the ACT has shown its intention to impose on ACTEW because it is a member of a class that engages in an activity, has it shown its intention to impose on ACTEW liability to pay a tax?  That is the question.

GUMMOW J:   This notion of immunity has to come out of the Self‑Government Act, does it not?  You would have to say, Territories are geographical areas, you have only a body politic because of this federal statute and that created this creature and called it a body politic and a legislature.  You want to say that brings with it notions of immunity, you may be right.  It has to come out of the Self‑Government Act, does it not, because otherwise there is nothing there?

MR HANKS:   What it brings with it is legislative authority for the Assembly and the Assembly has legislated in both the Water Resources Act and in the Territory-owned Corporations Act and one sees immediately in the Territory-owned Corporations Act the introduction of the concept of immunity in order to dismiss it.  That is what one sees. 

GUMMOW J:   To call a body politic under the Crown – it is a peculiar creature.  The Crown has no representation in the Territory, as I understand it, a matter which used to agitate Justice Neaves in this earlier situation when all this was being drafted.  Anyhow, you want to attract to it these immunities that the Crown would have if the Crown was a direct integer in this structure created by this Act.

MR HANKS:   I am surprised that your Honour puts that in my mouth.  I am not seeking to attract any immunities.

GUMMOW J:   Well, you use this word “immunity”.  Where does it come from?

MR HANKS:   I do that because ‑ ‑ ‑

GUMMOW J:   It comes out of constitutional law.

MR HANKS:   I do that because the Territory-owned Corporations Act uses that very word.

GUMMOW J:   I know it does, but in what sense can it be using it?

MR HANKS:   Well, we understand that ‑ ‑ ‑

GUMMOW J:   In what sense is it open to it for it to use it, you see?

MR HANKS: Section 8(2)(a) dispels the notion that the status of ACTEW raises any conceptual barrier.

CRENNAN J: But do you not need, when considering section 8, to also look at section 7, especially paragraphs such as subsection (1)(b).

MR HANKS:   Yes.

CRENNAN J:   It is a very complicated notion of being immune in the context of having an obligation:

to maximise the sustainable return to the Territory on its investment in the corporation –

matters of that kind.  All the matters identified here in the objectives seem to be matters of public concern.

MR HANKS:   They are public policy issues.

CRENNAN J:   Public policy issues, yes.

MR HANKS:   They are undoubtedly public policy objectives, but pursuing those objectives is, it is clear, something that is necessarily consistent.  It must be consistent with ACTEW and every other Territory‑owned corporation being subject to the provisions of Territory law, including those provisions that impose taxes, duties, fees or charges.

CRENNAN J:   Where 7(1)(a) refers to “comparable business”, is it referring to government‑owned businesses, or is it bringing into account privately owned businesses?  Is that a reference to public policy in relation to competition, or what?

MR HANKS:   I do not know the answer to that.  I can only assume that it is that very point, your Honour, that it is a reference to entities that engage in comparable activities.  That is how I read it, but that may not be accurate.

CRENNAN J:   Whether government‑owned or private entities?

MR HANKS:   Yes, indeed, and the fact that this legislation is addressed to agencies that are corporations owned by the Territory to kill a vehicle that may have been chosen to carry out some activity, rather than a department of the Territory, a department of government, would probably add some strength to that understanding of the reference in section 7(1)(a).  This is part of a package, if I could indulge in an oversimplification, of corporatisation of government enterprises and one would understand that to be that those enterprises ought to compete, ought not to be subject to special protections, although they have other obligations that go beyond the obligations cast on privately‑owned enterprises, for example, they have to show a sense of social responsibility.

The reason that I have taken the Court to this Act, the Territory‑owned Corporations Act, is that we understand that it is fundamental to an understanding of the relationship between ACTEW, on the one hand, and the provisions in the Water Resources Act on the other.

FRENCH CJ:   The notion that the government‑owned body has to compete is not, of course, unique in the ACT.  It is embedded in the competition principles, is it not, in relation to Crown agencies and States?

MR HANKS:   Yes, it is, of course, your Honour, but here it is – well, we think it is articulated, perhaps a little subtly, in the Territory‑owned Corporations Act as well, but we had thought that we could extract from this legislation a simple point that, so far as the Territory legislature is concerned, the corporation is subject to the law, that is it, including those laws that impose taxes and charges.

KIEFEL J: You are approaching the matter by way of first consideration of the status of ACTEW. Another way of approaching it might be to consider the extent to which, if any, the matters in section 8 cut across an evident intention on the part of the Territory to act through its corporation in the area of undertaking in question. If one approaches it that way, you ask to what extent do any of the matters in section 8 deny an intention that may be otherwise evident. I suppose you would say section 8 may be one of the matters that goes to the question of that intention. I am not sure.

MR HANKS: We think it is a powerful indication, your Honour, that where the corporation – and here it is ACTEW – does engage in activities that would otherwise attract liability if they were undertaken by a privately‑owned enterprise, they will similarly attract that liability. That is the whole point of section 8(2), we think.

FRENCH CJ:   All this ultimately goes to the question of the characterisation of the imposition on ACTEW, does it not?

MR HANKS:   It does.

FRENCH CJ:   By virtue of the fact - having regard to the fact of its relationship to the body politic?

MR HANKS:   Yes, that is right.  The question is, can we properly characterise it as a ‑ ‑ ‑

GUMMOW J:   And what is meant by this expression “body politic” in section 7 of the Self-Government Act.  It is just a statutory expression.  It is not something that comes out of the Constitution of the Commonwealth.

MR HANKS:   Can I respond to the Chief Justice?

GUMMOW J:   Yes.

MR HANKS:   It is a question of characterisation.  Can it be said that in its – I think it has to be put in these terms.  In its application to ACTEW, is the water abstraction charge properly characterised as a tax, as a compulsory exaction, et cetera, using the conventional, positive definition from Matthews from Chief Justice Latham?  That is the question.

CRENNAN J:   That question involves a matter pointed out by Chief Justice Keane, that is to say that the compulsory exaction is normally directed to the governed, not part of the governor.

MR HANKS: That is true, but our answer is that the ACT has chosen to place ACTEW in exactly the same position as the governed. That is the effect of section 8 of the Territory‑owned Corporations Act.

FRENCH CJ:   This is a question of constitutional characterisation, is it not?

MR HANKS: Yes. So one goes beyond form, one goes to substance, but one cannot ignore that aspect of the form, if I can put it – perhaps there is a better way of putting this. One cannot dismiss section 8 of the Territory‑owned Corporations Act as mere form.  It is a statement of the substantive legal position of the corporation.  In our constitutional system, and that is something that one needs to bear in mind as the Attorney‑General for Queensland notes in paragraph 40 of his written submissions, there are a number of aspects of the constitutional system that are prevalent in this federation that one needs to take into account.

The Constitution, for example, assumes the rule of law, that is it assumes that all governments, their officers, their entities are subject to law and that the law is enforceable. Now, what we have here is the legislature having endowed a particular Territory entity, Territory‑owned corporation, with legal characteristics - the ones that we put to the Court derive from section 8(2) of the Territory‑owned Corporations Act. Specifically this entity is subject to - as subject to taxation obligations as any other entity and our rhetorical question is why should constitutional principle require that that direction found in section 8(2) be ignored?

Could we then say something about what we understand or apprehend to be the effect of accepting the argument that our friends who appear for ACTEW now advance?  The first would be that government initiatives to corporatise the services that they provide would be problematic in the following ways.  Parliament, the legislature, could not in truth, subject their own corporate entities to taxation.

HAYNE J:   Why not?

MR HANKS:   Because it would not be characterised as taxation.  Any charge imposed ‑ ‑ ‑

HAYNE J:   But the government can say to its entity “You will pay me X dollars per whatever”.

MR HANKS:   Yes, but it will not be taxed.

FRENCH CJ:   That does not matter, does it?

MR HANKS: Well, it will have consequences. Indeed, it will matter. For example, to take the Commonwealth Parliament, the constraints found in section 55 would be inapplicable.

GUMMOW J: Section 55?

MR HANKS: Of the Constitution – the anti‑tacking provisions. There is no doubt ‑ ‑ ‑

FRENCH CJ:   Look at the position of a State Parliament. 

MR HANKS:   Yes.

FRENCH CJ:   A state legislature seeking to ensure the application of competition principles – it requires a State agency which is engaged in a particular activity, regardless of whether it is corporatised – to use that word – or not, to pay to the State some impost so that it is on a level playing field – to use another metaphor – with other actors in that field of activity.  It does not matter that it may be a tax when imposed on others and an impost of some other kind when imposed on the State agency, does it?

MR HANKS:   No.  It would be a charge in the other name.

FRENCH CJ:   Yes.

MR HANKS:   But, I accept what your Honour says, yes.  It does not matter for that purpose.  In part, it would not be a tax.  It would be some other exaction.  Perhaps a bit of bookkeeping – compulsory bookkeeping, but that is what it would be.  The other consequential point that we wish to raise would be that this mechanism would present States with a simple means by which they could avoid – perhaps I can use the word “evade” – the scrutiny that it contemplated by the analysis in Air Caledonie and the analysis in Harper.  

KIEFEL J:   But how do you say the courts can apply a concern about the use of a device – the interposition of an instrumentality – to make the tax a tax more remote from the consumer but, nevertheless, have the practical effect that it is passed on.  Where does it fit into the court’s analysis of whether or not a state or a body politic is actually acting through the entity?

MR HANKS: Well, your Honour, one of the guiding principles in this area of characterisation – and that is what we are concerned with – is that we need to focus on issues of substance. If the substance is that this particular charge has all the characteristics of a tax, other than it is imposed by the body politic on and, indeed, outside the body politic, we need to consider whether this is simply a formal structure, the formal analysis that is opening the way to evasion. The language that I have just offered to the Court can be found in many of the cases looking at the characterisation of impost, at least for the purposes of section 90, and your Honour would be generally familiar with that.

CRENNAN J:   I suppose the imposition of an instrumentality is a bit reminiscent of the post‑Dennis Hotels and pre-Ha line of cases where debates were focused on the precise timing in relation to the distribution of goods at which a licence fee was imposed.  In other words, if it were early enough there is a possibility of evading the characterisation as an excise.

MR HANKS:   If it was sufficiently backward looking, then one might say.  At the point of the liability to pay tax ‑ ‑ ‑

CRENNAN J:   Looking back to the wholesalers rather than forwards?

MR HANKS:   Yes, that is right, your Honour.

KIEFEL J:   I take the force of what you say about form over substance and the possibility of a conclusion in a particular case that there might be something more in the nature of structural device being utilised, but how does it apply in the present case?  What features can you point to to suggest that that may be an approach or do you say, I am assuming that you are relying upon it in this particular case as an alternative submission?

MR HANKS:   Yes, well I will answer your Honour’s question in a moment.  I hesitate to overcommit myself if Mr Kirk is telling me something that I should say.

GUMMOW J:   Better read it carefully first.

MR HANKS: There are particular features here with these Territory‑owned corporations and I have drawn those to the Court’s attention already. I have relied quite heavily on section 8 of the Territory‑owned Corporations Act.  Those features are sufficient, we say, to enable the Court to see that this is not simply an internal adjustment.  This is an entity, no doubt, closely aligned with the Territory but which the Territory has declared shares none of its immunities and is subject to Territory taxes.  Those are critical points.

If a court accepts that despite that, this is no more than an internal financial arrangement, the court should acknowledge the real risk that this structure, even with those qualifying elements derived from section 8(2), will allow State or indeed, the Territory, to avoid what we would say is the careful scrutiny contemplated in the Air Caledonie Case and Harper v Minister for Sea Fisheries.

HAYNE J: Can I explore that with you a little further, this avoidance/evasion notion which you have raised? In this case ACTEW, a government instrumentality, charges consumers X dollars per unit of supply. What does it matter for the application of section 90 how ACTEW strikes its charge to consumers of X dollars per unit? More particularly, why does it matter that the government has said you will strike your charges in a way that is built up by including at least these integers - WAC, UNFT, whichever other elements? Why does that matter? Why does the clarity of that – I should say the transparency and accountability of that, should I not – why does that lead to the possibility of avoidance or evasion?

MR HANKS:   Well, I think your Honour needs to inject some other assumptions into that question, but ‑ ‑ ‑

CRENNAN J:   Assuming that you are relying on the pass on in relation to your characterisation.

MR HANKS:   Of course, yes, but I am assuming that Justice Hayne’s question to me proceeds on the basis that what we have here is not a tax, that these charges, the water abstraction charge and the UNFT, the facilities tax, are not taxes ‑ ‑ ‑

HAYNE J:   My question does not depend upon attaching or not attaching the term “tax” to either.  My question is, you say there is a possibility of avoidance.

MR HANKS:   Yes, indeed.

HAYNE J:   Why does it matter whether the charge that is levied to the consumer can be observed to be built up in a particular way or is simply struck at the same level with no revelation of how it is constructed?

MR HANKS:   The orthodox proposition is that taxes on production or distribution of a commodity have a tendency to enter into the price and it is always assumed, but it is never necessarily established, that the particular impost, to use a neutral term, is reflected in the price, has the capacity to dampen demand for the commodity.  All of those things are assumed.  They are never the subject of evidence.

GUMMOW J:   The commodity in all the other cases has been a commodity generated by someone else’s commercial activities.  This commodity is a peculiar commodity.  It is a natural resource which has been appropriated, as it can be, and turned into an object of commerce by the very taxing authority itself, the so‑called taxing authority which is charging for it.

MR HANKS:   Yes, your Honour.

GUMMOW J:   It is not the pub selling beer.  It is a peculiar sort of commodity, which is another branch of this case, of course.

MR HANKS:   Yes, it is a peculiar commodity.  It is one of life’s essentials.

GUMMOW J:   That peculiarity of the commodity, I think, is linked to this notion of avoidance and device because it would only crop up in a peculiar circumstance.

MR HANKS:   I want to go back to engage with Justice Hayne’s question, if I could.  Assume that there is a charge on the taking of water.  It is a charge that is paid by the entity that takes the water.  It is an entity that is engaged, as indeed the charge assumes and requires, it is engaged in the supply of water, the urban supply of water.  Those are the terms of the charge.  The question is whether that might be characterised as tax and one of the ways we say in which the Court would answer that question is to determine whether there is no discernible relationship to value between the amount of the charge and the value of that which is supplied. 

That is one of the questions that would be normally investigated, but this answer that our friends for ACTEW present, that the Chief Justice of the Federal Court presented, is you never get to that point because independent of whether there is or is not a discernible relationship to value, you never ask that question because it is a peculiar adjustment within the government.  It cannot be a tax, therefore, we do not go on to the more sophisticated, perhaps more demanding, question as to the existence of a discernible relationship of value.  That is why, Justice Hayne, we say that it creates the opportunity to avoid that difficult question to evade the scrutiny that was contemplated in those cases.  That is why.

CRENNAN J:   You are not contending that a pass on is always indicative of something other than an internal government arrangement, are you?

MR HANKS:   A pass on?

CRENNAN J:   A pass on, yes, as you have described.

MR HANKS:   No, I am not, your Honour.  Our primary point obviously is that there is no such internal – you would not characterise these imposts as such an internal government arrangement.  They are general taxes to which this entity, ACTEW, has become liable because it has engaged in particular transactions and it has done that in a setting where it lacks any particular statutory protection.  That is our primary position.  There is something of a somewhat subtle suggestion, we believe, in ACTEW’s paragraph 50 ‑ ‑ ‑

FRENCH CJ:   Sorry, just before you go to that, Mr Hanks ‑ ‑ ‑

MR HANKS:   I am sorry, your Honour.

FRENCH CJ:   The legally effective – the provision which effects the imposition upon ACTEW of the liability to pay WAC, is that strictly the Water Act itself or is that read with 8(2)(b)?

MR HANKS: I think we would answer it as follows. It is the Water Act. The Water Act is perhaps a little oblique on this. Section 30, the person may be granted a licence to take water. I think it is section 107 which allows the Minister to determine fees for the purposes of the Act and the determinations that we have reproduced are such determinations of fees, and it is a combination of those provisions but, critically, the determinations made in exercise of delegated power that we say create the liability in ACTEW when it takes water for that purpose it becomes liable. Perhaps all that section 8(2) does is to dispel the notion that because it is a Territory‑owned corporation subject to all the duties referred to in section 7 – to which Justice Crennan referred, that it attracts some immunity from those charges. It simply dispels that.

GUMMOW J:   Apart from section 107, where is the section that provides the licence may be on a condition involving payment of a fee?

MR HANKS:   There is no express provision to that effect.

GUMMOW J: That is what I thought. It maybe comes out of section 31(1):

A licence to take water is subject to any condition –

(a)prescribed by regulation –

The activity under section 107 may generate a regulation, I suppose.

MR HANKS:   It might, your Honour, but what it has actually generated is each of the determinations, as we understand it.  They are based directly on section 107, at least the ones made after the 2007 Act came into existence, but there was, of course, a precisely equivalent determination‑making power in the 1998 Act.  I think, Justice Gummow, this is what I had in mind when I said that the authority to impose the charges is somewhat elliptically expressed in the Water Act.  As we understand it, there is the power to issue and grant a licence, there is a power to determine fees for the purposes of the Act and that is understood to carry with it the power to impose the fees that we find in each of the determinations for the taking of water.

BELL J: Is it then necessary to look to section 9 of the Taxation (Government Business Enterprises) Act?

MR HANKS: I have a copy of that, yes. It might be, but I would prefer to say, your Honour, that there is a shorter route to that proposition and that is section 8 of the Territory‑owned Corporations Act.  This seems to be ‑ ‑ ‑

BELL J: What purpose does section 9 of the latter Act serve in light of that submission?

MR HANKS:   It is, in our submission, redundant.  It is the braces that go with the belt where the belt is very secure.

HAYNE J: Section 9 marches in step with section 29 of the Territory‑owned Corporations Act and there has to be an intersection charted there - see, for example, 29(4) or (5), I think it is, of the Corporations Act.

MR HANKS: That is a carve‑out from the section 8(2) subjection of the corporation to Territory taxes, we would say. Could I also draw your Honour’s attention to the Legislation Act 2001 and to section 121. I think your Honours will have it. This deals with the binding effect of Acts of the Territory.

HAYNE J: Section 121?

MR HANKS:   Yes, your Honour.  In that case, we will provide your Honours with ‑ ‑ ‑

HAYNE J:   At least I have 120 but not 121, I think.

MR HANKS: My friend, Mr Orr, has produced multiple copies of section 121. If we could hand those up to the Court. We are working in tandem.

CRENNAN J: What is the relationship between subsection (2) and (4) of section 121?

MR HANKS:   Subsection (2) is directed to Territory law, as I understand it, that requires the payment of money that would form part of the Territory’s public moneys.  Then when the government entity authorises an act or omission, that immunity in subsection (2) extends to the authorised act or omission.  I do not think that what I have said to your Honours is necessarily a real answer to your Honour’s question, but that is as close as I can come to identifying the relationship.

GUMMOW J:   But reference to the public money of the Territory in subsection (2) is a reference, I think, to section 57 of the Self‑Government Act.

MR HANKS:   Yes, your Honour, I accept that. 

GUMMOW J:   Which is in Part 7 which deals with finance.

MR HANKS:   Yes.  In the print that I have it is defined on page 231.

GUMMOW J:   Yes, it includes revenues.

MR HANKS: Yes, “means revenues, loans and other money received by the Territory.” Our position in relation to 121 is that the references to the Territory are references to the polity that is the Territory but would not extend to this Territory‑owned corporation. This provision would have to be read with section 8(2) of the Territory‑owned Corporations Act.

GUMMOW J:   There is a definition of “Territory” also in the Self‑Government Act which draws the distinction between geographical and political sense.

MR HANKS:   In the political sense the Territory is manifesting the Executive.

GUMMOW J:   A headless Executive really.  Anyhow, we will not go there.

MR HANKS:   That is a disappointment.  Could I ask your Honours to look at the submissions that have been filed by ACTEW on the water abstraction charge which is really where we came in and could I ask your Honours to go to paragraph 50.  We have been seeking to decipher this text overnight.  I do not know whether we have had the success that our efforts ought to have achieved, but it does appear to us that our friends place some significance on the capacity of the Australian Capital Territory to charge consumers whatever the Territory might wish for the water vested in it.  Your Honours will see the second sentence in paragraph 50 where it is said that:

it was common ground [below] that the WAC would not infringe s 90 if the water were supplied directly to consumers by the ACT rather than by ACTEW.

That common ground, of course, was driven by the orthodoxy most recently affirmed probably as far back as Dickenson’s Arcade that once the commodity leaves the hands of the last seller and thereby passes into consumption, no tax can be characterised.  No tax at that point can be characterised as an excise duty.  Of course that was common ground below and was common ground because this Court expressly avoided, not in any pejorative sense but it did expressly avoid considering that distinction in Ha. 

We would observe this is, no doubt, not the occasion for revisiting the distinction, but it is a distinction that is extraordinarily difficult to reconcile with the underlying objective of a Commonwealth’s exclusive control over taxes on commodities.  It is also articulated by the principle judgment, the majority judgment in Ha.  We do not know at this point precisely what stock the first respondent places in that proposition in paragraph 50.  It might be elaborated by our friends when they have an opportunity to address the Court.

BELL J:   Was it illuminated by the ACTEW submissions before the Full Court at 35 to 41which are not reproduced in our appeal books but in which it is asserted this point was taken contrary to the observations of the Chief Justice in paragraph 51 of the judgment?

MR HANKS:   Justice Bell, I think that is a different issue.

BELL J:   I am just directing your attention to what is said in footnote 60 in ACTEW’s submissions.

MR HANKS:   Yes, thank you.  What our friends say is that before the Full Court they put the argument on which the Court, in its letter yesterday, has invited submissions.  What I am saying, and I am not trying to avoid your Honour’s question, but what I am saying is that there is something, we think, implicit in paragraph 50 that there is an analogy to be drawn with a charge on the consumer.  It has not been articulated, of course, no one has sought to reopen the distinction that was found to exist.  Well, one goes back, I think, as far as Parton v Milk Board, if not before that, in relation to taxes on consumption.  No one has sought to reopen that and we obviously do not seek to reopen it now unless our friends now wish to advance it as a critical part of their argument.  It has not been advanced up to now.  We will see.

Might I turn to the UNFT.  That is a tax that is payable by each owner of a network facility on land in the Territory.  I do not think I need take your Honours to the provisions.  The Act is very short and it is very clear.  There are seven identified networks, or utility networks identified in section 7 of the UNFT Act.  Six of those are networks under the Utilities Act and the seventh network is a telecommunications network.  Here the liability for the tax is cast widely.  It extends plainly to not only ACTEW but other entities that are engaged in the activities contemplated by section 7 of the UNFT Act.

Now, the reason that ACTEW is liable for the UNFT, for that tax, is that it owns and operates a water network that is used for the purposes of collection, treatment and distribution of water.  We know that from the Utilities Act section 12(1) defines a water network for the purposes of the Utilities Act, “the infrastructure . . . used, or for use in relation to” various purposes and those purposes include collection and treatment of water and distribution of water. 

So, yet again, we have the situation where there is a general impost to which ACTEW becomes liable by reason of its engagement in a particular activity, the ownership of infrastructure of a utility network, namely, a water network.  It is a water network because it is used for that purpose.  The arguments that we have put to the Court about the water abstraction charge apply equally to the items we are putting now.  This is not an internal financial adjustment.  This is the imposition of a tax.

GUMMOW J:   Looking at 21 of the Utilities Act, what is the relationship between section 121 of the Legislation Act and 21 of the Utilities Act as to liability and it says, “A person must not”?

MR HANKS:   Your Honour is referring to subsection (3) of 121 of the Legislation Act?

GUMMOW J:   Yes.

MR HANKS:   That immunity attaches to the Government or a government.

GUMMOW J:   Yes, that is right.  Where do we find what a government is?

MR HANKS:   I think that is an undefined term.  Can I put it this way, in its generic sense it refers to a government with a small g, it does not refer to a particular government. 

HAYNE J:   It includes New Zealand.

MR HANKS:   Has your Honour found that?

HAYNE J: Section 121(6), is it not?

MR HANKS:   Thank you your Honour:

includes the Territory, the Commonwealth, a State, another Territory or New Zealand.

It does not extend, we would say, does not extend to ACTEW.  The Territory is not carrying out this activity itself.  The activity is being carried out by ACTEW.  The requirement that it hold a licence is one that comes directly out of the Utilities Act.

CRENNAN J: How do you factor in matters such as – I think it is section 30(a) – that ACTEW has to take directions from the Minister and so forth – in the context of what you were just saying?

MR HANKS:   Again, I take your Honour – just as your Honour wishes to take me back to the Territory‑owned Corporations Act dealing with those directions. I ask your Honour to consider section 8(2)(a). So the corporation enjoys none of the amenities that might be held by the Territory itself. That is an important consideration to put into the balance and, in our submission, it weighs the balance down.

CRENNAN J:   Well, whatever the contrary indications, it outweighs those.

MR HANKS:   That is what we say, your Honour, yes.  Now, perhaps if I can just come back to Justice Gummow’s question.  We need to go back to the Legislation Act to begin to tease out an answer.  Your Honour drew my attention to the prohibition in the Utilities Act.  If we go to the Legislation Act, we know from section 144 that definitions in the dictionary apply to all acts and statutory instruments.

GUMMOW J:   I do not have a section 144.

MR HANKS:   Well, I apologise for that, your Honour.  That is what it says.  It is just over one line of text and it says:

A definition in the dictionary, part 1 applies to all Acts and statutory instruments.

Now, your Honour may not have the dictionary, but the dictionary defines “person” to include an individual and a corporation and defines “corporation” to include a body politic or corporate.  It follows that ‑ ‑ ‑

FRENCH CJ:   It also defines the Territory, does it not, as the body politic established under section 7 of the Self‑Government Act?

MR HANKS:   Yes, your Honour, but it does follow that when you see the prohibition in section 21 on a person providing a utility service except in accordance with a licence, when you see that prohibition, you would understand it presumptively to extend to ACTEW, it is a corporation, and, indeed, to the Territory as a body politic.  The same would, as Mr Kirk reminds me, that same will be true of the prohibition in the Water Resources Act, a prohibition on taking water without a licence, which is found in section 28 of the Water Resources Act. 

We see a qualification, if we go to section 121 of the Legislation Act, a qualification on the proposition that I have just put to your Honours, those prohibitions apply to ACTEW and they apply to the Territory, but that is subject to the qualification found in section 121(3) that the government is not “liable to be prosecuted for an offence”, but the legal constraint is still expressed to apply to the Territory and, undoubtedly, applies to ACTEW, which is, in our submission, for the purposes of this legislation, not the Territory.

FRENCH CJ:   The definition of “government” in 121 is not exhaustive.  It does not extend to agencies of government, even though they might have a separate corporate existence.

MR HANKS:   Although not exhaustive, one would understand its content from the particular examples that are given and those examples are the bodies politic.  Now, your Honours, we understand that the Court will want to hear from other parties on this question.  I hope we are not confused.  That is the case, is it not?

FRENCH CJ:   Yes, that is right, Mr Hanks.

MR HANKS:   You do not want me to occupy the lectern for the next hour and a half.  There will be in due course, if this point finds favour with the Court, there will be something we would want to say about costs, but we will have an opportunity to reply to what our friends say.

FRENCH CJ:   Yes, indeed.  Thank you, Mr Hanks.

MR HANKS:   Thank you, your Honours.

FRENCH CJ:   Yes, Mr Walker.

MR WALKER:   May it please the Court.  Your Honours should have an outline, a two‑page outline, for the matters noted as the subject of the Court’s invitation.  May I briefly touch on them before responding to some matters that have arisen this morning.  Proposition one in particular draws upon the fact necessary to be added to what my learned friend noted about the licence as the lifting of the prohibition that only my client, as our written submissions that are there cited show, only my client has the requisite licence, namely, for the purposes of urban water supply and in practical terms, if it matters, only my client has, of course, the network for the reticulation for urban water supply.

Proposition two is, of course, that which we raised below as well as in this Court.  I now have for the Court and my friends the two pages containing the passage cited in footnote 60 of our written submission and might I hand that up.  I do not want to dwell on that text.  Your Honours will see, indeed, some similarity between that and what is contained in our written submissions in this Court.  May I draw to attention, however, while it is with your Honours, paragraph 36 of our written submission in the Full Court.  One of those we cite in our footnote 60 here is a reference to the matter that my learned friend noted as one he was unsure whether we put it or relied upon it.  Well, yes, we did and we do in our written submissions here as well.

Proposition three is a matter that, as we there note, we defer to Queensland and adopt, with great respect.  Proposition four is a different argument, an elaboration by way of an answer accepting some things for the purpose of argument in the way in which the argument is put against us, as we understand it, to test it by its consequences.  There is at the heart of the appellant’s reliance on substance rather than form, a matter which has to be attended to, namely, whether or not in substance the Territory levying a price to be paid by consumers can or should at any point in substance be seen as a tax.  I do not want to intrude into matters which are not within the Court’s letter, but there is an obvious overlap of issues.

But, if in substance, when the Territory directs its creature not only to pay but also to pass on the WAC – an onomatopoeic expression for the government action involved, no doubt – to the consumer, to the ultimate consumer, via the distributor on the way – the City Council in this case – then, in our submission, it is at least arguable that the substance of the matter is the levying of a price to be paid – the consideration that must pass from the ultimate payer, consumer, to the ultimate supplier.

Now, that sounds as if in substance it is the act of consumption – and with water taking the water is to be treated as tantamount to consuming it, that is taking it by the consumer –sounds as if in substance consumption is the taxing point, if there be any tax at all.  Now, my learned friend referred to orthodoxy this morning as grounding the common ground which their written submission, in paragraphs 19 and 20 of their reply to us on this point, states is the common ground correctly understood by us in our written submission.  It was common ground, but if the taxing point was consumption, it would not be an excise. 

Well, we have not reached, we think, such a pass that the word “orthodoxy” casts doubt on an argument.  To the contrary, and we have noted the point that that is the law as we understand it and so it remains unless and until, or by an argument permitted to be entertained and then decided, some different outcome emerges.  As my learned friend put it briefly and, we with great respect adopt this, this is not the occasion. 

Now, we test these matters by deliberately going outside the particular area of intergovernmental relations that in this case is dominated by considerations of sections 52 and 122.  We test it by going to the States because the matters that my learned friends rely upon avowedly transcend the particular character of the Territory.  Indeed, it is important for their argument that it be so.  Recall, for example, what we submit is the inapposite analogy invited this morning with Henderson’s Case. But, if you do test it, to pursue the appellant’s argument that far – if you do test it by applying these kind of arguments to States then you do directly run into section 114 problems as we try to point out in paragraph (a) of proposition four.

In truth, the only way the taxing point revealed as one on consumption could be achieved would be by taxing the sale – the supply – and that, in our submission, would very likely fall within the general description of tax on property – that which is literally impossible, but which has a well‑established ambit of meaning, perhaps without sharp delineation.

The property in question ought, as we note, by very broad analogy with 51(xxxi) concepts and noting that 114 is a very important guarantee of intergovernmental boundaries, ought obviously at least be entertained seriously as including that species of dominion or control which States can have over water.  Thus, if those steps be admitted at least as seriously to be considered, the next step is reached that you see in paragraph (b) of proposition four, that leads back to the common ground that orthodoxy, as my friend puts it, maintains as common ground, maintained below, maintained here, and yes, it is part of our argument here as it was below. 

It may be that there is some drama inserted into paragraph (d) of proposition four, but it would appear to follow from the kind of argument in question and, obviously, it is expressed as we have expressed it because we would intend, to the extent we can, to excite in your Honours an intuitive doubt as to everything that has preceded such a conclusion and, in our submission, that would be a sound first and considered reaction to the matter.  I do not wish, while I am on our written outline for this morning, to elaborate beyond what we have written there, proposition five, about the UNFT.  Much of what I am about to say will of course serve double purpose for the WAC and for the UNFT.

HEYDON J:   Mr Walker, the mere fact that it is an exaction of general application does not affect the characterisation of the payment when you consider it as between the ACT and ACTEW, does it?

MR WALKER:   Quite so.  That is what we are proposing.  Again deferring to the way in which our learned friends for Queensland have raised the matter, it could be the reason why, to put it bluntly, we should have taken the same point for UNFT as we took for WAC, yes.  In other words, some species of distributive effect pays regard to the identity of those paying what I will call a purported impost and for some, we will call them “the governed”, it is a tax for others, instrumentality of the governor, it is without any facetiousness or deprecation intended, it is a form of bookkeeping.

Now, it may be a very important form of bookkeeping, which is no mere thing in any event, because they are public finances.  It may also reflect, generally speaking, an approach to public finance and government conduct of activities which include matters of enterprise, that is, the receiving of money in consideration for the supply of goods or services, which, as your Honours know from the most solid indication, namely, the statutes to cross the Bench, have been subject to State‑owned or Commonwealth‑owned corporations carrying out public policy, by which I mean, political programs, for many, many decades with what some see as a beneficent and others see as a backward expansion of that in the recent two or three decades.

CRENNAN J:   That is part of Mr Hanks’ answer, namely, that the Territory-owned Corporations Act section 8 puts the instrumentality in the position of the governed, as you mentioned before.

MR WALKER: It is and we have identified that sentence in my learned friend’s address this morning as perhaps the pivot between us. We are diametrically opposed on the proposition. In our submission, on its own, it is not true of section 8 in the appropriate context to which I will be going, that is, all the other provisions, most of which, I think, all of which have now been touched on in argument, that I will try to pull together in a slightly different ‑ ‑ ‑

CRENNAN J:   Well, again he says it tips the balance. 

MR WALKER: But when you go to section 8 and you place it in context, it is simply not true that ACTEW is placed in the same position as what I will call an individual or corporation within the class of the governed. It is just not true.

GUMMOW J: What content would you give to immunity or privilege in section 8(2)?

MR WALKER:   The first part of the answer is to note that this is either a withdrawal or a statement of a difference in status or vulnerability which has at its heart the expression “only because”.  A territory‑owned corporation is not “only because” of that status, et cetera, et cetera.  An immunity – “privilege” probably does not affect the matters before the Court today to any great degree.  “Immunity”, however, is the same word as you will see in 121(4) of the Legislation Act. I am sorry, your Honours, this is one of those arguments that requires more than one statutory text to be available at the same time. Having noted that identity of expression, we submit that immunity ought to be understood in section 8 - given its focused concern with the same subject matter of legislating as 121 generally concerns - the same way. That will result in an immunity meaning and including the non‑application as a matter of proper interpretation of statutory provisions of ‑ ‑ ‑

GUMMOW J:   So it is a legislatively created immunity I think they are talking about there in 121?  Then they are qualifying it?

MR WALKER:   Yes, they are.  It would appear that “immunity” in 121(4) of the Legislation Act, it would appear that that includes the state of not being bound.

GUMMOW J:   Yes.

FRENCH CJ:   The immunity is not something that comes by way of implication or as an incident of the creation of the body polity under the Self‑Government Act. 

MR WALKER:   It does not seem to be royal or political, no, although, to the extent that the political does bestow immunity, then it presumably does apply but ‑ ‑ ‑

GUMMOW J:   Wait a minute.  But it then applies as a matter of inference from section 7 of the  Self‑Government Act, does it not?

MR WALKER:   Yes.  There are many starting points, but the best would be ‑ ‑ ‑

GUMMOW J:   As to the nature of this body politic.

MR WALKER:   The best would be the Self‑Government Act, it is a body politic.

GUMMOW J:   Under the Crown, even though the Crown is otherwise absent.

MR WALKER:   Quite.  So whatever is drawn in the train of those concepts is then addressed.  We would respectfully submit the best place to start in the suite of provisions that matter for this case is 121 of the Legislation Act.  That is just because it is the starting point, not the end point, it is the starting point for how to read the statutes that follow.  I fear your Honours do not have the Interpretation Act from comments made this morning, for which I am sorry. I am about to refer to sections 5 and 6, not because I wish to dwell on them, but because you cannot understand the Legislation Act without reading its sections 5 and 6.  I gather from some of your Honours’ quizzical looks that you do not have it either.  I am very sorry about that.

Could I just note then, and look forward to that deficiency being supplied, that sections 5 and 6 tell you in general terms what do you do when you see a provision that has the words of 121(5).  It describes itself as a “determinative provision”.  You have to go to sections 5 and 6 to see what that means and in a nutshell it means it has got to be a more deliberate expression of contrary intention that one would otherwise require, how, in a particular case, one would gauge the greater ‑ ‑ ‑

FRENCH CJ:   Expressly or by a manifest contrary intention.

MR WALKER:   And the word “manifest” is being used so the examples show or say they are going to show so as to indicate a requirement for greater deliberateness.  Still staying on 121, subsection (2) is that which I suppose logically follows having observed section 7 of the Self‑Government Act, the Commonwealth Act.  It says it “does not bind the Territory” and we accept, looking ahead to my client’s own constitution and status, we accept that we are not the Territory.  That is common ground.  However, we note that subsection (2) has what might be called a realism about the circulation of money to and from the Territory. 

Subsection (4) uses an expression which, as the Chief Justice noted, is non‑exhaustively defined in subsection (6) to include the Territory.  Then one sees there that there is a non‑binding, provided by subsection (3), a non‑binding of provisions which purport to make a government liable to be prosecuted.  Now, I say non‑binding because saying that a provision does not make a government liable to be prosecuted picks up, of course, the anterior, I will call it, common law of statutory interpretation about offences ‑ ‑ ‑

GUMMOW J: What about the voting shareholders who give these directions under section 17?

MR WALKER:   Yes, your Honour, that is an important question.  Can I come to that when I come to those shareholders and the directors because, as Justice Gummow has pointed out, it is to be recalled that the Act in question, which in this case is the Territory‑owned Corporations Act, is one that binds everyone including the Chief Minister of the Territory, Mr Stanhope, whose name you will see on the decision documents concerning the application of this charge and who was a director and a shareholder at all the relevant times and who also determined the fee under the Water Resources (Fees) Determination 2006 (No 1), which is to be found commencing in volume 4 of the appeal book here, page 1482.  I do not need to take you it. 

Under subsection (4), that non‑effect, non‑binding, non‑liability in relation to a government and prosecution for an offence is, pro tanto, picked up by subsection (4) under the banner of a same degree of immunity and said to extend to a government entity.  It may be there is then circularity intruded because it is said to be in relation to an authorised act or omission of the entity and one is going to have to break that circle somewhere.  One then goes to the definition of “government entity” and it starts with an undefined term “instrumentality” and it is our submission that on any view of it, given the provisions that have been referred to in the written submissions and to which we will be coming briefly and shortly, ACTEW is an instrumentality of the Territory.  It is a tool shaped, chosen, deployed for the purposes of the public policy of the Territory decided politically.

BELL J:   The dictionary to the Legislation Act, defines both “territory instrumentality” to include, amongst other things, a corporation “established under an Act or statutory instrument, or under the Corporations Act”, and then separately “territory‑owned corporation”.  Does that have some impact on this part of the argument?

MR WALKER:   It may.  To be a territory instrumentality under the Public Sector Management Act requires a declaration and although the evidence does not reveal it, I am instructed that ACTEW has not been so declared.  There is a question as to what the “and” means between paragraphs (a) and (b) of that definition given that the definition says that it means “a corporation, that (a) and (b)”.  It would appear both have to be satisfied in order for any corporation to be a territory instrumentality.  However, in our submission, we are, as a matter of ordinary English, an instrumentality of the Territory.

GUMMOW J:   Do we know when your client was incorporated?

MR WALKER:   Yes.

GUMMOW J:   We know its present status ‑ ‑ ‑

MR WALKER:   I am sorry, your Honour, I will get that ‑ ‑ ‑

GUMMOW J:   We know the 2001 Act now applies, but it is older than that, is it not?

MR WALKER:   Yes.

HAYNE J:   It was not within the 1990 Territory‑owned Corporations Act as first enacted.  ACTTAB was the Territory‑owned corporation at that time.

MR WALKER:   Priorities, your Honour.  1995, we think.

GUMMOW J:   Under?

MR WALKER:   My client was created in 1995.

GUMMOW J:   Under what statute?

MR WALKER:   The Electricity and Water (Corporatisation) (Consequential – no, that did not create it.  Can I take that on notice, your Honour?  The statute I was about to name, the Electricity and Water (Corporatisation) (Consequential Provisions) Act 1995 transferred the previous authority, the ACTEWA, transferred it, in effect, rights and liabilities, et cetera, to my client, but I will get an answer to your Honour’s question about the statutory ‑ ‑ ‑

GUMMOW J:   We had just better have the genealogy of this.

MR WALKER:   Yes.

CRENNAN J:   Another point is whether there was a transfer of publicly‑owned assets into the new corporation, which one would expect.

MR WALKER:   Well, there was, yes.  The parenthetical title of the statute is (Corporatisation), as my learned friend accurately put it this morning.  This was a corporatisation and if there is any stable content to that expression it involves the passing of public resources directly from the polity, usually in our history from a department, sometimes from a statutory authority, to an entity which is usually a corporation created under the general law concerning corporations.  None of these things are mandated by law, and so there are exceptions.

CRENNAN J:   But owned in some sense by the creating State or Territory?

MR WALKER:   Your Honour anticipates me, but at least in the lexicon that is used at the moment, with all the uncertainties of that, it is to be distinguished from privatisation because the corporatised entity is still usually owned by a number of devices.  You see in this case the shares held on trust as the device, and directed by nominees of government, usually, not always, with a direct political direction power which varies according to the completeness and, to use that word, transparency with which it must be exercised.  In this case, we have the full panoply of public control and direction.  I will come to some of those provisions in a moment.

KIEFEL J: Are you coming back to section 8, Mr Walker?

MR WALKER:   I certainly am.  In fact, that is where I am going.  So having gone to the Legislation Act, could I come to the Territory‑owned Corporations Act, read against that background ‑ ‑ ‑

HAYNE J:   You say “read against that background”.  What, relevantly, do we get out of 121 of the Legislation Act that we need to take to account in looking at the Territory‑owned Corporations Act?

MR WALKER:   The only thing, bearing in mind the express provisions of the Territory‑owned CorporationsAct, to which I am about to come, the only thing is the point I have made about subsections (3) and (4), that is it.

HAYNE J:   May or may not speak to a Territory‑owned corporation?

MR WALKER:   Quite.

HAYNE J:   Can I just see if I have understood the argument thus far on this aspect of it?  You look at section 7 of the Self-Government Act.  You see reference to establishment as a body politic under the Crown?

MR WALKER:   Yes.

HAYNE J:   That is an expression which, of itself, may evoke with respect to governmental instrumentalities of the Territory, questions in kind normally put under the rubric “shield of the Crown”, “immunities” and the like.  You go to the Legislation Act. That may or may not speak to such a body as this save to the extent that section 121(1) speaks:

An Act binds everyone ‑ ‑ ‑

MR WALKER:   Yes.

HAYNE J:   Then 8 of the Territory-owned Corporations Act makes a couple of provisions to the effect that such a corporation does not have certain immunities only because it is a Territory corporation.

MR WALKER:   Exactly so.  That is the sequence so far.

KIEFEL J: Section 8, you say, is concerned to limit the extent of representation or the immunity which implicitly is to be found elsewhere? It is not actually – you do not read it as the creation of a privilege rather than a limitation?

MR WALKER:   No, it is a removal of my client from having immunity by reason of its status.

KIEFEL J:   Only?

MR WALKER:   Yes.  It may be a more abundant caution provision, it does not matter.  That is all it does.

KIEFEL J:   Or it may be intended to operate so that it does not have representation or immunity other than when it is acting within its correct capacity.  It may be that type of limitation?

MR WALKER:   That is right, your Honour.  That leads to consideration immediately of 8(4).

FRENCH CJ:   Just before you go to (4), the word “status” does that include all of the characteristics of a Territory‑owned corporation which one finds in the Act as to shareholding, direction, compliance with policy and so forth?

MR WALKER:   No.  In our submission, the natural reading of those expressions – the expression found in subsection (1) and subsection (2) following the word “status” is that it is ‑ ‑ ‑

GUMMOW J:   Of a reference to 6(1)?

MR WALKER:   It is that status which comes from being and is inherent in being Territory owned.

FRENCH CJ:   Just the fact of effective ownership?

MR WALKER: If I may use a barbarism, it is the Territory “owned‑ness” of the corporation that gives its relevant status for the purposes of section 8.

GUMMOW J:   The status, it seems to me, may be its presence in Schedule 1.

MR WALKER:   Yes, but its presence in Schedule 1 is what makes it Territory owned.  It does not make it a corporation.  That is my point.  It is the epithet that is supplied by “specification” in Schedule 1, not the noun, which is “corporation”.

FRENCH CJ:   So that leaves one free, as it were, to look to the characteristics which one finds in the Act of these corporations in determining whether or not the corporation might be subject to any particular law.

MR WALKER:   Quite so.

FRENCH CJ:   In other words, looking at the interaction between those provisions and other laws of the Territory to determine the application of the other laws of the Territory.

MR WALKER: Yes. Section 8 does not answer the question as a tax in the form of the WAC being levied by the Territory on ACTEW. Section 8 does not answer that question because it is not being Territory‑owned but rather a number of other matters that enables one to address the substantive question of whether or not in particular this is a compulsory exaction. While on section 8, we would also say that immunity or privilege simply does not comprehend the notion of an immunity from a tax as being the answer to this case. The question asked in this case comes at an earlier stage in the analysis and that is whether this is a tax as it is purported to be levied on my client at all.

Our argument does not involve the erection of an immunity or privilege.  It makes no sense as a matter of English or, in our submission, an appreciation of the organisation of government to say that the creature of government enjoys an immunity from a tax to which the taxing Act would otherwise make it subject.  Rather, as we have tried to directly argue in our written submission below and here, it is not a tax on the creature of government the will of which is the same as the will of the government because there is no compulsion involved in the payment by an entity which is subject to and directed by the same will as the entity purporting to impose the tax. 

Could I draw to attention, as I say, subsection (4) of section 8. that is a form of words which, in our submission, arguably – I shrink from putting it categorically – arguably does not affect the provisions of subsection (3) and therefore in relation to crime, subsection (4) of section 121, it depends whether immunity or privilege in paragraph 8(2)(a) is intended to include the non‑liability to prosecution for an offence. If it does, then subsection (4) overturns 121 for these Territory‑owned corporations. If it does not, then it does not speak to the question of crime.

GUMMOW J: It does not help those acting under section 17 who are left maybe as principals, maybe as aiders and abetters.

MR WALKER:   I am sorry, your Honour?

GUMMOW J:   They are left as maybe principal, maybe aiders and abetters.

MR WALKER:   Yes, I will come to that in a moment.  Subsection 8(3) is obviously a substantive effect of corporatisation and has not been noticed in my friend’s arguments.  That is not a criticism, of course.  The limited liability which by a supererogatory set of words is said to be subject to agreement to the contrary by the Territory is, in our submission, of no significance whatever in relation to the issues in this case.  It certainly depends upon and shows that there is substance in the different legal personality of my client and the Territory but that does not, to any degree at all, overcome the proposition that the will of the Territory is the will of my client.

Section 10 is important because it is a form of specificity or paramountcy of the provisions of this Act in relation to these corporations. The provisions I am about to come to apply, section 10 says, as well as any other obligations. In section 11, one sees that the Constitution has to adhere to a particular line. If one goes to Schedule 2, one sees that it means that the Constitution is at the behest of the Legislative Assembly and Schedule 3, which is also compulsory, shows that the holding of political office is not an incidental but is an integral part of holding office in the corporation – see item 1, for example. One sees the obligation of item 4 in relation to the Territory‑owned Corporations Act itself.

Going back to section 11(2), then, referring to the voting shareholders, as you will see under section 13 is referring to Ministers. Section 11(3), again, subjects the matter to directly - of the constitution of these corporations to the Legislative Assembly. Section 12 – Directors – one sees the role of voting shareholders and subsection (4) shows that there is compulsory consultation and consideration of recommendation with a committee of the Legislative Assembly.

Section 13 shows that the authority to participate in the formation of a company is ultimately political, that is, through the Chief Minister.  One notes the similar provisions in relation to “non‑voting share” in subsection (3).  Subsection (4) is a shareholding qualification that emphasises the direct political control and subsection (5) shows that the money of the corporation is, though held by the corporation, held in a corporation all the shares of which are held on trust for the Territory.

If one is talking about matters of substance, subsection (5) of section 13 and the other provisions to which I have referred are matters which, in our submission, simply cannot be overlooked in understanding to what extent it can be said that anything in the nature of a tax has been levied when the Territory directs the WAC to be paid by my client and to be passed on by my client. Under section 15 one sees that the political control includes the informational aspect of accountability, Part 3 being headed “Accountability”. That is continued under section 16A and then we come to two very important provisions, sections 17 and 17A.

Bearing in mind the nature of the voting shareholders as Ministers, one sees there a written direction to require the company to comply with a request, contrary to what would otherwise have been the intention of the directors.  This is as manifest as one could find an indication that the will ultimately of the corporation is the will of the Government.  Subsection (2) compels compliance.  Subsection (3) renders it paramount in the sense that it cannot place them in breach of any other provision.  There is political transparency, see subsection (4), and there is fiscal responsibility, subsection (5), although one sees by reason of subsection (7) that ultimately that becomes the decision of politics by decision of the Chief Minister. 

Section 17A continues the subjection completely to the will of the Government of the corporation by permitting, empowering after consultation the Ministers to tell the corporation the general government policies that are to apply whereupon under subsection (2) there is an obligation in the management of the corporation to ensure that they are, as practicable, complied with. Again, a form of transparency in the political process under subsection (3) which emphasises again the governmental control. The auditor‑general, under section 18, is involved in the supervision and accountability of the corporation and section 18A, “Audit committee”, continues that theme.

In our submission, it is simply not possible, observing those provisions, to say that as a matter of substance there is even the glimmer of daylight that can be seen between the will of the Government and the will of the corporation.  When the corporation does something, if it is acting within the authority imposed by those provisions and the effectuation of those provisions, then it will be not incidentally but inherently because it is in accordance with government will.  That, in our submission, is a sufficient demonstration of the inability to characterise the WAC as tax.

GUMMOW J: Now, what is the consequence then for the application of section 28 of the Water Resources Act to your client:

A person must not take water ‑ ‑ ‑

MR WALKER:   One thing is clear, and that is that my client has, throughout all these dealings, acted on the basis that it is required to have a licence.  I do not need to elaborate that factually.  It is plain to demonstration on the findings of the courts below and there can be no departure from that as an accurate statement of the history.  It must follow legally – whether this is irrefragably good reasoning is another point – that if we regard ourself as bound to have a licence that would be because the sanction on not having a licence is somehow applicable.

Alternatively, we have a licence because that is thought to be a convenient way in which the administration of this aspect of the water resources of the Territory, which include those that are found in New South Wales, are to be administered by the Territory under a corporatised regime. I have put it that way because the actual sanction, the prohibition itself, strikingly is expressed in section 28(1) by the creation of a criminal offence, and ‑ ‑ ‑

GUMMOW J:   Well, Cain v Doyle (1946) 72 CLR 409 at 417 to 418 in Sir John Latham’s reasons, and 423 to 425 in Sir Owen Dixon’s reasons would suggest that in creating an offence, a “person” would not include “the Crown”, to use that expression.

MR WALKER:   Your Honour, that is one of the reasons ‑ ‑ ‑

GUMMOW J:  And furthermore, because there would be no principal offence, there would not be an aiding and abetting offence by the voting shareholders.

MR WALKER:   Yes, that is correct.  Can I go from the ground up, as it were?  If there is a natural person, an individual, who can be said to be taking water within the description of subsection (1) but not within the description of subsection (6), then that natural person is, on the face of things, committing an offence.  There thus may be one, probably more, individuals whose conduct – it is obviously at least convenient and probably necessary as a matter of law to be covered, if I can put it this way, by the licence of their employer. 

That may be an explanation as to why it is considered convenient in the administration of this natural resource, that is, water, for my client to have a licence to do that which it may well have been able to do without committing an offence anyhow.  That is not a matter of aiding and abetting in the example I have just given.  It is a direct offence if you can say that what the person is doing is taking, for example, surface water and not having a licence.

Can I come back to what Justice Gummow has raised concerning the common law statutory interpretation exemplified in Cain v Doyle.  Here we have comprehensive definitions of “person” and “corporation”, not only in the dictionary of the Legislation Act but in section 160 of it, which, except to the extent that the context supplies a contrary intention, would include the Territory and yet, in our submission, it would be absurd to suppose that the Territory being the polity, the body politic, whose legislature creates the offence and prohibition in section 28 unless it has licensed itself and that is sufficient contrary intention and, in our submission, is sufficient to carry with it instrumentalities using that word at least as a matter of ordinary English tools or even using it in the sense it is used in section 121 itself, such as my client, even when they are involved.

It is for those reasons, in our submission, that there is within the meaning of sections 5 and 6 of the Legislation Act sufficient contrary intention that the inclusion of the Territory itself as a body politic included in the defined term “corporation”, itself included in the defined term “person”, somehow means that 28(1) creates an offence if some paperwork goes wrong in a Canberra office.  In our submission, that is an untenable proposition.  It is based upon absurdity and produces increased absurdity.  However, as I say, the fact that natural persons may engage in conduct that if there were not a licence to cover their conduct as agents or servants of a licensed corporation, that they may themselves not by way of aiding and abetting, but by way of principal offenders, be subject to the offence, it obviously becomes convenient regardless of the true legal position of my client that there be a licence.

HAYNE J:   Can I understand where your argument is, Mr Walker.  It seems to be an argument that proceeds in three steps.  One, ACTEW pays amounts as and for the charges in question.  That is common ground, nobody disputes that.  Step two seems to be whether or not ACTEW pays those charges pursuant to some legally enforceable obligation to do so is beside the point.  Step three seems to be that the degree of connection between ACTEW, the payer of these charges, and the Territory, the payee if you like, is such as to deny that what ACTEW pays bears the description “tax”.

MR WALKER:   Yes.

HAYNE J:   That second point, whether or not it pays those amounts pursuant to a legally enforceable obligation to do so is beside the point, joins issue squarely with what lies at the heart of the appellant’s argument, does it not?

MR WALKER:   Yes.

HAYNE J:   Why should we resolve it one way rather than the other?  Why should we resolve that argument?

MR WALKER:   You do not necessarily have to.  If the next step – which is self‑sufficient – be correct, if this Court were to decide by reason of the connection between my client and the Territory there is no tax, then as I understand the long practice of this Court that decisive point is not merely enough but ought to be the limit of the adjudication, subject of course to this Court’s thinking otherwise.  We do not urge, in answer to your Honour’s question, why should you decide more than is necessary to dispose of the case, there is no reason why you should do more than dispose of the case.

HAYNE J:   The point I think is this, that what I have identified rightly or wrongly as the second step in the argument seems to be that the presence or absence of legally enforceable obligation bears upon, if you like. the closeness of connection – that is perhaps putting it inaccurately – bears upon the significance to be attached to those features of the Territory‑owned Corporations Act to which you took us earlier, demonstrating identity and closeness.

MR WALKER:   The identity of the will of the Territory with the will of the corporation, yes.

HAYNE J:   The argument against you. I think in part at least, is that because there is a legally enforceable obligation you cannot take the third step.

MR WALKER:   We think that is the argument against us, and we would add another, one that the premise of which we accept, or the conclusion we dispute, the separate legal identity of my client from the Territory.  We accept the premise; we do not accept that produces either an obligation which is a tax – forget in the nature of – which is a tax.

There is an obligation to do whatever we are directed to do.  There is an obligation which has been expressed between the Territory and my client as the WAC; a compulsory charge determined to be paid.  I will return to other aspects of Justice Hayne’s question, but that, as your Honours have observed earlier this morning, comes because there is a licence that has been given to my client and only to my client.  Section 106 assumes there may be a fee in relation to that licence, and section 107 permits the Minister to determine fees.  Once the Minister has determined a fee to be payable by ‑ ‑ ‑

GUMMOW J:   Just stopping at section ‑ ‑ ‑

MR WALKER:   ‑ ‑ ‑a creature of the Territory subject to ministerial direction, then the notion of an obligation becomes entirely a matter of form and with no substance, and we should say that notwithstanding the argument by way of warning of consequences for my learned friend about evasion or avoidance, we submit that it is quite the other way around.  The argument for the appellant on this point is one which turns utterly on matters of form.  We do not say, mere form, we do not say, unimportant form.  The fictitious, but legally real separate identity of my client from the Territory is no mere form, but if one is talking about questions of what is a tax, we know we are talking about substance and to speak of an obligation imposed on the creature of the Territory subject to ministerial direction; to obey ministerial direction is, in our submission, to elevate form over substance for the purpose of that characterisation question.

We are trying, contrary to strictures written against us in this regard, to avoid questions of form or in any way to diminish the importance of the separate legal identity.  Rather, we say that because these are matters of substance to be determined, the intuitive surprise that a government may tax itself or one of its own instrumentalities and still call it a tax is, upon reflection, revealed also to be a legal outcome, and I do not wish to repeat what we have written, what Queensland has written and what I have already said.

CRENNAN J:   You are saying, in effect, that the no immunity just does not matter.

MR WALKER:   That is why I said earlier it is nothing to do with immunity.

CRENNAN J:   Whereas Mr Hanks says the no immunity is critical.

MR WALKER:   Your Honour has, with respect, correctly summed the difference between us.  I said earlier this is not a case about a non‑immunity; this is simply a case about whether this is a tax.  To return to some loose ends in my answer to Justice Hayne ‑ ‑ ‑

GUMMOW J:   Just before you do that, sections 106 and 107 were being discussed with Mr Hanks before.  Sections 106 and 107 may implicitly create an obligation to pay the debt constituted by the determination of a fee.  Would that be right?

MR WALKER:   Yes.

GUMMOW J:   It says the Minister may determine fees.  It assumes that there may be fees, and then empowers the Minister to fix the quantum.

MR WALKER:   Exactly, and the slightly puzzling and increasingly ‑ ‑ ‑

GUMMOW J:   It is a sort of crabwise form of drafting really.

MR WALKER:   Yes, it is.  The slightly puzzling and increasingly unrealistic application of these provisions to our case emerges when one looks at the events expressly contemplated in section 106.  We are talking about my client failing to pay and failing to pay in such a way as to leave the Territory with only one way of enforcing its will, namely, suspending the entitlement, et cetera.  It is, with respect, bizarre and inappropriate to an argument meant to be based on characterisations of a matter of substance to propose that that is in reality on the cards.  It is not all in reality on the cards.

GUMMOW J:   Shepherd v Hills would suggest, would it not, that your client could be sued for quite large sums probably?

MR WALKER:   Quite so.  So the Territory would be suing the corporation, but all it has to do is have a ministerial direction paid for the taking of the money.

FRENCH CJ:   Incidentally, is the relevant Minister also the shareholder?  One would imagine that might be so.

MR WALKER:   Yes.  I will get you the references to that, yes.  At all relevant times it was Mr Stanhope who was the Minister and who was also the shareholder, as you will see from the appeal book volume 1, page 307.  You see the currency of his office bearing by the blank in the right‑hand column for the cessation date.  That is at a very relevant period.  That is as at 2 August 2006.  Of course, he is off the scene now.

Now, your Honours, it is for those reasons that the passing on is nothing more than the inclusion advertently rather than hidden, rather than without disclosure, the inclusion of an amount that wears what is a political description, none the worse for being political, and, in our submission, it is included in a price.  I do not want to stray across the boundary of the argument fixed by the Court’s letter but, in our submission, it is for those reasons that there is simply no question here of a tax at the relevant point.

Can I come next to another answer to my learned friend’s criticisms of our position as being formalist and tending to encourage evasion and avoidance.  As we have put in writing both below and here, the appellant only gets a chance to start any of this argument because there is interposed between it and the Territory, whose natural resource is in question by dint of a program of corporatisation, a corporation all of whose shares are held on trust for the Territory, all of whose conduct is subject to both broad and minute direction by the Territory through its political offices and directly accountable, not just in the general sense but quite specifically, to the Legislative Assembly.

It is only the interposition of something with undoubted separate legal identity which is not mere form, but which is form, that provides any possibility of an argument at all, and the argument is one that rams, as it were, down our throat, the fact that we have been subjected to something that the Constitution forbids the Territory to subject us to because we, poor old ACTEW, has been made to an excise. That is the argument of the appellant, and there is no hiding it.

In our submission, this is truly the trial for form over substance.  In what sensible way can it be said that when we are told - whether you call it a dividend, whether you call it an efficiency payment, whatever you call it you are going to pay a WAC to us and you must, not least because we wish to do something about demand management, you must pass that on - when we are told that that becomes, mirabile dictu, a tax that we ought not to be subject to then, in our submission, we have lost some connection with reality.

CRENNAN J:   I suppose it is not inconceivable that you could have a situation, not this situation, but a situation where the scale of what was imposed on the government instrumentality was – and the necessity for pass on too, coupled together, was such that it was impossible to avoid the characterisation that it was an excise, that is to say, I suppose the argument would be, well this is not a bona fide inter‑government arrangement that is in fact, in substance, an excise.  If 10 million were the impost, for example, and had to be passed on that ‑ ‑ ‑

MR WALKER:   To use a Hematite figure we should probably have to multiply by 10, yes.

CRENNAN J:   Yes.  So all am putting to you, it is not inconceivable.

MR WALKER:   Quite so.  None of my argument has anything to do with what would be true device.

We are talking here about corporatisation, a perfectly good faith, if contestable way of managing government business and the conduct of the allocation of resources and the recovery of the costs and, furthermore, the realisation of the value of the resource held, as it were, in the larger sense, in trust for the public.  Second, we are talking about resort to well‑established vehicles for carrying out activities in the community, namely, a corporation.  Put those two together and, in our submission, there can be no doubt about good faith and it has never suggested for the contrary.

FRENCH CJ:   Mr Walker, that might be a convenient moment.  Perhaps one question which might be worth some little reflection over the luncheon adjournment is the extent to which, if any, the relationship between ACTEW and the body politic is affected by the general provisions of the Corporations Law in which ACTEW is embedded which, after all, imposed duties on directors and gave third parties rights and so forth.

GUMMOW J: Particularly looking at section 17(3) of the Territory‑owned Corporations Act.

HAYNE J:   Questions of a kind perhaps touched on in SGH Ltd v Federal Commissioner of Taxation (2002) 210 CLR 51.

FRENCH CJ:   We will adjourn until 2.15 pm.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ:   Yes, Mr Walker.

MR WALKER: Your Honours, may I hand up copies of sections 5 and 6 of the Legislation Act and a note, which will not need elaboration, to answer a question from Justice Gummow concerning what we have called the genealogy of my client.  Your Honours, may I then come to address the area notified to me just before the adjournment.  The way we put it is as follows.

The constitution of my client in clause 73, which is found in volume 1 of the appeal book at page 295, reflects the obligation, to which I drew attention this morning, imposed by section 11 of the Territory‑owned Corporations Act in Schedule 3 and, in particular, one sees that clause 73, with a immaterial alteration of language “shall” for “must”, reproduces the substance of what is required by item 4 of Part 3.1 in Schedule 3.  The company, its directors and its voting shareholders, who must be Ministers, therefore have an obligation to comply with the Territory‑owned Corporations Act 1990 as a matter of the statutory contract which is the constitution of my client under section 140 of the Corporations Act. The Corporations Act, of course, applies by dint of the transition dealt with in Part 10.1 of the Corporations Act which omits to do nothing startling in relation to the transition.  Because of that circumstance ‑ ‑ ‑

GUMMOW J:   In 1995 it was the Corporations Act of the ACT.

MR WALKER:   Yes.  Now there is a Commonwealth Act.

GUMMOW J:   Yes, indeed.

MR WALKER: So the question obviously is, does section 17(3) on its face purport to override, if one could even voice the thought, a provision of Commonwealth law and the answer is no, of course it cannot and neither does it. What has been done is that the constitution of the corporation, which of course is lawfully made, no one suggested there is any illegality in it, requires as a matter of the statutory contract, by statutory I mean section 140 of the Corporations Act, requires compliance with the provisions of the Territory‑owned Corporations Act and it is for those reasons that what might on the face of it give rise to the disturbing notion of the body politic, the ACT, seeking to trump the body politic, the Commonwealth of Australia, by section 17(3) can be dismissed.

When one goes to substantive provisions of the Corporations Act, such as classically section 180 whether it be duties of directors, there is nothing, in our submission, that gives rise to any inconsistency created by dint of this corporation’s constitution requiring compliance by the corporation of the officers, the directors, shareholders with the territory statute there are no substantive clashes of any kind set up.

GUMMOW J:   Your genealogy misses out a step, does it not?  The Corporations Act 1989 is the Commonwealth law, is it not?

MR WALKER:   Yes, your Honour.

GUMMOW J:   Then we get to the Corporations Law of the ACT on page 275.

MR WALKER:   Yes, your Honour.

GUMMOW J:   That is by virtue of some transition, is it not?  After the decision of this Court caused the trouble for the 1989 federal Act.

MR WALKER:   Your Honour, I am sorry, I cannot answer that now.  I think it must be so.

GUMMOW J:   Then the Commonwealth enacted ‑ ‑ ‑

FRENCH CJ:   The Corporations Law succeeded the 1989 Act?

MR WALKER:   Yes, that is right.

FRENCH CJ:   That was based on the Territory Act, was it not?

MR WALKER:   That is right.

GUMMOW J:   But it was a federal Act, was it not?

MR WALKER:   Yes, your Honour.

GUMMOW J:   It can be fixed up at some stage. 

MR WALKER:   Yes.

FRENCH CJ:   You had the ACT Act, I think, post the 1989 decision of the Court and that was adopted, I think, as the Corporations Law around the country and then after the failure of the cross‑vesting arrangements, you then had the referral powers and the Corporations Act 2009.

MR WALKER:   The referrals, but directly under 122 for the Territory.

FRENCH CJ:   So it becomes then Commonwealth law.

MR WALKER:   Yes, your Honour.

FRENCH CJ:   Justice Hayne reminds me it was a Commonwealth Act when it was applied to the Territory.

MR WALKER:   Yes.  Applied as a Commonwealth Act under 122.

FRENCH CJ:   Yes.

MR WALKER:   Your Honours, SGH was mentioned. There is, in our submission, obviously a difference between the position of Suncorp which kept company as shareholder with all the depositors from time to time in that case, notwithstanding it represented the State. Now, obviously, here all the shares are held on trust for the Territory. In this case, by dint of the incorporation and the Constitution, as I have described it, there is nothing that sets up any clash or tension between what I will call the general duties of the directors and that which subsection (17)(3) is addressing. Subsection 17(3), of course ‑ ‑ ‑

HAYNE J:   Well, the contrast with SGH is found in paragraph 26 of SGH.

MR WALKER:   Yes, it is.

HAYNE J: 210 CLR 51 at 71, paragraph 26, where you had A and B class shares ‑ ‑ ‑

MR WALKER:   That is right.

HAYNE J:   ‑ ‑ ‑ and they could not ignore one class.

MR WALKER:   Quite so.  Can I also draw to attention, that under subsection 17(3), all that is being done again, is a direction that:

The directors of a company are not to be taken in breach of any duty . . . only because of their compliance with a lawful direction.

The concept of lawful direction, of course, puts paid to any notion of the Constitution being illegal or a direction under the Act required to be observed because of the Constitution being illegal from which it follows there is no inconsistency to which the questions left open by SGH need to be answered. 

That brings me only to the final point which was the last way in which my learned friends address - raise the spectre of evasion or avoidance at what he put as the Commonwealth level. The argument in question concerning when there would or would not be a tax to which various provisions would then be attracted was raised by the rhetorical question, as it were, does this mean that section 55 does not have to be complied with, to which the short answer is of course section 55 has to be complied with but only for taxes.

If there is something which is not a tax, in particular because it is part of a legislative scheme by which the Commonwealth, for example, is charging a price levying a charge, not a tax, for something which is within the ownership or stewardship perhaps as a natural resource managed by the Commonwealth, then with great respect, it would be entirely salutary for all of that, including the charges in question, to be part of the one and the same scheme, and the one and the same Act. 

In other words, the political science underlying the anti‑tacking provisions of section 55 would not only be inapposite because it was not a tax as a matter of substance, it would also be quite inappropriate to be contemplating the fragmenting out of the regulation and management provisions from what I will call the charging provisions. May it please the Court.

FRENCH CJ:   Yes, thank you, Mr Walker.  Yes, Mr Gleeson.

MR GLEESON: Your Honours, the Territory respectfully adopts the submissions put by ACTEW this morning. The only matters I wish to add are four matters arising out of questions this morning, three of which relate particularly to the Territory’s own position and legislation. The first matter is the Territory submits that there was a legal liability on ACTEW to pay these fees, and that legal liability to pay arose by combination of these provisions, that under sections 29 and 30 of the Water Resources Act 2007 ACTEW applied for and was granted a licence. Secondly, that a fee was imposed by determination under section 107 of that Act, and thirdly, there were two sections of the Legislation Act which have not yet been gone to which complete the picture, and they are sections 56 and 57. 

Section 56(2) gives some meaning to the very brief expression “may charge fees for this Act”, and that is the linking provision back to the matter being the grant of a licence under section 30 for which the fees are to be charged. Section 56(4) and (5) go on to specify details of the determination, and then in ‑ ‑ ‑

GUMMOW J:   What print are you reading from?

MR GLEESON:   I am reading from the Legislation Act, section 56(2) and following, and in section 57, which imposes the obligation to pay fees “determined by a disallowable instrument”, which this is, by reason of section 107 of the Water Resources Act. So it is the Territory’s position that the characterisation issue under the Constitution should be determined against a background that ACTEW was in fact legally liable to pay these fees.

Your Honours, the second matter concerns questions raised about the possibility of a criminal offence in circumstances, not the present. We ask the Court respectfully not to decide whether under section 28 of the Water Resources Act 2007 a body such as ACTEW could be held liable for criminal prosecution if it acted without authority.

We respectfully put that submission for two reasons.  Firstly, it does not arise and, secondly, can I inform your Honours that that section has in fact been amended in 2010.  Could I hand up the Water Resources Amendment Bill 2010 and the explanatory statement, the effect of which is to bring the provision closer to the statutory language in the case Justice Gummow mentioned this morning, Cain, in this sense, that what has now happened – perhaps it is a better piece of drafting – is that section 28 is no longer an offence. It simply says “must not take” and in terms is capable of applying to any person or entity bound by the Act, including the Commonwealth, which is part of the reason for the amendment.

The offence provisions have been separately located in section 77A and following of the Act and any issues which they give rise to as to the inability to prosecute the Commonwealth or perhaps State‑owned corporations, are removed from the central scheme.  So the problem has been dealt with in a better fashion, if I might put it that way and for that reason also, we would ask your Honours not to pronounce upon a matter that ‑ ‑ ‑

GUMMOW J:   Where do you say the amendment to 28 is?  It just says “A person must not take water”.

MR GLEESON:   Yes, as opposed to it being an offence.

GUMMOW J:   Is that some duty of imperfect obligation?  What is it?

MR GLEESON:   It is a duty not to take water, then qualified by the ability to obtain a licence under section 29, the grant of a licence under section 30 and it is a duty which could be enforced under ordinary principles such as injunction to restrain the breach of a statute. 

GUMMOW J:   What is the provision as to the recipient of the payment of the licence fee?

MR GLEESON: That is section 56(5) of the Legislation Act.

GUMMOW J: Section 56(5) of the Legislation Act?

MR GLEESON:   The Legislation Act.  The determination must state by whom the fee is payable and to whom and so on.

FRENCH CJ:   There is an offence of taking water without a licence, referring to surface or ground water, in 77A.  That has not changed.

MR GLEESON:   Yes.  So what has happened is the original provision, which was both the offence provision and, one might say, the primary command, have been split up into two separate areas so that any questions as to who can be reached by the prosecution do not impact upon the primary command, and the primary command is capable of touching ACTEW clearly enough and also, as per the explanatory statement, it is designed to touch the Commonwealth to the extent the Commonwealth takes water from land under the management or control of the Territory.  That is the stated purpose of it, in any event.  So for that reason we would ask your Honours not to pronounce on that question.  Your Honours, the third matter ‑ ‑ ‑

GUMMOW J:   Just a minute.  This amendment Act you take us to, is that in force yet?

MR GLEESON:   Yes, your Honour.

GUMMOW J:   It says, “commences on a day fixed by the Minister”.  Has that happened?

MR GLEESON:   It is in force and it is in the latest reprint of the Act.  I will obtain the exact date, your Honour.

GUMMOW J:   At what time do we take the text of the Water Act to work out these questions in this case?

MR GLEESON:   For the purpose of this case, it will be the earlier text that your Honours have been taken to this morning.  I have gone only to this for the purpose of ‑ ‑ ‑

GUMMOW J:   Because Mr Hanks’ case ultimately was to get back money that they had paid.  Does the determination in question specify the recipient of the funds?  Where do we see that?

MR GLEESON:   One of the determinations is at volume 4 page 1423 and it says the fees are payable to the ACT Government under paragraph 5.  Your Honours, the third matter concerned the UNFT legislation.  We support the submission made by ACTEW that that case can be resolved in the present circumstances where the only ‑ ‑ ‑

GUMMOW J:   I am sorry to keep interrupting you, but we have to be clear about this.  So, paragraph 5 of the determination gets Mr Hanks’ client to pay to the ACT Government.  Right?

MR GLEESON:   No, no.  I am sorry, your Honour.  It requires ACTEW to pay the ACT Government.

GUMMOW J:   Then in the hands of the ACT Government, they become public money within the meaning of Part VII of the finance provisions of the Self‑Government Act.  Sorry, go on.

MR GLEESON:   Yes, your Honour.  The third matter simply concerned the UNFT Act.  It is the factual position, as I think was indicated, that that Act applies in terms to utilities and some of those utilities are not ACTEW and are not pure governmental bodies in that sense.  We submit it is appropriate to decide the issue as raised here in respect to its application to ACTEW as that is the only matter that concerns Mr Hanks’ client.

Your Honours, the only other thing I would wish to say is in relation to the primary matter that has been debated this morning, we would offer two propositions.  The first which concerns both the Commonwealth and the States and Territories is that where any of those qualities engage in an activity through what is properly seen as their own instrumentality in the sense of SGH, the financial arrangements between the polity and its own instrumentality, even if made legally binding, are not apt to be characterised

as taxation within the Constitution. They lack the necessary element of compulsory exaction by public authority on a relevant other.

The second proposition which is the corollary but narrower is that where a State or Territory engages in an activity through its instrumentality which generates a commodity such financial arrangements between the polity and instrumentality, bearing upon the charges the instrumentality might make for the commodity, even if legally binding, are outside section 90.

For that reason, it matters not how or why ACTEW comes to set its ultimate charges.  It could have been by fee, as here.  It could have been by direction or policy instruction from the Territory, or it could have been its own assessment in the light of information from the Territory.  No different outcome would emerge.  Unless your Honours have questions, I think they are the only matters that specifically affected the Territory and we otherwise adopt what Mr Walker put.

FRENCH CJ:   Thank you, Mr Gleeson.  Mr Orr.

MR ORR:   Your Honours, this issue is dealt with in the Commonwealth submissions in footnote 54 and briefly in paragraph 3 of our outline on argument.  The Commonwealth’s position is that the fact that the WAC is payable by ACTEW, and ACTEW is a government‑owned corporation, does not prevent the WAC being a tax.  ACTEW has a separate legal personality and the WAC is imposed pursuant to a law of general application.

HEYDON J:   We do not seem to have your outline of argument.

MR ORR:   So, in that respect, we agree with the appellant that for those reasons, that in relation to those reasons, the WAC and the UNFT is a tax.  In relation to the broader issue as to whether it is not a tax for other reasons, as our general submissions state, we say it is not a tax for other reasons because it is a payment for property or a privilege.  But, in relation to this particular issue, it is paragraph 3 of our outline of submissions, which we refer to.

FRENCH CJ:    Now, is that indistinguishable from the proposition that WAC in its application to ACTEW is a tax?

MR ORR:   Yes, your Honour.  Both in its legal form, we say the WAC is a tax and in its application to ACTEW.  The fact that ACTEW has a relationship with the ACT Government does not change that characterisation. 

GUMMOW J:   You say a law of general application, but when we were taken to the details of this particular charge there is only one water reticulation system in the Territory.

MR ORR:   That is true, your Honour.  This particular charge is divided up into two types – the charges imposed on two types of bindings.  One of them is a provider of urban water services and there is only, as a matter of fact, one urban water service provider in the Territory.

GUMMOW J:   You cannot say it is a matter of substance.  This particular charge is relevantly a law of general application.

MR ORR:   Exactly, your Honour.  So this law on its face makes no distinction about who could pay it.  It could apply to a range of people.

GUMMOW J:   No, not the particular heading we were taken to.

MR ORR:   Sorry, your Honour.

GUMMOW J:   It does not matter.

MR ORR:   In terms of both the actual provision in the Water Resources Act and the actual determination ‑ ‑ ‑

HAYNE J:   It is cast in general terms, but it applies once and once only to one organisation.  How is that a law of general application?

MR ORR:   Because other people could – so at a particular moment ‑ ‑ ‑

GUMMOW J:   They could, but they have not.

MR ORR: ‑ ‑ ‑it will only apply to one person. The broader provision, which it runs with, applies to other people, that is, other people who take water who are subject to the general prohibition, and then pay a different licence fee in relation to that licence, but other people could move in and out of this category and our basic proposition is that when we are talking about the application of section 90 of the Constitution, it does seem an odd result if that application is going to vary depending on who owns the shares of the body upon whom the charge lies.

HAYNE J:   Well, that proposition is one which carries with it the notion that the shares are freely tradable.  This is somehow going to see a change in ownership of this entity.  That is utterly divorced from the facts, is it not, Mr Orr?  This creature is defined by more than its shareholding from time to time.

MR ORR:   That is true, your Honour.  But if I could just focus on the key issues about the nature of this body.  We completely agree that there will be many intra‑governmental charges or imposts which cannot be taxes, namely, where there is one body politic which is moving money around and imposing imposts or charges on aspects of that body politic, then that cannot be a tax and it cannot be an excise.  Those charges or imposts are generally laid under the exercise of that body politic’s plenary power to add or subtract from the powers of its bodies and the State and to provide for what they do and, therefore, reductions and appropriations or additions to appropriations of those bodies within the body politic cannot be charges, or cannot be taxes if they are reduced from time to time.

But where the agency is a separate legal person and that is what it is here, I do not think there is any dispute that ACTEW is a separate legal person, in our submission you need to go further and one step further you need to take is to look at whether it also has separate moneys, that is, whether its moneys are part of what, at the Commonwealth level, we would call a consolidated revenue fund or at this ACT level you would call the revenues, the public revenues of the Territory.

FRENCH CJ:   Public money of the Territory.

MR ORR:   Public money of the Territory.  I have a bundle of provisions just to briefly take your Honours to in relation to the public revenue of the Territory.

FRENCH CJ:   You would draw no distinction between the position of a corporation set up with the overlay of the Territory’s own corporation statute and, say, an authority created by statute directly under a law of the Territory and subject to imposts by the Territory?  Your proposition is good for ‑ ‑ ‑

MR ORR:   Well, our proposition is that you need to look at the nature of the body and its relationship to the body politic and you need to look at the nature of the impost.

FRENCH CJ:   Let us suppose you have an authority subject to ministerial direction in all matters. 

MR ORR:   Yes, your Honour.  The mere fact that it is subject to ministerial direction would not mean that if there was a tax law otherwise made to which you were subject that its payment of that amount was not a tax.  If it was an independent – if it had a separate personality and if it had separate money and if it was paying that money under a law which could or did apply more generally, in our submission, that would be a tax.

HAYNE J:   That is to say, moving the entity off balance sheet is determinative.  That is what it is coming down to, is it not, Mr Orr, that taking it out of receipts becoming public money going into CRF or, here, the Territory equivalent.  Creating a separate entity, moving it off balance sheet in that way determines the character of the charge made by the Territory to its own creature.

MR ORR: That is one relevant factor to take into account as to whether, for the purpose of section 90 of the Constitution, and I know there has been a lot of talk about substance and form, but when talking about section 90 of the Constitution we are talking about an important measure to provide for the governance of the nation. So when we are looking at this important constitutional provision, it is necessary to look at a range of factors in order to determine whether this really is a tax which can be an excise. Our view would be to put it the other way around. In our view, if something is a separate body then that is one relevant factor to look at to see whether what really is being imposed is a tax and which could be an excise.

GUMMOW J:   Depends on what you mean by separate really.

MR ORR:   Yes, your Honour.  So, the second point I was making was that not only is it a separate legal personality, but it has separate moneys.

GUMMOW J: Given the history of the last 100 years, it is odd to hear the Commonwealth somewhat constricting the scope of section 90.

MR ORR:   On this issue?

GUMMOW J:   Yes.

MR ORR:   Yes.  Our submission is that ‑ ‑ ‑

GUMMOW J:   You seem to be placing a huge amount of significance upon matters of form not substance.  You can talk about separate all the time which is linked back to incorporation, I suppose.

MR ORR:   Yes.  If I could just take your Honour to this Australian Capital Territory (Self‑Government) Act, which these provisions have been mentioned, but, as we said, section 7 creates the body politic.  Section 57 provides that:

The public money of the Territory shall be available for the expenditure of the Territory.

“Public money of the Territory” is defined in section 3 as:

revenues, loans and other money received by the Territory –

So in relation to those basic arrangements, in our submission, the moneys held by ACTEW are not public moneys of the Territory.  They are moneys held by the Territory itself, the body politic, ACTEW is a separate body, and that definition of “public money” is also picked up in the Legislation Act and in relation to the Financial Management Act which provides for the financial management of the body politic.  There is also a further definition of “public money” which:

means all money received by the Territory, including the proceeds of all loans raised on behalf of the Territory, but does not include –

. . . 

(b)money received by a Territory‑owned corporation –

So the simple point, your Honour, is that this body has its own money which is not subject to the concept of what at the Commonwealth level we can call consolidated revenue fund and it is not part of the public money of the Territory.  This is just simply an indication with regard to money and its funds.  It is not just that there is a separate body, but also that this body has its own money which it operates.

HAYNE J: Just as to that, I notice section 60 of the Self‑Government Act permits the Federal Minister for Finance on behalf of the Commonwealth to lend money to the Territory or to a Territory authority. Would ACTEW be a Territory authority as defined in section 3 of the Self‑Government Act, presumably, part (b) of that definition:

a body corporate established for a public purpose by or under enactment and having power to borrow money ‑ ‑ ‑

MR ORR:   It is established under an enactment and it is established under the corporations regime.

HAYNE J:   Would have thought it was, but ‑ ‑ ‑

MR ORR: Yes, I would have thought it was too. So, in our submission, in order to decide this issue, it is necessary to look both at the nature of the body and that is what we have been doing, that is what I have been taking your Honours to, but it is also relevant to bear in mind, as I have said, the position of section 90 in the Constitution, that the need to consider this issue arises because of the operation of section 90 which is intended, of course, to provide a free trade area throughout Australia and to give to the Commonwealth Parliament the power in order to impose excise.

It is put against us that the ACT could itself impose this fee or charge or tax on consumers themselves, and that this is the orthodox position, but I will just take your Honours to the decision in Ha v New South Wales (1997) 189 CLR 465 at 499, and just to note the sentence at the bottom of 499:

In this case, as in Capital Duplicators Case [No 2], it is unnecessary to consider whether a tax on the consumption of goods would be classified as a duty of excise.  In the light of this doctrine, the second major proposition in the defendants’ submissions falls for consideration.

So in our view, it is still an open question as to whether an imposition on the consumptions of goods would be classified as an excise, and therefore, it is an open question as to whether the ACT could impose this itself.

Just returning to the proposition that we need to look at, both the nature of the body on whom it is imposed and the nature of the imposition, we agree with the submissions of Queanbeyan Council that this impost, both in terms of section 28 of the Water Resources Act and section 8 of the Utilities (Network Facilities Tax) Act is imposed on ACTEW, and that that is the proper characterisation of the legislation.

Finally, I come back to the proposition that both those provisions can apply to others, that is, the imposition of the WAC can apply to, on its face, a range of bodies, notwithstanding that it only applies to ACTEW in this operation, and certainly section 8 of the Utilities (Networks Tax) does apply to a range of bodies. When we are looking to characterise this imposition, it is important to look at the substance of what is happening there, and to see that in this imposition, these charges are being imposed both on ACTEW, and on others in relation to the UNFT, on a range of others.

In our submission, it is not an appropriate characterisation to say insofar as the charge falls on ACTEW, it is not a tax and therefore cannot be an excise, but insofar as it falls on others, it can be a tax and can be an excise and with regard to the UNFT that is exactly what is happening here. It is also important to note that with regard to ACTEW itself, it has a particular structure and organisation at the moment, but again it would be a very odd outcome, in terms of section 90 of the Constitution, if changes in the structure or organisation of ACTEW meant that amounts it was paying became taxes or excises, but then moved back or moved to not becoming taxes or excises, simply by nature of the relationship which it has with the ACT Government.

In our submission, it is not appropriate to have those sorts of outcomes in relation to section 90 of the Constitution. There needs to be a clearer demarcation and, in our submission, given the nature of ACTEW as a separate body with its separate money, notwithstanding that there are legal obligations for it to comply with what the ACT Government wants it to do, added to the fact that in their terms these charges are of general application and either could, in the case of the WAC ‑ ‑ ‑

GUMMOW J:   You keep saying “of general application”.  We were taken to the determinations which conveniently appear in the water case in Mr Hanks’ outline attachment firstly at page 34, the last item and then on page 51, the second‑last item.  Each case it is a specific species of licence concerned with urban water supply.  We know for a fact that it is now and has not been, as far as anyone can remember, any other system of urban water supply other than that provided by this corporation.  This is a specific form of charge, is it not?

MR ORR:   That is true, your Honour, it is a specific form of charge.  

GUMMOW J:   It is a possibly general application, but this complaint is about its specific form taken by this determination.  That is what has triggered this litigation, the rate of the charge.

MR ORR:   That is exactly true, your Honour.  Of course that is true and we know from the facts that insofar as this second element of the WAC, it only applies to one person, although the other elements apply to others, but the factual application of this charge at the particular moment, in our submission, is not determinative.  There are a range of services, like the provision of water, which have in the past been provided by one body with a statutory monopoly which are now provided by a range of bodies which hold appropriate licences within a regulatory regime.  

It is possible that the same developments might apply in relation to water and our submission is the possibility of those developments and the legal application of this provision mean that it is not sufficient to say just because they only apply to one person at the moment that they are not of more general application.  The ACT Government could have obtained this money or could have obtained moneys from ACTEW through its directions powers or through its shareholding position, but it has chosen to impose it in a measure which looks like a tax and, in our submission, having chosen to do that, it needs to be properly characterised as where the application of that is in fact a tax to that body.

FRENCH CJ:   Do you accept that the characterisation of an impost as a tax is critically dependent upon a character of the body or person upon whom it is imposed?

MR ORR:   Yes, your Honour.

FRENCH CJ:   If that be so, then the question whether the impost is of general application really falls away, does it not?  It depends for its characterisation upon where it falls in the particular case for the purposes of which it is being characterised.

MR ORR:   Yes, your Honour.

FRENCH CJ:   So the question really turns upon the relationship between ACTEW and the Territory Government, does it not, regardless of whether it is a law of general application?

MR ORR:   Because in this case it is only applying to this one body then it is obviously a key factor.

FRENCH CJ:   But even assuming it applied to a raft of others, let us put that to one side. 

MR ORR:   That is correct, your Honour.  The relevance of the raft of others or the one other or whatever, or the nature of the tax is simply, I think, to assess the nature of the position, notwithstanding who it is applying to.  So it could well be, for example, there was a provision which applied to ACTEW and to a range of other bodies ‑ ‑ ‑

FRENCH CJ:   Let us say it is undisputed that in its application to 600 other people or bodies it is a tax.  That does not make it a tax in its application to ACTEW, does it?  That depends upon an examination of the relationship, which you have been undertaking between ACTEW and the government.

MR ORR:   That is correct, your Honour.  Our position is that in the relationship in this case there is sufficient of a gap between ACTEW and ACT.

FRENCH CJ:   That is the real question here so far as you are concerned.

MR ORR:   That is right and the appellants have taken your Honours to significant provisions which, in our view, demonstrate that and I have sought to reinforce that in terms of the separate legal personality and the separate moneys and the separate systems for administering those moneys, which ACTEW has from the ACT.

KIEFEL J: In that regard, it is the case, is it not, that if ACTEW borrows money it is required to pay it to the Territory. It is at section 31, I think, of the Territory‑owned Corporations Act, the borrowing levy – “borrows money” under section 31(1):

whether from the Territory or otherwise –

it is required to pay the Territory that amount.  That suggests a closeness of connection.

MR ORR:   Yes, your Honour, it does suggest a close connection.

FRENCH CJ:   Thank you, Mr Orr.  Solicitor for Western Australia.

MR MEADOWS:   May it please the Court, I will not detain you for long.  Western Australia did not address this issue in its written submissions, although relevantly we did adopt the submissions of the respondents.  So bearing that in mind we would seek to respectfully adopt the submissions made by my learned friends, Mr Walker and Mr Gleeson, today.  We would also seek the Court’s permission to adopt what the Attorney‑General for Queensland has said in his written submissions in this regard in paragraphs 36 to 42 and with the Court’s permission we would defer to my learned friend, the Solicitor‑General for Queensland, in terms of oral submissions and if I might seek prospectively to adopt those.

FRENCH CJ:   I think those are your last words in this place, are they not?

MR MEADOWS:   They are indeed, your Honour.

FRENCH CJ:   Thank you.  Yes, Solicitor for New South Wales.

MR SEXTON:   If the Court pleases, we take the same position as Western Australia.  We adopt the respondent’s submissions and prospectively the submissions for the Attorney‑General for Queensland on this particular question.

FRENCH CJ:   Thank you.  Yes, Solicitor for Queensland.

MR SOFRONOFF:   Do your Honours have our outline of oral submissions?

FRENCH CJ:   Yes.

MR SOFRONOFF:   Your Honours, the starting point in analysing this case, in our respectful submission, is to identify, relevantly for present purposes, what is a tax.  In our submission, a tax is an exaction of money by a polity from its subjects and others for the purpose of defraying the cost of government, that is to say, there is no quid pro quo.  It is a taking of money in return for the political promise to use the revenue for the public wheel.

It has been said famously in McCulloch v Maryland that the power to tax is a power to impair and perhaps to destroy and it is for that reason that the power, for example, to initiate bills dealing with taxation in the British Parliament lies in the House of Commons as a result of the tension between the Crown and the Parliament many hundreds of years ago. In Australia, that is reflected in section 53 of the Constitution which has the same effect with respect to the House of Representatives and that is because, in our submission, the power to take money from subjects and private bodies owned by subjects is a power that is entrusted to that part of the legislature which is elected as representatives of the people directly.

In a federal system like ours, of course, the term “others” in the definition that we have advanced may include other polities. There is no reason, apart from any impediments in international law, why the Commonwealth might not tax a foreign state. Equally, there is no reason, apart from the terms of the Constitution, why one polity in our federation might not be able to tax another, hence section 114 of the Constitution which limits that power to tax in the terms with which your Honours are familiar.

Of its nature then, in our respectful submission, a polity, when exacting money from another part of itself, is not imposing a tax by whatever name the impost might be called. It cannot be a tax as understood in terms of our federal Constitution, and the mere fact that such an impost is of general application and would be a tax vis-à-vis a subject or other person would not affect its character. Its true character is something else and not a tax when the body that must pay it is either a part of the same polity in its purest form or, as here, a creature of that polity, assuming for the purposes of the argument that ACTEW is relevantly the Territory.

For the same reasons, in our respectful submission, a polity cannot impose an excise duty upon itself, first, because that would be attempting to tax itself which it cannot do.  But if one looks at the nature of an excise duty or a customs duty it is an impost applied by a polity upon the entry of goods or commodities into the jurisdiction, something that, of it nature, a polity cannot do against itself, or with respect to goods that are already within the jurisdiction of the polity or are brought in – foreign goods that have been brought into the polity – it is a charged imposed by the polity as a condition of persons who own or control those things, putting those things into the market. 

If the goods or the commodity is already owned or controlled in the broad sense, as we understand Australian laws invest minerals, invest water in the States and the Commonwealth and the Territories as the case may be, then it does not make sense to speak of duty of excise being applied by that polity against itself.  It is simply a charge insofar as somebody pays that amount, it is a charge imposed by the polity as a consideration for the transfer of ownership or control of the goods or commodities into the hands of a private person, a subject or company.

Indeed, the very essence of a duty of excise, in our submission, is to attempt to control a market by imposing an external cost not relating to the actual market factors that go to cost upon goods or a commodity so as to have a desired effect upon the demand for those goods within the economy in question. If there was a law of general application imposing a charge upon the sale of widgets – the manufacture and sale of widgets in Queensland and if the State of Queensland was a manufacturer of widgets, along with other people, and let us assume that the impost was framed in such a way as to constitute it according to established learning in excise, that impost would be invalid as an excise pursuant to section 90 vis-à-vis the private persons who had to pay it but it would be permissible cost imposed by the State of Queensland as part of the price of sale of its widgets.

But, of course, insofar as section 90 seeks to strike at distortions in the market applied by States for their own provincial purposes, there would be no mischief if the State of Queensland wanted to overprice its widgets, that would be a matter for itself. It could not affect, by a duty of excise, private persons.

That is the answer, in our respectful submission, to the concern raised by the appellant that the construction advocated by those on our side of the record might give rise to a freedom to evade the effect of section 90. A government could never do that in the form of an excise applicable to the market generally, only in respect of itself. If, in the case where it has a monopoly upon the supply of the commodity, as in water, it is not an excise we are talking about, it is a price – part of the price for the supply of water.

In the context of the law relating to mining we use the term “royalty”, although that might be in strict terms apt, or inapt in terms of the old private law from England relating to private mines, but, nevertheless, it is an apt term to describe an impost charged by the monopoly government owner of a commodity upon those who wish to buy it or produce it, as the case may be.  If I can take your Honours to section 7 of the Water Resources Act.  That section vests the right to use, flow and control all water of the Territory in the Territory, firstly, and then it provides that the right to the use, flow and control all water is exercisable by the Minister on behalf of the Territory and, the Minister, in our submission, has an infinite number of ways in which he or she may exercise those rights on behalf of the Territory. 

As it happens, in the history that has led us here, the Minister exercises his rights by and through ACTEW.  ACTEW, in our submission, for the reasons advanced by our learned friend, Mr Walker, is to be regarded as part of the polity of the Territory so that moneys exacted from it, although styled or of the character of a tax if applied to private persons, that exaction cannot itself be characterised as a tax.  The history of companies like this one lies in the early 1990s and your Honours would be familiar with it. 

In Queensland and in other States in the early 1990s statutes were enacted to make provision for what were called government‑owned corporations to take over what were called government‑owned enterprises and the vaunted political basis for doing that was the belief in an economic policy that it would be better if government‑owned enterprises were subjected to some but not all of the constraints that private enterprise was subjected to.  So that businesses rather than being privatised would continue to be operated by governments but subjected, at the choice of the policy of the government of the day, to some of the constraints that private enterprise was to be subjected to. 

The obvious feature that private enterprise is subject to is taxes in its various forms. Insofar as a tax might be imposed upon a body, a creature, created under one of those statutes by an external polity, the Commonwealth for example, then, subject to section 114, those taxes would have to be paid as taxes. There is a statute that your Honours have in the materials in this appeal, the Taxation (GovernmentBusiness Enterprises) Act 2003, which reflects the agreement of the States and Territories to subject entities of this kind to each other’s tax. So that statute deals with the tax imposed by other polities and neutralises any protection that might be found in the Constitution against the imposition of those taxes. Similarly with respect to the taxes imposed by a polity against entities of its own, the internal terms of one of the Acts in question here, the Territory‑owned Corporations Act 1990, makes provision in the section that your Honours have been taken to.

GUMMOW J:   Just before you leave the Taxation (Government Business Enterprises) Act, section 5 of that picks up a memorandum of understanding, does it not?

MR SOFRONOFF:   Yes, I do not have that, your Honour.  We will find it.

GUMMOW J:   The parties to which I think are the Commonwealth, all the States and Territories.

MR SOFRONOFF:   I think that is right, your Honour.  But we will find that document and provide it to the Court.

FRENCH CJ:   Is this part of implementation of the competition principles?

MR SOFRONOFF:   Yes.  As I understand it, it was all part of that movement at the time, your Honour. 

HAYNE J:   We do have something called the manual for the National Tax Equivalent Regime of January 2008, Version 6, which no doubt can be reduced to a single sheet of A4. 

GUMMOW J:   Version 1 seems to have been dated June 2001. 

MR SOFRONOFF:   Just as that statute exposed State creatures, State bodies to taxes imposed by other polities, so too the Territory‑owned Corporations Act exposed this particular company to territory taxes, but not some taxes. If we look at section 29 of the Territory‑owned Corporations Act 1990 some taxes were not payable if they fell within the definition of “exempt activity” or otherwise within section 29(1). So it lay within the power of the legislature of the Territory to turn the key and to make its body liable or not liable to taxes imposed by itself or, indeed, by other polities.

Some of the constraints of private ownership were, therefore, applied to this company and to GOCs in general in Australia, and some were not. There was a liability to pay taxes. Immunity, as your Honours have seen, was not sought and provision was made that it was not available, but other constraints were applied. Section 27 of the Act limits the ‑ ‑ ‑

GUMMOW J:   Wait a minute, of which Act?

MR SOFRONOFF: I am sorry, section 27 of the Territory‑owned Corporations Act ‑ ‑ ‑

GUMMOW J:   Thank you.

MR SOFRONOFF:   ‑ ‑ ‑ limits the power of this company to borrow, notwithstanding that other companies incorporated under the general corporations law are free to borrow as they think fit, and subject to their constitutions.

Section 28A limits the power of such a company to give a guarantee without the Treasurer’s approval. The constitution of the company itself, if your Honours would go to the appeal book, volume 1 at page 281, reflecting that the Minister owns the shares, if your Honours would go to Article 47 at page 290, 47(3) limits the right of the voting shareholders. The only voting shareholder is the Minister. It limits that right of appointment of a director unless before so, something called the “Relevant Committee” has been consulted. That is defined in section 9 at page 282 and it is a standing committee of the Legislative Assembly.

FRENCH CJ:   It looks like it affects the terms of the Act too, does it not?  Is that not in the Act somewhere?

MR SOFRONOFF:   I am not sure there was, your Honour.  I might be wrong.  My purpose in taking your Honours to those provisions in addition to the ‑ ‑ ‑

GUMMOW J:   It looks like the public accounts committee.

MR SOFRONOFF:   Yes.  My purpose in taking your Honours to those provisions, as well as your Honours having seen the provisions my learned friend Mr Walker took you to, was to show that this body was set up in order to execute a particular governmental policy under the control of the government of the polity, under the ownership of the government of the polity while requiring that entity to subject itself to some but not all of the strictures that persons in private enterprise are subject to.

FRENCH CJ: I had in mind section 12 of the Territory-owned Corporations Act and the reference of “Relevant Committee” in section 12(4).

MR SOFRONOFF:   Yes, your Honour, that is right.  Yes, thank you.  Now, it was argued by the Commonwealth this afternoon that the decision by the Territory to use a company enacted under the general law is determinative of the proposition that for the purpose of analysing whether an impost paid by it is a payment of taxation or not is determinative.  In our respectful submission, that argument was rejected by the Court in SGH Ltd v Federal Commissioner of Taxation (2002) 210 CLR 51. Your Honours will in due course, if you wish to, see the argument being put in the same terms really by the Commonwealth by the then Solicitor‑General for the Commonwealth between pages 61 and 62. At the top of 62, the argument was put in this way:

A corporation incorporated under the general law is the antithesis of the State.  Even if all its shares are owned by a State, it is a manifestation of a deliberate choice by a State that the relevant activities should be carried on subject to the general law of corporations rather than as a government activity.

That argument was dealt with by the majority and rejected between pages 66 and 68 and by your Honour Justice Gummow concluding at pages 77 to 78.  In our respectful submission, if one accepts that the nature of a tax is the exaction of money by a polity from persons other than the polity and if one accepts that in substance the money and all of the assets owned and controlled by this corporation is, in truth and in substance, albeit through an alter ego, owned by the same polity, it follows, in our submission, that this charge cannot be a tax or an excise.  Those are our submissions, your Honours.

FRENCH CJ:   Yes, thank you, Mr Solicitor.  Solicitor‑General for South Australia.

MR HINTON:   If the Court pleases, South Australia and Tasmania adopt the same position as New South Wales and Western Australia.  We adopt the submissions with respect to the Court’s letter made by the respondents and, indeed, the Solicitor‑General for Queensland.  If the Court pleases.

FRENCH CJ:   Thank you.  Solicitor‑General for Victoria.

MR McLEISH:   If the Court pleases, this is also not a matter on which we made written submissions and we seek to adopt the submissions made by the respondents and my learned friends, the Attorney‑General for Queensland.

FRENCH CJ:   Thank you, Mr Solicitor.  Yes, Mr Hanks.

MR HANKS:   I will confine myself to two points in reply.  We understand that it is put against us that there is a constitutional principle that an impost by a polity on a closely connected entity cannot be a tax.  That is how we understand it to be put.  Of course, that principle must depend and for the purposes of our reply we will assume that that is the principle – it must depend on the relationship between the polity and the entity.  Is there indeed a close connection?  The answer to that question, we say, will depend at least in significant part on the legislation which defines the relationship.

Could I deal briefly with some submissions which we understand our friend, Mr Walker, made by reference to section 121 of the Legislation Act. Our short point will be that the answer, the definition of the relationship, the closeness of the relationship or otherwise is not found in section 121. Your Honours will recall that apart from the opening proposition about an Act binding everyone in subsection (1), there are some qualifications in subsections (2), (3) and (4). As we understood the submissions made for ACTEW they relied on subsection (4):

To the extent that an Act does not bind a government, the same degree of immunity extends to a government entity in relation to an authorised act or omission of the entity.

If it is said by our friends that ACTEW is a government entity and therefore can claim some degree of immunity either from prosecution or from an Act that might provide for the payment of money to form part of the public money of the Territory, if that is how it is put, we draw your Honours’ attention to the definition of “government entity” which is found in subsection (6) of 121.  It is said to include “an instrumentality, officer, or employee of the government.”

I recall that our friend, Mr Walker, made the point that instrumentality, as such, is not defined in this Act, but there is a definition of “territory instrumentality” and, in our submission, that definition which is found in the dictionary and in the print that I have it is found on page 235 of the Act – the dictionary appears at the end of the Act – the definition of “territory instrumentality”, we submit, would inform the understanding of instrumentality in section 121(6). It is plain that a territory instrumentality, as we understood our friend, Mr Walker, to concede, have two cumulative characters or elements. It is a corporation that:

is established under an Act . . . or under the Corporations Act –

and one that is, that is, it must have the second character as well, it must be:

a territory instrumentality under the Public Sector Management Act 1994.

ACTEW does not fall into that description, as our friend put to the Court. So the answer to the question, what is the nature of the relationship or the connection between ACTEW and the ACT, to the extent that that depends upon the legislation which defines the relationship, is not found in section 121. It is, in our submission, to be found in section 8(2) of the Territory‑ownedCorporations Act.  Your Honours are familiar with that provision.

GUMMOW J:   What is this reference to the Public Sector Management Act, again?

MR HANKS:   Your Honour, it appears in the definition ‑ ‑ ‑

GUMMOW J:   I do not think we have that Act itself. 

MR HANKS:   Do we have it?  Not that I am aware of.

GUMMOW J:   No.

MR HANKS: I am dependent on my friend, Mr Walker, who tells us – and I have no doubt that he is doing so on instructions and I have no reason to suspect that the instructions are in any way inaccurate – that ACTEW does not answer that description. That is as far as I can take it, your Honour. To return to section 8(2) of the Territory‑owned Corporations Act, it is put on behalf of ACTEW, to the extent that subsection (2) waives any immunity or exemption that a Territory‑owned corporation may have, it does so only to the extent that the immunity depends upon being, as our friend put it this morning, territory owned.  It is said on behalf of ACTEW that there is another basis for its immunity or exemption from tax – we might say another basis for finding that it is closely connected to the Territory – and that is that it is, as our friend put it this morning, subject to the will of the Territory.

So it is not its status, but it is the legal fact that provisions such as sections 17 and 17A of this Act, the Territory‑owned Corporations Act, subject ACTEW to the will of the Territory, that create a closeness of the connection, a connection of the kind that means that any Territory imposition on ACTEW cannot be a tax, because it is an imposition by the ACT on itself. We make this point. What it is that destroys, puts to one side any possible immunity or any possible exemption from a tax is not the status of being Territory‑owned, it is the status of being a Territory‑owned corporation. Now, that is a statutory artefact. It is an artefact which we find in section 6.

To be a Territory‑owned corporation one must be specified in Schedule 1. It tells us nothing about the fact of ownership. It tells us only that it is specified in Schedule 1 and that is where we find ACTEW Corporation. It is by reason of holding that status that, for example, ACTEW is brought within the class of entities to which section 17 applies. Section 17 declares that the shareholders of a Territory‑owned corporation can make a request to that corporation and that request is binding. That is under subsection (2):

The company must comply with a lawful direction.

So if one falls within that statutory artefact, if one is – if an entity is a Territory‑owned corporation then the entity is subject to that constraint, potential constraint. The same may be said about section 17A. Precisely the same proposition applies to every one of the provisions to which your Honours were taken. They are all constraints. They all define the power of the Territory and the Territory’s representatives in relation to a Territory‑owned corporation.

Yet, when we go back to section 8(2) we are told that by reason of holding that status, the status of being a Territory‑owned corporation, the entity is not:

(a)entitled to any immunity or privilege of the Territory; or

(b)exempt from a tax, duty, fee or charge payable under an Act.

So that the relationship between the ACT and ACTEW is one of some closeness, but not so closely connected as to deny to the two imposts with which we are concerned the character of a tax and that is because of the terms of section 8(2).

My second point arises from the outline of oral submissions that the Solicitor‑General for Queensland, Mr Sofronoff, handed up.  We wish only to make one point about paragraphs 2c and d.  This is a little off point, if I might say so.  Those paragraphs are a little off the point that we are debating at the moment.  The paragraphs address an issue relating to the right of the subject to acquire goods or commodities belonging to the polity.  That is not the debate that we have been conducting for most of today.  The propositions that are articulated in paragraph c and d, in our submission, are in conflict with the observations made by Justices Dawson, Toohey and McHugh in Harper v Minister for Sea Fisheries. 

Your Honours would be aware that we have sought to articulate submissions in the appeal in our written submissions.  I need only refer your Honours to the paragraphs where we have done that.  We identify what we say is the principle that emerges from that joint judgment and we say that principle receives significant endorsement by other members of this Court in the Airservices Case.  We do that in paragraphs 55, 56 and 57 of our written submissions.

Your Honours, I did say, before I concluded our principal submissions this morning, that I would hold my position on costs.  It may be appropriate for me now to say on behalf of Queanbeyan that there are some peculiarities about the issue that has engaged our attention today.  The first of those is that it was not pleaded before the trial judge.  The second is that although our friends for ACTEW have handed up written submissions that were made to the Full Court, the way in which this point was put to the Full Court was put essentially as part of a generalised submission as to the substantive effect of the impugned determinations.  It is only now that we find ourselves at this level of the appellate structure and that the point has been put with clarity and precision that our friend, Mr Walker, put it with in both his written submissions and in oral submissions today.

HEYDON J:   They are often word for word the same.

MR HANKS:   Beg your pardon, your Honour?

HEYDON J:   The submissions that Mr Walker handed up, the ones tendered or offered to the Full Federal Court are often word for word, sentence for sentence, identical.  There is no claim to originality.

MR HANKS:   Yes, but the thrust of the submissions, we say, your Honour, was directed to a different aspect of the argument.  Now undoubtedly, there are phrases there which mirror the phrases that were made in the submissions of this Court.

HEYDON J:   What was your answer to these written submissions?

MR HANKS:   What was it?

HEYDON J:   Yes.  Did you answer paragraphs 35 to 41?

MR HANKS:   I do not have our written submissions here, your Honour.  Therefore, I cannot answer your Honour’s question.  The third point we wished to make was this, that the argument that we have been dealing with was not put by the ACT, the second respondent, either at trial or in submissions to the Full Court, nor indeed in submissions to this Court.  The fourth point was that even when ACTEW did raise the point, it did not raise it in relation to the UNFT, but only raised it in relation to the water abstraction charge.

Now, all of that leads to this observation, that quite substantial costs would have been saved if this point had been raised at first instance.  This may well have been a question that could have been decided separately, if there is merit to it, and of course in making submissions in relation to costs, I am assuming against ourselves that there is merit to it.  So that it would have provided a short route home for the respondents without the substantial expenditure that was incurred by all the parties. 

It is for those reasons that we foreshadow, and if necessary, now make a submission that if this point is decided against the appellant, we will seek an order that each party bear its own costs in this Court and in the Full Court.  We do not seek to disturb any of the cost orders made by the trial judge.  We think it is a little late for that, but we would seek that order in relation to the costs incurred in the Full Court, and in this Court.  If your Honours please.

FRENCH CJ:   Thank you, Mr Hanks.  Yes, Mr Walker.

MR WALKER:   Your Honours, may I hand up a better note to supersede the earlier one, please.

FRENCH CJ:   Mr Walker, do you have anything to say on the question of costs?

MR WALKER:   Your Honours, the point was taken in the Full Court.  The extension to the utilities tax finds no reflection to any material extent in expenditure and for those reasons, in our submission, so far as ACTEW is concerned, there should be no special consideration to costs other than following the event.

FRENCH CJ:   Mr Gleeson?

MR GLEESON:   Your Honour, in relation to the Territory, the application that Mr Hanks contingently made was that the orders made by the trial judge be left intact, but otherwise there would be some variation.  The current costs orders which stand in the Full Court are found at volume 6, page 2834, and they reflect a variation upon the trial judge’s orders.  We submit that in the contingency being considered there is no reason for this Court, if it were to dismiss both appeals, to vary those costs orders below; that is, made by the Full Court on page 2834.  That is our submission.

FRENCH CJ:   Yes, the Court will adjourn briefly to consider what course it should take in this matter.

AT 3.47 PM SHORT ADJOURNMENT

UPON RESUMING AT 3.58 PM:

FRENCH CJ:   The Court will consider the case on the arguments advanced today.  Before we adjourn, I should acknowledge that that is the last appearance of the longest serving of the Solicitors‑General, Mr Meadows, and on behalf of the Court wish him well on his retirement.  The Court will adjourn until 10.15 am tomorrow morning.

AT 3.59 PM THE MATTER WAS ADJOURNED