Vanderstock & Anor v The State of Victoria

[2023] HCATrans 7

[2023] HCATrans 007

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No. M61 of 2021

B e t w e e n -

CHRISTOPHER VANDERSTOCK

First Plaintiff

KATHLEEN DAVIES

Second Plaintiff

and

THE STATE OF VICTORIA

Defendant

KIEFEL CJ
GAGELER J
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 14 FEBRUARY 2023, AT 9.59 AM

Copyright in the High Court of Australia

MR R. MERKEL, KC:   If the Court pleases, I appear with my learned friends, MR C.L. LENEHAN, SC, MS F.I. GORDON, SC and MR T.M. WOOD for the plaintiffs.  (instructed by Equity Generation Lawyers)

MS R.J. ORR, KC, Solicitor‑General for the State of Victoria:   If the Court pleases, I appear with MS S. ZELEZNIKOW and MS M.R. SALINGER for the defendant.  (instructed by Victorian Government Solicitor)

MR S.P. DONAGHUE, KC, Solicitor‑General of the Commonwealth of Australia:   May it please the Court, I appear with MR D.F.C. THOMAS, SC, MS C.G. WINNETT and MR M.P.A. MAYNARD on behalf of the Attorney‑General of the Commonwealth intervening.  (instructed by Australian Government Solicitor)

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

MR P.J.F. GARRISSON, SC, Solicitor‑General for the Australian Capital Territory:   May it please the Court, I appear with MS H. YOUNAN, SC on behalf of the Attorney‑General for the Australian Capital Territory intervening.  (instructed by Government Solicitor for the Australian Capital Territory)

MR J.A. THOMSON, SC, Solicitor‑General for the State of Western Australia:   May it please the Court, with MR J.D. BERSON, I appear on behalf of the Attorney‑General for the State of Western Australia intervening.  (instructed by State Solicitor’s Office (WA))

MR M.J. WAIT, SC, Solicitor‑General for the State of South Australia:   If the Court pleases, I appear with MR J.F. METZER on behalf of the Attorney‑General for the State of South Australia intervening.  (instructed by Crown Solicitor’s Office (SA))

MR N. CHRISTRUP, SC, Solicitor‑General for the Northern Territory:   If the Court pleases, I appear with MR L.S. PEATTIE on behalf of the Attorney‑General for the Northern Territory intervening.  (instructed by Solicitor for the Northern Territory)

MS S.K. KAY, SC, Solicitor‑General for the State of Tasmania:   May it please the Court, I appear with my learned friend, MS E.A. WARNER, on behalf of the Attorney‑General for the State of Tasmania intervening.  (instructed by Solicitor-General of Tasmania)

MR G.J.D. DEL VILLAR, KC, Solicitor‑General of the State of Queensland:   May it please the Court, I appear with my learned friends, MS F.J. NAGORCKA and MS S.E.D. SPOTTISWOOD, on behalf of the Attorney‑General of the State of Queensland intervening.  (instructed by Crown Law (QLD))

KIEFEL CJ:   There are two matters before we commence hearing from the plaintiff.  At some appropriate point, the Court would be grateful if the Commonwealth and Victoria would review their requirements for replies and rejoinder on Thursday afternoon, at a point that it is appropriate to see if as much time as has been provisionally allocated is truly necessary.

The second matter is for the use of the word “consumption”.  If parties – if those speaking to us could let us know in what sense they use the term since there seems to be a little bit of a variation.  It would be good if we were all talking about it in one sense, but perhaps if you could each make clear the sense in which you are using it, it would be of assistance to the Court.

Yes, Mr Merkel.

MR MERKEL: If the Court pleases. Could we say that the present matter involves two questions. The first is an inland tax imposed on the consumption of goods a duty of excise within the meaning of section 90, and the second is if the answer to that question is yes, is the ZLEV charge, which is the zero and low emission vehicle charge, a duty of excise within the meaning of section 90 of the Constitution?

Before going to a number of propositions, which we say we put forward to warrant the answer to each question being yes, can we briefly outline the statutory context in which the present matter has arisen.  Could I take your Honours to the Act which we will call ZLEV Act, which is the Zero and Low Emission Vehicle Distance‑based Charge Act 2021 (Vic). That is at tab 4 of volume 1. Could I just ask your Honours to note the Act commenced on 1 July 2021 and on that date, each of the plaintiffs had an electric and an hybrid vehicle, which were covered by the Act at that date. So, as registered operators of those vehicles, they became subject to ZLEV charge under the Act as from the date of commencement.

“Electric vehicle” is defined in section 3; “excluded vehicles” are very narrowly defined; then a “plug‑in hybrid electric vehicle” is also defined.  Importantly, the “registered operator” and “registered” definitions pick up registration under the Road Safety Act.  A “registered operator” is defined is defined:

in relation to a ZLEV that is or has been used on a specified road, means the person who is . . . the registered operator )within the meaning of the Road Safety Act –

The definition was not in the papers, but can I ask your Honours to note the definition of a “registered operator” in section 3 of the Road Safety Act is:

the person recorded on the register as the person responsible for the vehicle –

“Specified road” is given a definition which gets picked up in the Road Management Act and the Road Safety Act but, in effect, is every road which the public has an entitlement to use, which covers any road in Victoria and anywhere else in Australia, other than a road that would be called a “private road”, like a private driveway or a road on private property, but otherwise every road which the public can use would be caught within the definition of a “specified road”.  The ZLEV charge is the charge under the Act.  Section 6 gives the Act extra‑territorial operation, so it covers the driving anywhere in Australia of a vehicle that is registered in Victoria.  Section 7 imposes the charge on a registered operator, who:

must pay a charge for use of the ZLEV on specified roads.

I will just ask your Honours to note that the registered operator may or may not be the driver of the car when used on those roads.  The rate of charge is set out in section 8, and it is a slightly higher rate for the electric vehicle than it is for the hybrid vehicle.  It is:

for each kilometre travelled on specified roads during –

any relevant period.  Section 9 provides for indexation of the ZLEV charge, basically on a CPI basis.  Section 10 provides for an:

Initial declaration by registered operator –

so the registered operator must lodge a declaration within the time specified of the reading on the odometer of the number of kilometres travelled and then fill in the reading at the end of each specified period.  Section 11 provides for:

Subsequent declarations by registered operator –

and Division 3, from section 15 onwards, deals with how the charge is determined.  And could I take your Honours to section 15:

(3)In determining the amount of the amount of the ZLEV charge, the Secretary may assume, in the absence of evidence to the contrary, that all distances travelled . . . are travelled on specified roads.

In effect, the gravamen of that subsection is that the onus lies on an operator to satisfy the Secretary that any exemption, such as driving on a private road, applies so that the charge is not imposed for driving on a private road.  Section 17 provides for how the amount of the charges to be determined and section 58 – which is at page 128 of the book of authorities – enables recovery of the charge an interest as a debt due to the State of Victoria.  And finally, section 62 requires a registered operator to keep records and evidence.

The amended special case sets out the relevant facts concerning how the Act operates at paragraph 43 through to 58.  I do not need to take your Honours there, but the only exception that we would say may be relevant is that there is a motorcar traders’ exemption in paragraph 53 of the special case.  There is an exemption for 15,000 kilometres, I think it is, so that when a motorcar trader is driving a vehicle on display or a test drive that is an electric or hybrid vehicle, the charge does not apply up to that limit, which means that they would effectively be exempt from the charge.  But, of course, a person who drives the vehicle, such as a purchaser, would be liable for the charge from the moment they become registered. 

Could I go next to the Road Management Act, which is at tab 7.  Again, I would only ask your Honours to note the definitions that operate – there is a definition of “public highway”, “public road” and “road” which each pick up each other.  The effect of those provisions is – in section 8, you have a “right of passage”.  So, the public have a right of passage along a road.  Then, section 17 defines what a road is for the purposes of the Act and, essentially, what that means is that the public have a right of passage to use as a public road all of the roads other than private roads.  Your Honours will see that they include toll roads and roads anywhere in Australia, not just in Victoria.  Finally, can I go to the Road Safety Act, which is behind tab 8.  We have, again, definitions of “highway”, picks up:

road or road related area –

Can I go to section 6, which says that:

This Part applies only to motor vehicles and trailers which are used or intended for use on a highway.

Section 6A provides for the:

Secretary not to register vehicles based outside Victoria –

and that is defined as requiring the Secretary to be:

satisfied that the vehicle’s garage address is in Victoria.

So, that gives the link to Victoria under the statutory scheme.  Section 7 makes it an offence if a vehicle is not registered.  So:

A person must not –

(a)     use on a highway a motor vehicle . . . or

(b)     own a motor vehicle . . . which is used on a highway –

unless that motor vehicle . . . is registered –

Finally, section 8 provides for registration in accordance with the regulations.  Could I ask your Honours to note the regulations are not in the joint book of authorities, but can I ask your Honours to note that the combined operation of regulations 23, 24, 40 and 41 is that a person who owns or manages a vehicle is eligible to apply for registration as the registered operator.

The aspects of the scheme I will just take your Honours to that we would comment upon is first, under section 7 of the Road Safety Act, it is an offence to use an unregistered vehicle on a public road.  It follows that a person can only lawfully drive a ZLEV on a public road when it has been registered in the name of the registered operator.  It is from that point of time that the person’s liability to pay the ZLEV charge arises.  Secondly, the liability for this ZLEV charge for use of the vehicle is that of the registered operator, irrespective of who is driving the vehicle.

The information concerning the plaintiffs in set out in the amended special case book at paragraphs 5 to 41, but they show that the first plaintiff was the registered operator of an electric vehicle when the ZLEV Act commenced, the second plaintiff was a registered operator of a hybrid vehicle when the Act commenced, and both have complied with their obligations under the Act by filing the necessary declarations.

In summary now of the propositions we put, we rely upon the differently constituted majority judgments in Capital Duplicators (No 2) – and I will refer to that as Capital Duplicators if I may – and Ha to state a number of propositions in support of our case, that first a tax on the consumption of goods is a duty of excise within the meaning of section 90 and, second, the ZLEV charge is a duty of excise. We state the following propositions that we say flow from those cases.

First, goods may be the subject of duties of excise irrespective of where they are manufactured or produced. Second, the expression “duties of customs and of excise” in section 90 must be construed as exhausting the categories of taxes on goods for the purposes of the section. Three, the distinction between a duty of customs and a duty of excise is dependent upon the steps taken in dealing with the goods, importation or exportation in the case of customs duties; production, manufacture, sale or distribution in the case of excise duties. Critically, a tax imposed on one of those steps will be an excise tax upon goods. Four, a question left unanswered in Capital Duplicators and Ha was whether a tax on the consumption of goods should be added to those steps.  Fifth, on the basis of ‑ ‑ ‑

STEWARD J:   Just before you move on Mr Merkel, concordantly with what the Chief Justice asked, what is your definition of a consumption tax?

MR MERKEL:   Yes ‑ ‑ ‑

STEWARD J:   You are coming to that?

MR MERKEL:   ‑ ‑ ‑ I will try to define it with some care, your Honour, rather than – it is something we appreciate.  Is ‑ ‑ ‑

STEWARD J:   If you are coming to it then deal with it later.

MR MERKEL:   We will come to it, yes, your Honour.  Critically we say – it is not an answer to your Honour’s question, but critically we say a tax on use is a tax on consumption, and this case is solely concerned with use, and we do not get into any wider context than use.  Chief Justice Barwick in Dickenson’s Arcade dealt with durable and non-durable goods and consumption in the sense of use.  But we will answer your Honour and the Chief Justice’s question more carefully, if we might.

What I was going to say is that on the basis of the principles – this is the fifth proposition – enunciated in Capital Duplicators and Ha, consumption should be added, and we say that is so because a tax on consumption, in this context use, is sufficiently related to the goods and is a tax upon, with respect to, or in relation to the goods, as that expression has been articulated in the authorities in this Court. Sixth, as the ZLEV charge is such a tax, it is a duty of excise within the meaning of section 90. Seven, the decision of the majority in Dickenson’s Arcade that a tax on consumption is not an excise is inconsistent with the majority judgments in Capital Duplicators and Ha, and if leave to reopen Dickenson’s Arcade on that issue is necessary it should be granted and the decision overruled or not followed.  And finally, leave to reopen Capital Duplicators and Ha should be refused, but if that leave is granted both decisions should be affirmed.

I should indicate, your Honour my learned friend Mr Lenehan will be putting our submissions on the application of the factors in John v Federal Commissioner of Taxation to the applications concerning Dickenson’s Arcade, and Ha, and Capital Duplicators.

In summary, our case is that a law imposing a tax has a sufficient connection with goods if the tax is directly related to the goods.  It is so related if it is imposed on a step dealing with the goods.  In that context, historically, a tax on a relevant step in a dealing with goods – which was production, manufacture, sale or distribution – had a sufficient connection.  Logic and the principles enunciated in Capital Duplicators and Ha support the addition to those steps of a tax on consumption.

We say that that analysis has replaced the need for the tax to have a natural and general tendency to affect demand or production, manufacture, sale or distribution.  But if that is still a requirement, it is met in the present situation because a tax on consumption is a tax that has a natural and general tendency to be a burden on demand by increasing the cost to the consumer of using the goods.

EDELMAN J:   Sorry, demand for what?  Demand for purchase of the good?

MR MERKEL:   Demand for electrical hybrid vehicles.

EDELMAN J:   For purchase of the electrical hybrid vehicles, you mean?

MR MERKEL:   Yes, for purchase, that is correct, your Honour.

EDELMAN J:   Purchase as a retail customer?  As a second‑hand customer?  As a third‑hand customer?

MR MERKEL:   In any market, your Honour, for electrical hybrid vehicles.  It has this upstream effect.  Basically – and we will come to this in considerable detail – what has been consistently identified in this Court as the anomaly or illogicality of excluding consumption, is that once it was decided that taxes on distribution or sale were excised because of the consequential effect on demand for goods and, therefore, effect on production and manufacture, there is no reason why a tax on a consumption would not have the same logical consequence and effect – that upstream effect.  We say that if that is a requirement – and our primary submission is that if that has been overtaken by the analysis in Ha ‑ ‑ ‑

EDELMAN J:   That is the rationale, then – the rationale is it is matters that affect the demand for goods.

MR MERKEL:   Yes, your Honour, and that gives it a commercial consequence and an economic effect, which ‑ ‑ ‑

EDELMAN J:   Why confine it, then, to things that are directly related to goods?

MR MERKEL:   Your Honour, we do not say directly related to goods as an essential prerequisite if there is a sufficient connection.

EDELMAN J:   So, if there is economic evidence, for example, that a sufficient increase in the price of fuel would dampen the demand for the purchase of vehicles, does that fit your test of “directly related to goods”?

MR MERKEL:   Each case is a question of fact and degree.  We would say that the test is, is there a sufficient connection to make it a tax upon, or in relation to, or in respect of goods?  The words “directly related” has been used in some of the authorities.  We do not have any difficulty with it as descriptive because our case is directly related – we have a tax here which is directly related to goods.

EDELMAN J:   So, the answer to my question, then, is it depends how much the tax on fuel increases before it becomes a tax on goods?

MR MERKEL:   Ultimately that is right, your Honour, but we say that we do not get into this evidence.  The test put forward by, I think Lord Haldane and picked up by Justice Dixon in the earlier cases is whether there is a natural and general tendency of the tax to have that upstream effect, a burden upstream, and that does not get into economic evidence as such.  It does not exclude it, but inherent built into that and to the analysis in this Court is that because a tax on goods increases the price of goods or the cost of goods, it necessarily will have a consequential effect on demand, and that has its upstream consequence, whether it be of distribution, sale, manufacture or production.  But because of the decisions in Ha and Capital Duplicators, we say that a tax on goods itself defines what is within the concept of an excise for the purposes of section 90.

STEWARD J:   Is there a slight problem about that proposition, because really every tax, direct or indirect, can be a burden on purchasing power.  An income tax can affect the amount which one can afford to pay for a car.

MR MERKEL: That is right, your Honour, but the income tax is on income, not on goods, and our approach to section 90 is that it merely gives exclusive power in relation to taxes on goods.

STEWARD J:   Well, Victoria says this is a tax on the use or activity of driving on a public road using a ZLEV car, not a tax on goods.

MR MERKEL:   Well, your Honour, again when one looks at the details of a particular tax – it may be a fee for a privilege, it may be a fee for an activity, it may be a fee for a service – it may or may not be a tax as defined.  But where, in the present case – and we come to this at the end of our submissions – one looks at the ZLEV Act, it clearly is a tax on the consumption, that is, in this context, use, of ZLEV vehicles.  If it were, for example, limited to particular roads that had a particular rationale, that may give you a different result, but here because it is all‑embracing on any road anywhere in the country we say that – and distinctively selecting ZLEV vehicles as opposed to a tax on all vehicles, this is really a tax in respect of and in relation to these goods.

GORDON J:   But your argument would not hold, would it, in relation to the distinction you just drew between ZLEVs and all cars or all vehicles?  I just want to understand what that last proposition was addressed at, because I do not understand how it fits with your earlier propositions.

MR MERKEL:   Once one got to a tax on all vehicles, or an impost on all vehicles, you may get into whether it was a service, for example, registration fees are charged on all vehicles, but when you look at the registration fee it has a regulatory function and it also has a third‑party insurance function so it would stand in a different category, it may not be regarded as a tax on goods.  But here where you have got a tax on a particular step in this process of dealing with goods, and the definition arises by reference to the step that attracts the tax, it has been held and determined in Ha and Capital Duplicators that any tax on manufacture, production, sale or distribution is an excise, and our question is whether consumption should be added to those categories and we say logically there is no basis for excluding it.

STEWARD J:   What do you say about the proposition that an excise has traditionally been seen as a trading tax?

MR MERKEL:   I think, your Honour, that might be glossing over what is meant in those earlier cases by tax as an article of commerce, or an integer of commerce.  What this Court has intended by that is that the category of goods upon which the tax is imposed is a category that are commercial, or are trading goods, or are integers of commerce or articles of commerce, and we say ‑ ‑ ‑

STEWARD J:   Is that anything for sale?  Is that what that means?

MR MERKEL:   Anything that would have a market would be caught.

STEWARD J:   Yes.

MR MERKEL:   But we say that when properly understood all of these cases come back to this:  does the tax impose a burden or have an effect on demand?  And it is through that process one goes to the commercial consequences.

EDELMAN J:   But we test the effect on demand by reference to what you are describing as natural tendencies and without regard to any economics somehow.

MR MERKEL:   The test has been framed in terms of a natural and general tendency, and that is the way it has been applied.

EDELMAN J:   But not the economic tendency.

MR MERKEL:   Yes, your Honour.

EDELMAN J:   How does one work out a natural tendency without using any concepts of economics?

MR MERKEL:   I think concepts of economics have been brought into play, for example, to remove any relevance of a direct or indirect tax, and using that as any dichotomy, not that it is irrelevant but it cannot be determinative.  And underlying the cases is this general acceptance that a tax on goods imposes a burden on those goods, and that that has an economic effect by making those goods more expensive and, therefore, that burden on demand will have that natural and general tendency to have an upstream effect on sale, distribution, supply and so forth.

GLEESON J:   Mr Merkel, my researches suggest that taxes on conveyances, or duties on conveyances, go as far back as 1784 when a tax was levied on hackney coaches, and duties of excise were also levied on horses according to whether they were entered in races.  I am just wondering why we really need to get into any kind of economic argument.  It seems that over the course of history, duties of excise are largely described without any particular principle as to what is covered by a duty of excise.

MR MERKEL:   Well, that is right, your Honour. And, of course, we are here because of the uncertainty of the connotation that attaches to the word and therefore defined a meaning that gives it its operative effect in section 90 based upon the kind of background that your Honour has raised.

That is why we say that the way in which we contend the matters to be now approached is that when one looks at taxing the step in the course of dealing with the good, that becomes the criterion, so the taxes imposed on the step – and that creates the necessary relationship between the tax and the goods to give the tax the character of an excise.  That is certainly how Chief Justice Mason and Justice Deane put it in Philip Morris at page 434  But when I take you to the passages in Ha and Capital Duplicators, critical to the language and analysis is a tax on that step, and that really is the required relationship.

When one gets to particular kinds of taxes, the questions can often arise, is the scheme regulatory, or is the scheme a payment for a privilege, or is it involving a service, in which case – in each such case it might take it outside what would otherwise be an excise.  We say we do not have that territory or that problem in the present case, and we say what the two High Court cases decided was a tax upon goods is the essential criterion and that is to be defined by the step upon which the tax is imposed.

Could I go now to both Capital Duplicators and Ha.  We rely on the majority judgments in those cases to make good our point that a tax upon goods has become exclusively within the power of the Commonwealth and has been yielded up by the States.  And we stand alone on those two cases for making good our case on the ZLEV tax.  Secondly, we go then to prior judgments in the Court that specifically consider why a tax on consumption should not be considered any differently to a tax on sale or distribution.  We will be submitting that the exclusion of a tax on consumption is illogical and unwarranted.

Could I go now to Capital Duplicators, which is volume 4 at tab 17. The majority held that franchise in advance fees for a wholesale or retail licence, calculated by reference to the value of “X” videos sold, were an excise.  Can I take your Honours through different parts of the judgments, some of which I will read, some of which I will ask your Honours just to note.  Without reading it, at 583, point 2, to 583, point 4, their Honours say why the criterion of liability test applied in Bolton v Madsen and Dennis Hotels has given way to the court having regard to matters of substance rather than form and therefore to the practical and substantial operation of the statute as well as to its legal operation.

Until that test was set aside, the determination of whether a tax was an excise was determined entirely by the criterion of liability imposed in the Act’s legal operation.  Their Honours then, at 583, point 4 – and can I take your Honours to that passage – then said – sorry, it is 583, point 6, in the middle paragraph, towards the end, their Honours say:

The rejection of the criterion of liability as an exclusive test has not disturbed general acceptance of the proposition that a tax in respect of goods at any step in the production or distribution to the point of consumption is an excise.  That is the fundamental proposition for which Bolton v Madsen stands as authority, subject only to the qualification that it speaks of taxes “directly related to goods”.

GORDON J:   Can I raise two matters before you go on in relation to that passage, Mr Merkel.  One is the question the Chief Justice and Justice Steward asked you.  Can I just understand what your position on consumption is, and is it the test that you propounded before?  So that when you are actually asking us to look at this in the terms of consumption, what is it you are talking about?

MR MERKEL:   What we are saying, your Honour, is that – we say in the present context what we are talking about in terms of consumption is an act of the person in possession of the goods in using or destroying them by use.  Can I just say to your Honours we have mentioned that in footnote 35 to paragraph 14 of our submissions, but in the context of durable goods we say it is synonymous with use.

GORDON J:   Thank you.  The second proposition is in the sentence immediately preceding that, which you read, the majority in Capital Duplicators, having rejected the criterion of liability analysis in favour of the substantial and practical operation, in footnote (99), a number of factors,  they said, would take into account in this new approach to the substantive and practical operation.  Do you propose to address those factors in identifying the limit to which you would have consumption extended?

MR MERKEL:   We say, your Honour, that those factors might be relevant to determining whether or not the tax on the particular step falls within the category of an excise, and you would look at those factors in areas where the tax may be indirect, for example, or may be direct, and how it might operate in some circumstances.  But we say those factors do not arise in the current context because we have a tax based entirely upon use throughout the life of a durable good which would be a classic definition of a tax on consumption.  So we do not have anything in any borderline territory to the extent that it embraces use on roads that are not specified.  We say that that is such a minor irrelevant exception, it does not change the nature of the tax imposed.

So we say that those actors can all be relevant where there is an argument; for example, whether a licence is really an excuse or a privilege, and how it works, and how it is imposed, and what it is charged by reference to would all be taken up as factors to be considered, but we say that kind of problem does not arise in the present case.

STEWARD J:   Can I ask a follow‑up question to what Justice Gordon was asking you.  Ordinarily, an excise is a charge or tax which is payable once upon a dealing or good.  It might be charged again with a different dealing, but usually it is a singular tax, it is not an ongoing tax.  Why would not consumption here be considered to be the first use or the first opportunity to use a good when it enters into home consumption?  Why would it continue?  Because I am not aware of any excise that operates on a periodic basis.

MR MERKEL:   Your Honour, whether it is continuing or a one‑off would tell you or assist you in informing whether it is a tax on the particular step, so that if the tax was on all production of goods from time to time, it may be a continuing process even though the goods may change, be produced and then move on.  But we say that, whether it is an instant or continuing tax would not change the characterisation of the purpose of an excise if it is a tax on the relevant step, which may be a continuing step. 

When we get to consumption, you have the durable and non‑durable dichotomy, but where it is durable, such as in the present case, if the tax is imposed on the first year of use it would be an excise, or the first day of use it could still be an excise if it is unrelated to any service, and so forth.  But we say it does not affect the character of the tax, that it is continuing, it just means it is for the entire life of the good.

STEWARD J:   It might go to the issue of indirectness, though, or sufficiency of relationship.  I mean, imagine the ZLEV is 15 years old, it has been sold and resold to five different people and it is a long way from manufacture, production, distribution and sale ‑ ‑ ‑

MR MERKEL:   Yes.

STEWARD J:   ‑ ‑ ‑ which is a classic understanding of what an excise is.

MR MERKEL:   Your Honour, we would accept if the economic effect as an article of commerce were relevant and then had to be an effect on demand, there may come a point, if that were the basis the Court concluded was still operative, where the tax was far removed from any demand for the goods.  But we do not have that issue in the present case because – just taking it within your Honour’s context – a purchaser cannot drive that vehicle out of the trader’s premises – take effective delivery of the vehicle – without becoming registered and, therefore, liable to the tax.

STEWARD J:   It could be put on a truck and driven to the farm where it is used on the farm.

MR MERKEL:   It could be.  One can think of all sorts of exceptions.

STEWARD J:   Or to an open‑cut mine.

MR MERKEL:   Yes.  Your Honour, one can think of exceptions – and we will take your Honours further down the track to what Justice Dixon said in – I think it was Dennis Hotels, about those kinds of exceptions. But they cannot really determine the proper characterisation of the tax for the purposes of section 90 if it is so easily evaded by saying, well, you can use it on a private road when we all know that private roads – there might be some that are extensive but, for the most part, they are just a driveway, and that is not really going to be something that is going to affect the nature of the tax.

With a good such as the present, from the moment it is purchased, you take delivery – and assume you take delivery to drive it, which almost all people would do, then you pay the tax.  So, the remoteness issue that your Honour put to me, hypothetically, does not really arise in the context of the present case.  If the Act were changed to, say, vehicles that are 10 years old, 20 years old, will have the tax imposed and not earlier, there may be an argument about that not having a consequential effect on demand.  But, again, one would then get into a second‑hand market for vehicles which are commercial – is a commercial market versus new market for vehicles.

EDELMAN J:   Do you mean an effect on demand or an effect on price?

MR MERKEL:   We say, properly understood, when you go back to the cases, what is critical is a consequential effect on demand.  It may or may not affect price.  For example, if you have an indirect tax that is passed on, that will affect price – will be more likely to affect price.  But then, the cases rejected that analysis because whether it will affect price would depend on whether the person liable for the tax wants to carry the tax or pass it on.  It is not something that is automatic.  But it would be a burden on demand because it makes the cost of those goods more expensive.

EDELMAN J:   So, if it were the fact that there were more potential purchases of electrical vehicles than supply of electric vehicles in Australia, so that, assuming your premise, the ZLEV provisions increased the price of an electric vehicle but did not change the demand, then that would not be a circumstance that would fit the rationale that you are proposing because demand would not change even if price increased.

MR MERKEL:   Your Honour, I think ‑ ‑ ‑

EDELMAN J:   But we have to do this without economics.

MR MERKEL:   Your Honour, the “natural and general tendency” is the language used in the cases, and the assumption underlying that ‑ ‑ ‑

EDELMAN J:   But that is cases before the point of consumption.  That is because “natural and general tendency” may be a concept that is easily understood when one is looking at all of the steps up to sale.  But you are concerned with steps that are beyond – and, potentially, well beyond – the point of sale and, potentially, well into a secondary market.

MR MERKEL:   Yes.  But, your Honour – this is our alternative fallback position.  I want to emphasise that, because we say if it is tax on a step, that is sufficient, but ‑ ‑ ‑

GORDON J:   What is the step there, though?  When you ‑ ‑ ‑

MR MERKEL:   The step is use – consumption, which is use of the vehicle.  That increases the cost of the vehicle ‑ ‑ ‑

EDELMAN J:   How do we know that?

MR MERKEL:   Because the tax necessarily increases the cost because they have to pay a per‑kilometre charge for its use selectively because of that vehicle being used.

EDELMAN J:   The cost of the purchase of the vehicle.

MR MERKEL:   Because they are the registered operator of the vehicle.  Whether they purchased it or not does not matter, but all registered operators must pay the tax of ZLEVs, and that increases the cost of ZLEVs to the public who wish to buy those cars.

STEWARD J:   I think that is a big assumption.  I mean, people might buy a Tesla because of their concern for the environment and would not care less if the price increased or decreased.  The point Justice Edelman is making is that it is easy to see natural tendencies in the traditional journey of a good from manufacture to home consumption but, as to what happens once its end is home consumption – what effect is has on demand and price – I just do not know.

MR MERKEL:   Your Honour, the “do not know” applies equally to the tax on distribution or sale, and the reason why indirect tax was eventually discarded as a criterion for an excise was whether an indirect tax – the burden of it – was passed on depended on economic and market factors.  You could not assume it would or would not be passed on.  And when I take you to the way in which ‑ ‑ ‑

EDELMAN J:   Except for this, that all the steps up to sale – the natural tendency that is being assumed is that there would be an increase in the capital cost of the item.  You are not concerned with increases in capital cost.  Your concern is directly with an increase in the marginal cost of use, and your argument is that marginal cost of use somehow gets translated back into the capital cost of purchase.

MR MERKEL:   Could I endeavour to be precise in my answer to your Honour.  The pathway that your Honour has taken me to – and I will cover this later after I have dealt with Ha and Capital Duplicators – but, as your Honour has asked, I should make it clear.  Initially, it was thought that an excise had to have a consequential effect on production or manufacture.  So, when the cases moved to taxes on sale or taxes on distribution, the Court linked those taxes to production and manufacture by saying the natural and general tendency of the tax on sale would have an upstream effect and be a burden or affect demand, and a burden that affects demand would have consequential effect – can have a consequential effect on production.  That is how the cases unfolded.

Then, consumption was said to be in no different category in that context to sale or distribution.  In judgment after judgment, it was said that that has the same natural and general tendency because it is a burden imposed on demand for the goods by reason of an increased cost.  The fact that it increases in cost at the consumption point does not put it in any different category to the increase on distribution or sale, and with the upstream consequences.

Judgment after judgment has taken up that point and I have not – and I may stand corrected – I do not think there is any judgment that suggests consumption stands in a different category because it has no consequence on demand.  It has been assumed it has – and we say, correctly so.

But that was pre‑Ha because Ha broke that chain with a necessary requirement, or an implicit requirement, to link the tax with an upstream effect on demand by, in effect, saying that the States yielded up the power to impose taxes on goods in section 90 as within the exclusive power of the Commonwealth, and once goods the subject of section 90 became not just home manufactured goods but goods manufactured anywhere, what became the critical element was the government policy at the tariff level or at the manufacturing or the domestic level about what taxes should or should not be imposed on goods and not having the States have a power to hamper or act to defeat that policy.

So we say that when it moved with that shift then the idea that consumption would stand in a different category no longer had a rationale, nor was it an essential part of the process to have to identify a burden on demand upstream because it is implicit that the tax on goods became the criterion for imposition of the liability to pay excise and therefore it was an excise and beyond the power of the States to impose it.

To make good that, I need to go through Capital Duplicators.  I have taken your Honours to 583, point 4.  Could I go next at pages 584 to 586.  The policy of a Commonwealth economic union, as explained by Justice Dixon in Parton was discussed – it is set out at 586, point 2 – which came in Ha to be described as the doctrine, the Parton doctrine, and this has become very much the driving force of both where we landed in Capital Duplicators and Ha that:

“[Section 90] was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action.  A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production.”

That is in part where his Honour had removed consumption, which his Honour had regarded as a relevant step upon which the tax could be imposed in Matthews, but I will come to that.  Then, importantly for present purposes, their Honours said at 585, point 5:

A tax on distribution, like a tax on production or manufacture, has a natural tendency to be passed on to purchasers down the line of distribution and thus to increase the price of, and to depress the demand for, the goods on which the tax is imposed.

Then a number of judgments in the Court have accepted that a tax, as I indicated to your Honours, on consumption can have that natural and general tendency to depress or affect demand in the same manner.  Then at 587, point 2, four lines from the top, their Honours said:

No doubt the States could, by the exercise of some of their legislative powers (e.g., by fixing quotas for production) hinder the attainment of those objects. That possibility is no reason for denying that s. 90 serves a broad constitutional purpose.

Then from 589, point 9 to 590 the majority also rejected the State and Territory argument that section 90 did not “exhaust the categories of taxes on goods”. Again relying on Justice Dixon’s policy as stated in Parton, their Honours said at 590, point 1 after referring to Parton in the fifth line at 590, they said:

Moreover, they are inconsistent with the purpose which Dixon J. attributed to s. 90 in Parton and which has been attributed to s. 90 by subsequent judgments in this Court. Adhering to that view of the purpose of s. 90, the term “duties of customs and of excise” in s. 90 must be construed as exhausting the categories of taxes on goods.

We say that is a very, very important concept taken up in Ha and accepted by all seven judges in Ha if the Parton policy doctrine is to be accepted as a policy underlying section 90. Then, further down, their Honours said, in the middle of that paragraph:

However, once it is accepted that duties of excise are not limited to duties on production or manufacture, we think that it should be accepted that the preferable view is to regard the distinction between duties of customs and duties of excise as dependent on the step which attracts the tax:  importation or exportation in the case of customs duties; production, manufacture, sale or distribution – inland taxes – in the case of excise duties.

And then their Honours said:

It is unnecessary in this case to consider taxes on the consumption of goods.

Which, of course, is the issue that we now have in the present case.  We say it is implicit in the passages I have read to your Honours that the majority is accepting that if a tax on consumption is to be characterised as a tax on goods it is not within the power of the States to impose that tax, as it is an excise.  But as their Honours said, that is the question to be considered when it arises, which is in this case.  Then, finally, at 596 to 7 the majority found that because the principal elements of the Act in issue in that case were directed to revenue raising, rather than a regulatory scheme designed to protect the public, the two fees in question, calculated by reference to videos sold, were excise duties.

The revenue raising, of course, applies equally in the present case.  This is a general revenue raising statute, the ZLEV Act does not require or provide for the money to be paid other than into consolidated public revenue, nor is it required to be used for any purpose related to road use or to ZLEV vehicles.

Could I next go to Ha, which is at tab 23, volume 4.  Ha concerned whether licence fees for the retail and wholesale of tobacco, calculated by reference to a prescribed percentage of tobacco sold in a preceding period, was an excise.  At 487, point 7, the two issues are set out.  We are concerned here with the first, which is:

that the Act does not prescribe production or manufacture . . . to be a discrimen of liability –

And then the second, which we are not concerned with concerns fees for a licence.  Can I ask your Honours to note, but I do not need read it, at 488, point 5 to 448, point 9, their Honours cite the passage I had just read to your Honours from Capital Duplicators and affirming at the end of that quote that:

the term ‘duties of customs and excise’ in s 90 must be construed as exhausting the categories of taxes on goods.

I had earlier said that all seven judges in Ha had accepted that that if Justice Dixon’s policy was to be applied then State legislative power to impose taxes on goods would be exhausted and would have been yielded to Commonwealth.  Can I take your Honours to page 511 in the minority judgment where their Honours, after discussing the evolution through Dennis Hotels and Bolton, then their Honours said, six lines down from the top of 511:

As a result, increasing emphasis came to be placed upon the assumption of Dixon J in Parton that s 90 “was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action”. Of course, were that assumption correct, then the search for the meaning of the term “duties of excise” in s 90 would cease, for the exclusivity of Commonwealth power to impose duties of customs and excise would extend to all taxes upon goods and all taxes upon goods which were not customs duties would be excise duties.

So, while their Honours did not accept the Parton policy, they also accepted that the only answer to it was to go back to excise being a tax on manufacture or production of local goods, and there is some dispute about how that may be defined – my learned friend, Mr Lenehan will deal with that aspect of the case.  But what we say is important, that the concept accepted by all seven judges in Ha and the majority in Capital Duplicators is the State had yielded up the power to impose taxes on goods.  So, the issue becomes whether a tax in a particular case is a tax on goods.  Their Honours reiterated at 491, point 1, about the ‑ ‑ ‑

GORDON J:   Sorry, what page are we on now, Mr Merkel?

MR MERKEL:   At 491, point 1, but it is really just their Honours restated that:

the character of a tax required a consideration of the substantive operation as well as the –

legal form. But the analysis of section 90 in the context of Chapter IV starts at 491, point 4. Could I take your Honours to the passage at 494, point 7 and can I just indicate that this passage was cited by the plurality judgment in Betfair at paragraph 22 which we say cited with affirmation, which is important.  Can I start at 494, point 7 where it starts:

It is clear that an objective of the movement to Federation was “inter‑colonial free trade on the basis of a uniform tariff” as this Court pointed out in Cole v Whitfield. That objective could not have been achieved if the States had retained the power to place a tax on goods within their borders. If goods that attracted a State tax were imported into the State from outside the Commonwealth, Commonwealth tariff policy would have been compromised by the imposition of a State tax. The second paragraph of s 92 and the third paragraph of s 95 (by limiting the period of its operation) show that such a tax was alien to the scheme of Ch IV. If a State tax were imposed on goods brought into the State having been produced or manufactured elsewhere in the Commonwealth, the tax would affect the freedom of trade in those goods and might be a duty of customs on the entry of the goods into the taxing State. If a State tax were imposed on goods of local production or manufacture within the State, it would be a duty of excise on any view of the term. As State power to tax goods whatever their place of production or manufacture was given up to the Commonwealth, Dixon J was surely right –

And then the Parton passage is again set out.  So, we have reiteration of the yielding up of power to impose taxes on goods as part and parcel of the policy of Chapter IV.

EDELMAN J:   Of course, Cole v Whitfield does that by reference to the concept of discrimination, which was the minority’s point in Ha.

MR MERKEL:   Yes, that is right, your Honour.  Of course, we say that, properly understood, Ha and Capital Duplicators were to section 90 what Cole v Whitfield was to section 92 – a clarification of the hotly‑disputed area.

EDELMAN J:   Except the majority in Ha does not use the concept of discrimination.

MR MERKEL:   No, of course that is right, your Honour.  But the majority in Ha focus in terms of section 90 on excise covering the field of taxes on goods and that, therefore, becomes the only question that needs to be asked – is it a tax on goods within the meaning of section 90? Their Honours then went on to consider the convention resolutions at 495, point 5, to 496, point 5, to conclude at 496, point 4, that:

The history of s 90 denies any necessary linkage between the exclusivity of the power to impose duties of excise and Commonwealth tariff policy.

Then, at 496, point 5, their Honours address the significance of section 55.  What their Honours said at 496:

The dichotomy –

in section 55:

between laws imposing duties of customs and laws imposing duties of excise . . . is satisfied by the dichotomy between laws imposing a tax on the importation of goods and laws imposing an inland tax on some dealing with goods.  The defendants’ submissions propound a different dichotomy –

and their Honours reject that.  Then, their Honours concluded at 497, point 2, second line of 497:

Section 55 does call for a classification of taxing laws by reference to the criterial of liability that they express.  The criterion of inland  taxes on goods serves to identify clearly duties of excise for the purposes of s 55.

Then, reconfirming that conclusion, your Honours stated at 497, point 4, towards the middle of that big paragraph:

As earlier noted, the imposition of State taxes upon other inland dealings with goods as integers of commerce, even if those taxes were not protectionist, would have created impediments to free trade throughout the Commonwealth. Why should s 90 be construed so as to subvert an objective which Federation was designed to achieve? It is immaterial that the States retain taxing and other powers the exercise of which might affect the overall costs of production, sale or distribution of goods and ultimately be shared by consumers; what is material is that the States yielded up and the Commonwealth acquired to the exclusion of the States the powers to impose taxes upon goods which, if applied differentially from State to State, would necessarily impair the free trade in those goods throughout the Commonwealth. Section 51(ii) ensured that such taxes when imposed by the Parliament would be imposed uniformly throughout the Commonwealth.

Then, at 498, point 9, the majority disavow an approach that asks:

whether the imposts . . . burden Australian‑produced tobacco products –

in favour of the questions, for the reasons outlined – this is the top of 499, point 1:

However, for reasons stated above, the question is whether the imposts are an inland tax on a step in the distribution of tobacco products.

which is the submission that we have put forward.  The majority affirmed what it had then called the “Parton doctrine” by concluding at 499, point 8, where their Honours said – this is about 12 lines from the bottom of the page:

But the correctness of the doctrine they establish must now be affirmed.  Therefore we reaffirm that duties of excise are taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin.  Duties of excise are inland taxes in contradistinction from duties or customs which are taxes on the importation of goods.  Both are taxes on goods, that is to say, they are taxes on some step taken in dealing with goods.  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.

So, we say that built into the fundamental principles enunciated in Capital Duplicators and Ha is the question of identifying the step upon which the taxes are imposed.

GORDON J:   Can I just ask one question about that?  Page 490 in Ha at the foot of the page, after setting out what you, I think, took us to, which is:

The principle that an inland tax on a step in production, manufacture, sale or distribution of goods is a duty of excise has been long established.

Is what they then do, in quoting from Justice Brennan in Philip Morris, is that the passage you intend us to come back to?  I think you mentioned it earlier?  Is this the:

rock in the sea of uncertain principle –

leading up to:

the point of receipt by the consumer –

that point?

MR MERKEL:   Yes, your Honour, that is an important passage and, historically, it is correct.  I will go to the passage of Justice Brennan, if I might, in a moment because that is helpful.

GORDON J:   I do not mean to take you out of it, I would just like you to deal with it at some point.

MR MERKEL:  I will, your Honour.  One of the problems in this area, is that a lot of the earlier cases stated what an excise is, for example, in the very first case of Peterswald v Bartley, it was stated to be a tax on manufacture or production when the goods were manufactured or produced.  But what the cases came to deal with was whether that was merely descriptive as an excise or definitive and, therefore, if was not within that category it was not an excise.  And there was quite a bit of uncertainty about that.

And it is quite accurate to say – and I will come to this in my review of the cases but by the time, Capital Duplicators and Ha had come to be decided, the Court had adopted what had been a description of an excise as a definition of it and it ceased at the point at which a good came into the hands of a consumer.  That is what Bolton v Madsen decided and I will come to that.  But that approach is inconsistent now and was disavowed in Capital Duplicators and Ha, which is why I have taken you to all those passages.

But can I take your Honours to the passage in Philip Morris that your Honour asked me about.  Philip Morris, your Honours, is tab 35 in volume 6.  And the passage that your Honour asked me about, of Justice Brennan, is at page 444 where his Honour outlines the pathway from Matthews to Parton and sets out at 444, point 3, Justice Kitto’s formulation in Dennis Hotels, based upon Bolton v Madsen and that formulation which was picked up in Bolton v Madsen that:

a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or into a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer.

Now, at that point, what had been identified by Justice Dixon in Matthews wound back in Parton by excluding consumption had been descriptive but, at this point in Bolton v Madsen, it had become definitive.  So, if a tax was imposed on a step of consumption, it fell outside the definition in Bolton v Madsen.

His Honour then goes on to say – and there were two criterion imposed – one was that the criterion of liability test, which was you only look at the legal form – which is what was applied by at least three of the judges in Dickenson’s Arcade – but I will come back to that – but what his Honour says at 445 in the concluding paragraph of that section:

The continued acceptance of the test of “tax on a step” and the continuing conflict of opinion as to the “criterion of liability” approach can be seen in the reasons for judgment (other than those of Murphy J.) in the latest decisions on this point:  see Hematite . . .and Gosford Meats . . . If there be any rock in the sea of uncertain principle, it is that a tax on a step in the production or distribution of goods to the point of receipt by the consumer is a duty of excise.

We say that his Honour’s emphasis of “a tax on step” is the very analysis adopted and accepted in Capital Duplicators and Ha.  We say it is the one that we would, with respect, apply in respect to the taxing issue in the present case.

EDELMAN J:   But shorn of the concept of “to the point of receipt”?

MR MERKEL:   No, that, we say – I will just finish with Ha, your Honour, but we say when the passage in Ha refers to whether consumption is to be included and it cites from Bolton v Madsen, it leaves out that last aspect – and accepts a step – a tax on a step of manufacture, production, sale or distribution is an excise, but does not say up to the point at which it receives – goes to the consumer – because that is the question their Honours left open.

EDELMAN J:   Yes.

MR MERKEL:   And that is the question that we now have.  The Court concluded ‑ ‑ ‑ 

EDELMAN J:   My point was just that the “rock in the sea of uncertain principle” that you are relying upon – you are relying upon that shorn of the “point of receipt” limitation that was at that time thought to be part of the core criteria.

MR MERKEL:   Yes.  Correct, your Honour.  We say, implicit in what I have read to your Honour is that the Court did not accept ‑ ‑ ‑

EDELMAN J:   It did not reject it, either.

MR MERKEL:   No, it did not reject it, it said that is the question to be decided, but we say by reference to the principles that we have enunciated – which is consumption – a tax on consumption as step – and imposition of the step of consumption and therefore a tax on goods – that is what we are seeking to address here.  Their Honours concluded, in this way, finally at Ha at 503.

STEWARD J:   Just going back, the concept of a “step”, again – we perhaps need to focus on what that really means.  In all the cases in the past, it has always been about a singular dealing with a good as it made its way into home consumption.  Is it right to say that driving a car is a “step”?

MR MERKEL:   Yes, your Honour, because that takes it back to, is a tax on consumption a step in the same way as a tax on distribution, for example.  There are many forms in which the tax might be imposed.  If it is on total usage of the car – total usage of a car in the context of considering consumption is a step in dealing with the car, but because it is consumption, it must be by reference to use.

STEWARD J:   But when they refer to “step”, they are not just talking about any step – any dealing – they are talking about a particular type of moment at which the goods become exigible by reference to the value or quantity.  I can understand you arguing that consumption tax is when the consumer buys the goods and they are available for their first use – so, you tax the value of the goods in the hands of the consumer – that might be an excise.  But it is hard to say that ongoing continued use of the goods for their life is the kind of “step” they had in mind in these cases.

MR MERKEL:   Your Honour’s instant and finalised step versus an ongoing step ‑ ‑ ‑

STEWARD J:   I do not talk about steps.

MR MERKEL:   Well, activity – is not one that I can recognise from the cases but, just by way of example, if one looks at Matthews v Chicory, the tax was imposed on planting for chicory production and that was used as a different way of – so the court finally held – of taxing production and manufacture – but the activity was the continued activity of planting of chicory.

STEWARD J:   The continuous activity of production and manufacture of chicory, which would be on an annual harvest ‑ ‑ ‑

MR MERKEL:   It was on the planting, not the harvest, your Honour, and two of the judges found ‑ ‑ ‑

STEWARD J:   It was a step in manufacture and production, though.

MR MERKEL:   Well, no, it was not.  In fact, that is where the Court divided, because the Chief Justice and Justice McTiernan found that because the harvest might fail it was not a tax on production or manufacturing, amongst other reasons – it was not a tax on a production or manufacturing, but it was a tax on the ongoing activity of planting.  I will come to Matthews v Chicory because we say that case is seminal, and really the principles enunciated by Justice Dixon were taken up and pretty much adopted and applied in Ha and Capital Duplicators.  But we say it – the step requires the focus on what is the subject of the tax, and we say that confines one to whether it is a tax on goods.

Can I just finally take your Honours to page 504, point 2 ‑ ‑ ‑

GORDON J:   I think I interrupted you on 503.  Have you finished with page 503, Mr Merkel?

MR MERKEL:   Yes, sorry, your Honour.  At 503, point 2 – your Honour thank you for that – what their Honours said in the first clear paragraph:

The maintenance of constitutional principle evokes a declaration that the Dennis Hotels formula cannot support what is, on any realistic view of form and of “substantial result”, a revenue-raising inland tax on goods.  The States and Territories have far overreached their entitlement to exact what might properly be characterised as fees for licences to carry on businesses.  The imposts which the Act purports to levy are manifestly duties of excise on the tobacco sold during the relevant periods.  The challenged provisions of the Act are beyond power.

Then one has a licence over a period of time, your Honours.  It is not just a licence to do something on one day or another.  Finally, the Court declined the invitation to rule prospectively, but said – at the bottom of 504, point 2, their Honours said:

In any event, the decision of this Court is not to overrule Dennis Hotels or Dickenson’s Arcade.  They may stand as authorities for the validity of the imposts therein considered.  Properly understood, the test of “no closer connection” as stated by Kitto J . . . is maintained.

We do not need to worry about that because we are not into the licence territory, but it may be that we say the same may apply to Dickenson’s Arcade.  Here it should be regarded in the light of Ha and Capital Duplicators.  This is not governing anything other than the very acting question, which does not give us an answer to what we have to be concerned with in the present case.

KIEFEL CJ:   That might be a convenient time, Mr Merkel.

MR MERKEL:   Thank you, your Honour.

KIEFEL CJ:   The Court will adjourn for 15 minutes.

AT 11.17 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.32 AM:

KIEFEL CJ:   Yes, Mr Merkel.

MR MERKEL:   Could I answer your Honour the Chief Justice’s question about the meaning of consumption.  We would answer that by reference to what we have set out at footnote 35 of the plaintiff’s written submissions, which is at page 4.  We say it is:

“the act of the person in possession of the goods in using them or in destroying them by use, irrespective of the manner or means by which that possession was obtained”.

That was from Chief Justice Barwick in Dickenson’s Arcade.  Then Justice Jacobs in Logan Downs:

I use –

“consumption”:

to cover not only physical consumption but also consumption by continuing use of chattels privately or in business.

Could I move on away from Capital Duplicators and Ha to the judgments in this Court on section 90 which we say support our submission. We say that the relevant dicta is to the effect that in the context of section 90 there is no logical distinction between a tax on sale or distribution and on consumption when considered in relation to their consequential effect or burden on manufacture or production. I may have said manufacture or production being the relevant step, but that is a consequential step, not the step that the cases have discussed.

I had indicated to your Honours before the adjournment how Peterswald v Bartley had been developed in later decisions to require a link between the activity or the step on which the tax is imposed when it is in relation to sale or distribution and production.  Can I just give your Honours references to the Oil Refineries Case.  I do not need to take your Honours to them, but that was one of the first cases where this Court had to consider what the connection was with production and manufacture required, or taken to be required, by Peterswald.  What Justice Isaacs said at page 430 is that the tax on sale was essentially a burden that:

affects the producer . . . because it burdens the trade –

Justice Starke, at 439, approached the tax as imposing a:

burden upon the commodity –

but found it was a customs duty because it was:

a burden upon the importation –

Justice Higgins, at 435, saw section 90 as applying to a tax on a commodity that is imposed in any:

period intermediate between the commencement of manufacture and the final consumption –

So his Honour found that section 7, which imposed a tax on consumption, was an excise and was invalid.  Justice Isaacs took a different view.  His Honour Justice Isaacs viewed the tax on sale or use as a burden that enabled the effect of the tax to be considered to be a consequential burden on manufacture or production.

So before we get to Matthews we get this notion in the Court that you look at the burden the tax might impose to consider its upstream effect.  The seminal case that we want to take your Honours to is Matthews.  That is in volume 5 at tab 29, and the Act in question enabled the marketing board to impose:

a levy on producers of £1 for every half acre of land planted with chicory.

Chief Justice Latham and Justice McTiernan found it was not an excise because it had:

no relation to the quantity or value (however measured) –

but I do ask your Honours to note that at 277, point 7, the Chief Justice indicated that if the tax was not direct or personal and had that relationship with goods – that is, quantity or value – it:

may be an excise duty if it is imposed upon the sale or consumption of goods.

So, even at that stage, Justice Higgins in Oil Refineries and Chief Justice Latham had not seen consumption as some line that was to be drawn between sale distribution and consumption, but it was a continuing line.  Justice Rich at 281, point 5, regarded the levy as upon the commodity as taxing “according to planting”, and his Honour said:

affect or influence an operation upon which . . . production depends.

Justice Starke did not accept the Canadian case as suggesting an excise must be indirect as authority applicable to section 90, but found the true nature of the levy was in respect of a commodity produced for sale and therefore an excise. It is Justice Dixon’s reasons that have proved ‑ ‑ ‑

STEWARD J:   What page was that, sorry?  What page?

MR MERKEL:   That is at 285, point 2, your Honour.

STEWARD J:   Thank you.

MR MERKEL:   Justice Dixon’s reasons have proved to be seminal.  Relevantly, his Honour, in discussing the history of the excise – and again I do not read it – at 295, point 5, uses Blackstone’s account of excises, including sometimes on consumption.  Then, after referring to the Oil Refineries Case, his Honour at page 300, point 1, said in the second line:

No doubt there are strong dicta in the judgments of Isaacs J. and Higgins J. –

This is in the Oil Refineries Case:

to the effect that the tax must be connected with production.  But I think that it should not be overlooked that so far there is no direct decision inconsistent with the view that a tax on commodities may be an excise although it is levied not upon or in connection with production, manufacture or treatment of goods or the preparation of goods for sale or for consumption, but upon sale, use or consumption and is imposed independently of the place of production.

Then, his Honour went on to say:

What is decided is that to be an excise the tax must be imposed in respect of commodities.

Then further down at point 8, after referring to direct and indirect taxes, his Honour said, after referring to Attorney‑General for Manitoba:

But “it is the nature and general tendency of the tax and not its incidence in particular or special cases which must determine its classification and validity”.

Citing Lord Cave.  That is where we say the natural and general tendency of a consumption tax is to be considered and that is how the Court has approached it – not this tax, but the nature of a consumption tax, a tax that imposes a tax on use.  What is its nature and general tendency?  We say its nature and general tendency is to affect and burden demand in much the same way as we discussed from the Oil Refineries Case, and that has not really been departed from in later cases.  His Honour stated at 303, point 1:

The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted is a tax directly affecting commodities.

GORDON J:   Where is that?  I am sorry.

MR MERKEL:   Sorry, that is the fourth line, your Honour, at the top of page 303, starting with “the basal conception”.

GORDON J:  Do you rely upon what is, in a sense, the beginning of that paragraph as the conclusion of his Honour by reference of what has preceded it:  “The chief purpose of the foregoing discussion”?

MR MERKEL:   Yes, your Honour.  His Honour, at the bottom of page 302, talks about looking at excise in the Constitution:

there is no ground for restricting the applications to duties calculated directly on the quantity or value of the goods.  A definition which makes quantity and value the only basis . . . which would satisfy the notion of “excise” has no foundation either in history, economic or fiscal principle, nor in any accepted specialization.

We would certainly adopt that, your Honour, and it is consistent with what was said in Ha.  In the middle of the page, going back to the tendency, his Honour said:

But the basis adopted –

This is for the chicory plantation tax:

has a natural, although not a necessary, relation to the quantity of the commodity produced.  Although many other factors go to the determination of the actual quantity of chicory produced, the area planted is, if not the chief, at all events a controlling element.

Then his Honour, at the top of 304, said:

If the word “excise” received a meaning which confined its application to taxes the relation of which to the commodity concerned was of some narrow and strictly defined nature, as, for instance, by an arithmetical relation to quantity, it would not only miss the principle contained in the use of the word “excise”, but it would expose the constitutional provision made by sec. 90 to evasion by easy subterfuges and the adoption of unreal distinctions. To be an excise, the tax must be levied “upon goods”, but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise.

We say that, again, his Honour had no difficulty including a tax on consumption as one of the steps involved in determining a tax will be upon goods. 

Can I jump next to Parton, which is at tab 33 of volume 6.  Parton involved an excise on milk distributors relevant to sale and distribution.  This was after Atlantic Smoke Shops had been decided in the Privy Council.  We note that Justices Rich and Williams at 252, after citing Justice Higgins’ reference to a tax on consumption in the Oil Refineries Case, applied Justice Dixon’s definition in Matthews – you can see that at 304.  Sorry, I have got that wrong.  It is the last paragraph of 252.  Justice Rich and Justice Williams accepted that the definition reached by Justice Dixon in Matthews, where his Honour, after full discussion of the subject, referred to the passage I have just read you, but including consumption.

So, it is clear that their Honours did not see the Canadian Privy Council’s decision, which was not referred to, but appears to have been treated as irrelevant to the Australian context.  Justice Dixon continued to reject any requirement that the excise be on manufacture or production but retreated from this inclusion of a tax on consumption in Matthews – and that appears at page 260, point 2.  In a key paragraph, what his Honour said at point 2:

I cannot adopt the view that this is an essential feature of the conception.  What probably is essential is that it should be a tax upon goods before they reach the consumer.

Then, his Honour refers to Justice Higgins:

‘Excise means a duty on the manufacture, production etc. in the country itself; and it matters not whether –

the tax:

is a duty imposed at the moment of actual sale or not or sale and delivery or consumption.’  In making the power of the Parliament of the Commonwealth to impose duties of customs and of excise exclusive it may be assumed that it was intended to give the Parliament a real control –

and that is the Parton doctrine.  Then his Honour, in the last sentence, says – four or five lines from the bottom:

A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production.  If the exclusive power of the Commonwealth with respect to excise did not go past manufacture and production it would with respect to many commodities have only a formal significance.”

Then, over the page ‑ ‑ ‑

EDELMAN J:   Is that because – is the assumption underlying that passage because any tax at any one of those stages is effectively an input cost and so, as an input cost, it will have the same effect on price and therefore upon demand for the consumer?

MR MERKEL:   We put it the other way, your Honour.  We say what is apparent from these passages is what is critical is the effect of burden on demand.  The Court, in rejecting a reference to indirect tax as an essential criterion – because they are passed on, and that is what your Honour is putting to me; that is how the price goes up – rejected it, because in economic theory it just was not justified to assume that it would be passed on.  That would depend on market forces and numerous factors.  So, the idea of “indirect” is a relevant inquiry but not part of the definition.

What we say, if the commercial aspect has application because there are needing to be articles of commerce, or if there is to be a consequential effect of the tax which has a commercial consequence, we say, the logical natural and expected burden would be that on demand, and that would have its economic consequences.  But it is the effect of a tax on consumption.  We have got two questions here.  Is consumption to be an added step?

EDELMAN J:   Yes, but Justice Dixon is not talking about consumption.

MR MERKEL:   No.

EDELMAN J:   I am just asking about the assumption underlying this passage that you read out.  It seems to me the assumption underlying the passage is that any attacks on any commodity at any point in the course of distribution before it reaches the consumer is, as you say, a tax which will affect demand because, as an input cost, it is assuming that the tax will increase the cost of the product.

MR MERKEL:   Yes, your Honour – I appreciate what your Honour is putting to me, but in Matthews his Honour did not treat consumption as any different from ‑ ‑ ‑

EDELMAN J:   I am not asking about Matthews.  I am just asking about what you understand to be the assumption underlying this passage that you read out.

MR MERKEL:   The assumption underlying his Honour’s judgement in Parton, in our submission, is only one simple assumption.  That is, that since he said there was no decision that suggested a tax on consumption is not an excise – there was the decision of the privy council in Atlantic Smoke Shops, which I will take your Honour to in a moment – he relied on that decision to qualify his inclusion of consumption in Matthews, and only on that decision.  And that came to be part of the doctrine.  It is clear at 261, your Honour, at point 1, where it says:

In Matthews . . . I examined the history of the word “ excise ” and its meaning and I shall not go over the same ground again.  It is probably a safe inference from Atlantic Smoke Shops, Ltd. v. Conlon, which has since been decided, that a tax on consumers or upon consumption cannot be an excise.  This decision perhaps makes it necessary to that extent now to modify the statement:  “that so far there is no direct decision inconsistent with the view that a tax on commodities may be an excise although it is levied not upon or in connection with production, manufacture or treatment of goods or the preparation of goods for sale or for consumption, but upon sale, use or consumption and is imposed independently of the place of production”.

And then his Honour modified that:

with respect to consumption.

But the only basis for that modification, your Honour, was Atlantic Smoke Shops.  Can I just say what happened after that.  As in Bolton v Madsen, the Court adopted Justice Kitto’s analysis in Dennis Hotels of what Justice Dixon decided in Parton.  That is how we got to an excise being defined, not described, as a tax upon a step of production, sale, distribution, and so forth, up and to the point of reaching the consumer.  And that is entirely based upon his Honour’s reading of Atlantic Smoke Shops.  Can I take your Honours briefly to that case because the reliance on it has not been supported as far our researches show by any of the judgments in this Court, and numerous judgments – or a number of judgments have criticised it. 

Could I take your Honours firstly to volume 1, which sets out the relevant statutory scheme, which is very different.  It is at tab 43 – no, sorry, that is the case.  It is volume 1 at page 200.  If your Honours would just excuse me for a moment. 

GORDON J:   I think you need tab 9.

MR MERKEL: Tab 9, yes. Thank you, your Honour. The relevant provisions we are concerned with are at tab 9, and your Honours will see section 92 of the British North America Act makes the legislature of each province exclusive power to make laws.  In subparagraph 2:

Direct Taxation –

So, there is an exclusive power to make laws imposing direct taxes.  Then in sections 121 and 122, there is:

All Articles –

are to:

be admitted free –

Then, critically, 122:

Customs and Excise Laws of each Province shall, subject to the Provisions of this Act, continue in force until altered –

What occurred in Atlantic Smoke Shops – which was volume 8, at tab 43 – a direct tax was imposed, and the question is:  was it valid as a direct tax or was it an indirect tax and an excise and, therefore, invalid?  Can I go to tab 43 – it is volume 8, your Honours.  Can I just indicate that the headnote sets out the relevant statutory provision.  But can I just read the ruling of their Lordships, starting from about 10 lines from the bottom of the headnote:

The tax, which is to be paid by the last purchaser of the article, the money for it being found by the individual who finally bears the burden of it, satisfies John Stuart Mill’s test for a direct tax – “one which is demanded from the “very persons who it is intended or desired should pay it” – the use of which in interpreting the phrase “direct taxation” in . . . s. 92 of the Act of 1867 has long been firmly established and is fully justified. Further, the tax, being demanded from the very persons who it is intended or desired should pay it, is none the less direct even if it may be described as an excise tax.

Your Honours, the question that their Lordships were deciding is stated at 560, point 9, and it is clear that the questions their Lordships were considering – set to be in the third line into the reasons – raises the important and difficult question, whether the relevant Act and the regulations made:

are within the powers of the provincial legislature as constituting “direct taxation within the province” or whether, on the contrary, all or any part of these provisions must be held to be ultra vires having regard to the distribution of legislative powers effected by the British North America Act, 1867, and to the bearing of ss. 121 and 122 –

Their Lordships answer that question on the basis that it is a direct tax and, therefore is valid without considering – or having to consider – whether it is an excise – indeed, their Honours said that even though it may, to the contrary, be an excise ‑ ‑ ‑

KIEFEL CJ:   Where did they say that, Mr Merkel?

MR MERKEL:   Can I go to 563, your Honours – page 563, point 9, their Lordships say:

consider that this tobacco tax in the form they have called (a) would fall within the conception ‑ ‑ ‑

GORDON J:   Sorry, where are you reading, Mr Merkel?  I am sorry to interrupt.

MR MERKEL:   Sorry, the bottom of page 563, point 9, your Honour:

Their Lordships, therefore, consider that this tobacco tax in the form they have called (a) would fall within the conception of a “direct” tax, and ought so to be treated in applying the . . . Act.  It is a tax which is to be paid by the last purchaser –

and so forth.  Then, at the bottom of page 564:

There remains, on this first head, the question whether, notwithstanding that the tax in the form (a) is “direct” within Mill’s test, it is none the less beyond the powers of the province to impose as being in the nature of “excise” in the sense that the attempted imposition would be an alteration of the “excise laws” of New Brunswick which the provincial legislature is debarred from affecting under s. 122 –

Then, their Lordships say:

“Excise” is a word of vague and somewhat ambiguous meaning.

And then, after discussing at the top of page 565: 

The word is usually (though by no means always) employed to indicate a duty imposed on home-manufactured articles in the course of manufacture before they reach the consumer.  So regarded, an excise duty is plainly indirect.

Then, further down, their Lordships say in the middle of that paragraph:

Their Lordships do not find it necessary in the present case to determine whether this tobacco tax in the form (a) is for any purpose analogous to an excise duty, for it is enough to accept and apply the proposition laid down on behalf of this Board by Lord Thankerton . . . “that if the tax is demanded from the very persons who it is intended or desired should pay it, the taxation is direct, and that it is none the less direct, even if it might be described as an excise tax”.

And then their Lordships at page 566 at point 8 say:

There is an obvious distinction between an indirect tax, like an ordinary customs or excise duty, which enters into the cost of an article at each stage of its subsequent handling or manufacture, and an impost laid on the final consumer, as “the particular party selected to pay the tax,” who produces the money which his agent pays over.  This is mere machinery –

And, we say, that there is nothing in the case that, we say, would apply to how the analysis in section 90 might treat an excise, particularly for the purposes of a tax on consumption. Justices Rich and Williams did not treat it as having any significance. It has been criticised on a number of occasions ‑ ‑ ‑

GAGELER J: Mr Merkel, as I understand it, this legislation imposed a tax on the last retail – on the final sale, the sale to the consumer, the last retail sale. On our existing law, would not that be decided differently under section 90 – a tax on the sale to the consumer?

MR MERKEL:   Yes, that is right, your Honour, and that came up – Dickenson’s Arcade was, in many ways, a similar type of tax.  And Justice Mason – the regulations treated it more as a sales tax, but this case, we say, was decided on the basis that it came out – it was imposed upon the consumer; and had to come out of the consumer’s pocket, irrespective of the machinery by which it was collected.  But we say that this case, really, is authority for no more than – in Canada – a direct tax; it is within the power of the provincial legislature, even if it could be called an excise.

GAGELER J:   It might explain the possible exception, as articulated by Justice Dixon in Parton, when he excluded a tax on the consumer for consumption.  So, he was not just thinking about a tax on consumption, but perhaps had in mind this last retail sale.

MR MERKEL:   His Honour took the whole concept of consumption out of the relevant steps.

GAGELER J:   But also the consumer; that is what I am saying.

MR MERKEL:   His Honour used tentative language, but the problem here is, we say, properly understood, this case is merely authority for the tax being a direct tax, and therefore, it was irrelevant, whether it was an excise or not.  It does not really consider whether a tax on consumption should be an excise.  Can I say to your Honours – can I give your Honours certain references now to where the reliance on Atlantic Smoke Shops or the exclusion of consumption has being treated in this Court as illogical or unwarranted.

GORDON J:   So, just so I am clear, Mr Merkel, it comes back to the question I raised earlier.  When you were talking there, are you talking about sales tax, or are you talking about consumption by use?

MR MERKEL:   His Honour appeared, Justice Dixon treated it as a consumption by use case, and therefore, he excluded consumption from the formula in Matthews, but ‑ ‑ ‑ 

GORDON J:   Use consumption ‑ ‑ ‑

MR MERKEL:   Yes.

GORDON J:   ‑ ‑ ‑ not sale consumption.

MR MERKEL:   Correct, and we say that was unwarranted.  Can I just give your Honours references, I will not read them.  In Dennis Hotels, Justice Fullagar took a totally different view of consumption, at volume 4, it is page 554, and rejected the direct and indirect dichotomy – that is at 554, point 8 where his Honour included taxes on consumption.  Justice Windeyer at 594, point 4 in Dennis Hotels explained why he agreed with Justice Starke in Matthews that the Canadian cases are descriptive and not definitive and that unlike Canada, an excise under section 90 is not required to be indirect.

STEWARD J:   Could you just repeat the page number?  I am sorry.

MR MERKEL:   That was at 594, point 4, your Honour, Dennis Hotels.

STEWARD J:   Thank you.

MR MERKEL:   Then can I just give your Honours references in Philip Morris, volume 6, tab 35 at 467, point 8 to 468, point 2.  Justice Dawson regarded Justice Dixon’s deference to Atlantic Smoke Shops as inexplicable, and set out in the passage at 467, point 7, in effect, why consumption on that logic cannot be treated any differently to sale or distribution.  Also in Philip Morris, Justice Dawson at 471 talked of the irrelevance of direct and indirect taxes to section 90, which, of course, was critical to Atlantic Smoke Shops, and referred to the “curious and illogical results” concerning the exclusion of a tax on consumption.

Since Bolton, a number of judgments in this Court have regarded as either illogical or difficult to justify or unwarranted the exclusion of a tax on consumption from the ambit of section 90 when a tax on sale or distribution is not excluded. There is Chief Justice Barwick in Dickenson’s Arcade, which is volume 4, tab 21 at 185, point 9 onwards; Justice Gibbs at 218, point 9 onwards and 219, point 5 in Dickenson’s; and see also Justice Mason at 238, point 9 and Justice Stephen at 230, point 9.

Then in the minority judgments in Capital Duplicators their Honours took up the same theme.  That is tab 17 in volume 4.  Justice Dawson at 602, point 2 and Justices Toohey and Gaudron at 610, point 2 and 628, point 2 referred to the “illogicality” of excluding a tax on consumption’s effect on production and manufacture but including the effect of a tax on distribution.  Then, finally, in Ha, tab 23, similar points were made by Justices Dawson, Toohey and Gaudron at 510, point 7 onwards.

Can we say that, from our researches, we have not seen any justification of the deference his Honour gave and therefore to explaining the step that became definitional of an excise tax in Bolton v Madsen.  The only occasion apart from Oil Refineries where a consumption tax has arisen directly for decision was Dickenson’s Arcade.  We say that Dickenson’s Arcade is problematic.  We say it cannot be reconciled with Capital Duplicators and Ha, and the reasoning in those cases supersedes the reasoning in Dickenson’s Arcade.  Dickenson’s Arcade essentially applied the criterion of liability test and Bolton v Madsen to say that an excise is up to the point of receipt of the consumer.

Three of the members of the Court, Justice Stephen, Justice Menzies and Justice Gibbs, applied both Bolton and the criteria of liability test but Justice Mason also applied Bolton, and if we are correct that what we say Bolton is no longer reconcilable with the principles outlined in Capital Duplicators and Ha, we say that Dickenson’s Arcade can no longer be treated as governing the issue arising in the present case.  And I will only give your Honours a reference, we say that because it would not be followed and the underlying basis for it has not been applied in this Court in those two cases, leave to overrule Dickenson’s Arcade is not required.

We do rely on Norman’s Case, which is at volume 3, tab 13, at 201, point 2, and I will just mention that to your Honours.  That is a Barley Marketing Board v Norman.  And at page 201, the court considered the consequence of Cole v Whitfield departing from the individual rights theory in section 92 and looked at earlier cases and said, at point 5 of 201, they were:

open to the question to the extent to which those decisions were decided by reference to an interpretation of the section that could no longer be supported.

And then said that as a result, the analogy to Dickenson’s Arcade can not govern the present case.  And we say that appears to be the way their Honours approached it in both Ha and Capital Duplicators, by treating the question as an open question to be answered, rather than a question for which leave to reopen would be required.

So, we say that leave is not required if your Honours accept our submissions that Capital Duplicators and Ha are not reconcilable with Dickenson’s Arcade and therefore the Court should decide the matter on that basis without leave to reopening being required.  But my learned friend Mr Lenehan will put to your Honours submissions on why, if leave is required, it should be granted, and Dickenson’s Arcade not followed or overruled and, also, why leave should be refused in respect of Ha.

STEWARD J:   Can I ask a question about Dickenson’s Arcade.  In Justice Mason’s judgment, his Honour says at page 239 that:

The justification for the restriction –

that is, for the exclusion of consumption:

is evidently based on the notion that consumption is not sufficiently proximate to the production and manufacture of goods – a concept of proximity which it derives from the reference in s. 93 to “taxes paid on the production and manufacture of goods” and from the circumstance that s. 90 deals with bounties on production as well as duties of excise.

What do you say is wrong about what Justice Mason has said as the justification for the exclusion of consumption taxes?

MR MERKEL:   Your Honour, we say that ‑ ‑ ‑ 

STEWARD J:   Bearing in mind that his Honour was in the majority in Capital Duplicators and so on.

MR MERKEL:   Yes.  Your Honour, we say that his Honour is up against a large stream of authority which is to the contrary effect, that it is not so remote.  Indeed, all the cases I have cited your Honour, the passages that I have cited, have treated it as having the same natural tendency and consequential burden and effect as a tax on distribution and on sale.  We say that it may be in some cases there might be a question of remoteness, but we say that what his Honour said there is not consistent with the authorities we have relied on.

STEWARD J:   Well, in those other cases, they were not cases where the issue involved whether section 90 included a consumption tax. The only case where, I think, it is argued out is Dickenson’s Arcade.

MR MERKEL:   Yes, but it was decided, including by his Honour, on the basis of Bolton, meaning that consumption was excluded by both the criterion of liability test applying to Bolton and in Bolton itself.  But we do not ‑ ‑ ‑

STEWARD J:   Do we know what Sir Owen Dixon meant when he referred to consumption in Matthews v Chicory Board?  What type of tax he had in mind?

MR MERKEL:   We would say, primarily, any tax on use would be the primary basis on which consumption would arise.  And we would say that, with respect, if his Honour intended to say there is some question of remoteness you would need to look at it in a particular context.  But to say all consumption taxes, no matter how proximate to the sale and distribution is beyond the reach of excise, is going too far.  And we say that it is inconsistent with Ha and Capital Duplicators.

EDELMAN J:   This submission is effectively that one does not need to reopen Dickenson’s Arcade because the premise, or at least one of the premises for the argument having been removed, the decision can be ignored without being reopened.

MR MERKEL:   It does not govern the present case, yes, your Honour.  Can I conclude just by making very brief submissions on why we say that, on our submission, that ZLEV charge is a tax on goods.  Can I just the make following ‑ ‑ ‑

GORDON J:   Sorry, could you just say that again, Mr Merkel.  I did not hear what you just said.

MR MERKEL:   Sorry, I was going to conclude now by dealing with why the ZLEV charge is a tax on goods in the sense mentioned in Ha and Capital Duplicators.  Can I just make the following points.  It is an inland tax.  The criterion in section 7(1) is the use of ZLEVs on specified roads irrespective of who is using the vehicle.  Three, any requisite relationship is met by the registered operator being the person registered as being

responsible for the vehicle being liable for the tax payable for its use on specified roads, irrespective of the person who uses it.  The amount of the charge is directly linked to the amount the ZLEV is used.  The requirement for use on specified roads does not convert the characterisation of the tax on its use from being other than a tax upon, in respect of and in relation to the ZLEV.

That is for several reasons.  One, tax on activity of use is a tax on consumption.  Two, only ZLEVs as subset of vehicles registered under the Road Safety Act are the subject of the statutory liability to pay the tax.  Third, specified roads include all roads anywhere in Australia the public are entitled to use.  The exclusion, in respect of private roads, falls within irrelevant categories of exceptions.  They were described, helpfully, by Justice Dixon in Dennis Hotels at 539 point 3, which I will not read, but we do rely on that passage to say why the exception of private roads is irrelevant and insubstantial.  And fourth, the legal and practical operation of the law requires the registered owner to displace the assumption of use on specified roads by producing evidence of the extent of use by a driver who may not be the registered proprietor on a private road.  That operation makes it unlikely the exception will be of any significance.  And we also adopt the submissions of the Commonwealth Attorney-General in respect to the ZLEV charge.

So, we would say that ultimately the answers to the questions we ask are that the charge is an invalid excise, and the defendant should pay the cost of the plaintiffs.  Mr Lenehan will now address your Honours on the John v Commissioner of Taxation issues concerning Dickenson’s Arcade, Capital Duplicators, and Ha.  If your Honours please.

KIEFEL CJ:   Yes, Mr Lenehan.

MR LENEHAN:   Thank you, your Honours.  Your Honours, the premise for this part of the plaintiff’s submissions is obviously that we do need leave to re‑open Dickenson’s, your Honours – and Justice Edelman has just noted that we put a different point and that leave is unnecessary for the reasons Mr Merkel gave – but I am going to assume your Honours are rejecting us on that point for this part of the argument.

KIEFEL CJ:   But you are not abandoning it.

MR LENEHAN:   No, we are not, I am putting an alternative.

Your Honours will have seen that one of the submissions that is put against us is that Dickenson’s has been sought to be re‑opened in other cases.  That is put by Victoria at paragraph 24.  We say that is wrong.  The correctness of Dickenson’s has only been sought to be re‑opened, we say, in the context of a licence fee issue, not the separate consumption tax issue.  That is the point we made in paragraph 6 of our reply.

It is true that a form of the argument that we now seek to run regarding consumption taxes was sought to be put by Dr Griffith for the Commonwealth in Capital Duplicators.  But it appears, from our review of the transcript, that they may not have sought leave to re‑open Dickenson’s on that point and, in any event, what ultimately happened in this Court is it was found to be unnecessary to decide that issue, apparently including the re‑opening application.

So, I move then to the factors that your Honours would have regard to in terms of re‑opening, and your Honours well know those are the factors in John.  We have set out how we approach those in our submissions‑in‑chief in paragraphs 39 to 43, and then in reply in paragraphs 8 to 12.  I thought that rather than just repeating that analysis, it might be helpful to show your Honours from Wurridjal – which your Honours have in volume 7, tab 42 – a different but related way of approaching this issue, which is, of course Justice Aickin’s approach from the Second Territory Senators Case.

If you look in Wurridjal to paragraph 68, you will see that Chief Justice French there sets out – having made some introductory remarks about re‑opening – including 67, that there is:

“no very definite rule as to the circumstances in which

the Court:

will reconsider an earlier decision”.

His Honour sets out the five factors that Justice Aickin referred to in Second Territory Senators, and I am going to go through those shortly.  Before I do, can I note that there is then, at 69, a reference to the John factors.  Then, over the page at paragraph 71 – and this is perhaps the core of what we say on re‑opening in terms of Dickenson, you will see towards the end of that paragraph, Chief Justice French says:

Reasonable minds may differ on a point of constitutional interpretation.  It may be that in some cases subsequent decisions have made clear that the decision which the Court is asked to overrule not only stands isolated but has proven to be incompatible with the ongoing development of constitutional jurisprudence.  Dixon CJ once spoke of the possibility that an earlier decision had been “weakened” by subsequent decisions or in the light of experience.

Your Honour Justice Edelman, I think, had a similar idea in mind in the argument that your Honours heard earlier in the Bernasconi Case.  Before I leave Wurridjul, your Honours would of course remember that that was really how Justices Gummow and Hayne approached the question of overruling Teori Tau in that case.  They said – and your Honours have this at paragraph 189, which is 2097 of the bundle:

To preserve the authority of Teori Tau would be to maintain what was an error in basic constitutional principle and to preserve what subsequent events have rendered an anomaly.

Your Honours will have seen in our written submissions we have used the term “anomaly”.  We rely on it in relation to the John factors.  We have been criticised for that, but it is clear that that is a matter that is highly relevant and it also reflects bringing me to Justice Aickin’s first factor, and that is whether the error of the prior decision had been made manifest by later cases which have not directly overruled it.  Essentially, without repeating the arguments that Mr Merkel made on that point, we rely on those arguments.  So we say the error in Dickenson’s Arcade was to draw an artificial – and you will recall Mr Merkel referred your Honours to various authorities, using the expression a logical line between sales and consumption, based in large part, but as your Honour Justice Steward has noted, not entirely, on Justice Dixon’s deference to the Atlantic Smoke Shops Case.

We say – and this is a point that Mr Merkel made by reference to Capital Duplicators and Ha – that authority, that approach, cannot be reconciled with what was decided in those cases for two principal reasons. Firstly, it is established there that the purpose of section 90 is that identified by Justice Dixon in Parton and related to that, that section 90 exhausts the categories of taxes on goods, the point that Mr Merkel spent some time developing. So that, your Honours will have seen, is the way – I have already mentioned this – that we addressed the third John factor, that is to say, what has been created is an anomalous position and we rely on that to say Dickenson’s achieves no useful result.

Returning to Justice Aickin and his second factor, that is, whether the prior decision went with a definite stream of authority and did not conflict with established principle.  And again, in saying that that is satisfied, I am relying again on what Mr Merkel has shown to your Honours.  Before I get to that, can I say this is obviously related to this – if you look to the fourth factor – whether the prior decision was isolated as receiving no support from other decisions and not forming part of a stream of authority.

So, this of course is similar to the first John factor – does it rest on a principle not worked out in a series of cases.  The short point we make there is that it cannot be said that Dickenson’s went with a definite stream of authority, because, apart from the few references in the Petrol Case, which Mr Merkel referred your Honours to, this was the first time that the Court had to squarely confront the issue of whether a consumption tax was within section 90. From Parton onwards it was merely assumed that it was not.

So, when Justice Aickin applied that factor in the Second Territory Senators Case, he made a similar point, saying – and I will just give your Honours the reference to the report.  It is at page 631:

It is the first and only decision on a fundamental question concerning the status of States and Territories in the federal structure and the composition of the Parliament in the “indissoluble federal union”.

GORDON J:   Can I just ask one question about the stream of authority point?

MR LENEHAN:   Yes.

GORDON J:   I assume that your answer is because it is dealing with license fees.  How do you reconcile that with what is said at 593 of Capital Duplicators, where the majority, talking about:

considerations of certainty and the ability of legislatures and governments to make arrangements on the faith of the Court’s interpretation of the Constitution are formidable arguments against a reconsideration of Dennis Hotels and Dickenson’s Arcade.

MR LENEHAN:   Your Honour, the point that we make in our written submissions is that, ironically, because of the approach to the regulations in Dickenson’s, which destroyed the scheme – the scheme was abandoned – and none of our friends have been able to identify any similar legislative experiment in any legislation in Australia.  So, if your Honour is asking me, has this been – to use the John factors again – has this been relied on in a way that militates against reconsideration, the answer is, no.

GORDON J:   No, it is a bit more than that.  There are two points, there is that, and I think Victoria, at least, in their submissions, identify, in general terms, some matters which address that first point you have just raised about the effect.  They refer to legislation in general terms which might be affected.

MR LENEHAN:   They do, and we give an answer to that in our reply.  If your Honour looks to – if your Honour has our reply, paragraph 12.  So, we made two points there.  The first is the point that I inadequately first made in answering your Honour’s question, but the second point is that even if one looks at those generally described charges they can readily be viewed in other ways, that is, waste disposal levies, for example, are obviously fees for services.  So, we do not think the point that is made by our friends there is a good one, and they certainly have not identified with any specificity, any particular legislative scheme that is said to depend on the correctness of Dickenson’s.

STEWARD J:   Can I ask you a question just to tease that out?  There may be a simple answer to this, and if you want to think about it, that is fine.  But the Duties Act in Victoria – and, I think, also in New South Wales – levies duty on the hiring of goods by a commercial hire business and it is a rate of .75 per cent of the hiring charges.  So, that is a tax on a particular activity of dealing with goods.  Is that gone now?

MR LENEHAN:   Your Honour, can I take up your Honour’s invitation ‑ ‑ ‑

STEWARD J:   Yes, of course.

MR LENEHAN:   ‑ ‑ ‑ rather than giving your Honour a glib answer ‑ ‑ ‑

STEWARD J:   Sure.

MR LENEHAN:   ‑ ‑ ‑ after lunch.

GORDON J:   I think that was one of the examples given by Victoria in their paragraph of their submissions.  It may have been in general terms, but they talked about dutiful instruments.

MR LENEHAN:   Yes, yes.

GORDON J:   The dutiful instrument has a very broad definition in both New South Wales and Victoria.

STEWARD J:   Just on that, I know that both Duties Acts of New South Wales and Victoria include duty on the sale of goods where it takes place to give it with a duty of a sale of interest in land.  Have a think.

MR LENEHAN:   Can I, provoked by your Honour’s question, give the glib answer that I promised not to give and say that, obviously, stamp duty is something that has had a vexed history in the authorities – Hammersley, Anderson’s.

STEWARD J:   It has changed from being ‑ ‑ ‑

GORDON J:   It is not stamp duty anymore.

STEWARD J:   It is not duty, yes.  As Justice Gordon said, it is no longer stamp duty.  It is just duty.

MR LENEHAN:   Yes.

STEWARD J:   Duty on sales of, mostly, interest in land.

MR LENEHAN:   Yes.  So, having fully demonstrated that my first response was the correct response, can I take the lunch break to consider and respond to that question.  Subject to that, we say, in short, all of the John factors and all of the other factors identified by Chief Justice French in Wurridjal weigh in favour of reopening Dickenson’s on the consumption tax point.  That, then, brings me to what I will describe as a “contingent reopening application” and ‑ ‑ ‑

GORDON J:   Sorry, can I ask one more question about this question about the last observation of 593?  Who bears the onus?  It may be that it is the plaintiffs, I do not know, about independent acting on and, in effect, the detriment caused when you seek to reopen it.

MR LENEHAN:  Your Honour, we would say there has been an area at least allied to questions arising under the Constitution.  The principle that neither party bears the onus would apply but that the party who has the means of bringing forth the relevant information – more obviously, our friends – would be expected to do so.

GORDON J:   Is that consistent with what is said in John?

MR LENEHAN:   Your Honour, I am not sure that John sheds any light on it either way.  But, again, I will look at that over lunch ‑ ‑ ‑

GORDON J:   Thanks.

MR LENEHAN:   ‑ ‑ ‑ and given your Honour a full response.  Now, I was at the point of using pejorative language in respect of Ms Orr’s reopening application and describing it as a contingent reopening application, and your Honours have seen that it is only made in the event that we are successful in ours.

EDELMAN J:   Just so I understand, the reopening that you are speaking about now is reopening of the result, whereas Mr Merkel, as I understand his submission, was talking about reopening of the reasoning, effectively.  In other words, if the planks of reasoning had been removed there is no need to reopen.

MR LENEHAN:   Yes, that must be so, your Honour, yes.  So, he puts that on the basis of what is said in Norman on that page.

EDELMAN J:   How could the onus, then – and this may be for you to consider over lunch – but how could the onus then be upon a respondent to that application to show that there had not been direct or indirect reliance upon the result of a case?  Would not the onus naturally be upon the party seeking to reopen the result of a decision to show that the reopening of that result would not disturb settled expectations?

MR LENEHAN:   Your Honour, I may be at cross‑purposes.  Certainly, a persuasive onus, yes.  I need to satisfy your Honours that the factors – and, of course, they are not set in stone – apply.  But what our friends say is that we bear, we think, some sort of evidentiary onus, that we have put material before the Court that, in the special case and in some way demonstrates that that is made out, and we say – and that is the point that I make by reference to constitutional facts.

So, I am back at our friend’s contingent reopening application, and I first want to identify exactly what it is, because it is clear that they seek, in the event that we are successful on our reopening application to reopen Capital Duplicators and Ha, it is unclear how much further they go.

And we say, and your Honours will have seen, for example, for reasons that are not at all explained, this is in footnote (90), which is a footnote to paragraph 51 of their written submissions, that it may not be necessary to reopen the decision in Parton although they seek that leave if it is necessary.  And I will leave them to explain why that is so, but can I say what the approach of the majority in Ha was, and if your Honours take up Ha again, which, again is volume 4, and using the pages in the report, I am looking at 489 to 490.

KIEFEL CJ:   I am sorry, would you say that again, Mr Lenehan.

MR LENEHAN:   It is 489 to 490, and in the joint bundle, the references are 789 to 790.  That is a quote from Capital Duplicators and, at the foot of 489 you will see:

Acceptance of either of the interpretations put forward by the Territory and South Australia –

and I am going to be coming back and saying those submissions were entirely indistinguishable from what is put now:

would require the Court to overrule no less than five previous decisions.

Then there is a footnote to that, which is (90), and the decisions there – you will see first Parton, Dennis Hotels, Dickenson’s Arcade, Hamersley and Chamberlain.  So, adding Capital Duplicators (No 2) and Ha to that list, what we say is involved in Ms Orr’s application is an attempt to persuade your Honours that it should reopen an overall seven earlier decisions, or part of those decisions, decided over the course of 60 years.  And, of course, that has happened before – see Cole v Whitfield, but it is – it indicates immediately to your Honours that it is a very large step.

Now, we say – and, of course, your Honours will have also seen that our friends seek to reopen any other decisions that stand in the way of their submission, again without specifically identifying which those are.  We say that nebulous contingent lead application should be refused primarily for this reason, which is the reason we have given in writing, but I want to say a little bit more about now.  Victoria does no more than reagitate the very same arguments that were considered and rejected in both Capital Duplicators and Ha.

If your Honours will permit me to do this, I would like to – and do this briefly – show your Honours aspects of the argument.  So, if, again, you have Ha and look in the report to 499.  Sorry, before I get to the argument, I should make this point, and that is what you see at 499 is – although you see some doubts in the first full paragraph on that page, that leave was, in fact, granted to reconsider the entire line of authority, which is the five decisions that I referred to before.  Their Honours expressly note that the:

submissions could . . . have been dismissed by reference simply to the line of authority following Parton and culminating in the Capital Duplicators Case.

But, they said, given there was required a declaration as to the limits of the protection offered by the franchise cases, which is what they go on to discuss:

it seems right to accede to the . . . application to reopen the Parton line –

I will come back to this shortly.  The application we have made to reopen Dickenson’s does not lead to a similar conclusion; that is, if you reopen Dickenson’s, you ought to reopen Ha and Capital Duplicators.  But, if I can stay with Ha for a moment, having done that – having reopened – you then get to the passage that Mr Merkel took your Honours to before, which contains an authoritative definition of “excise”:

Duties of excise are inland taxes in contradistinction from duties of customs which are taxes on the importation of goods.  Both are taxes on goods, that is to say, they are taxes on some step taken in dealing with goods.

The point Mr Merkel made – but, before that, reaffirm that line of authority.  We say that nothing has changed since Ha in terms of authority or doctrine.  That means that the arguments that Victoria is seeking to put to your Honours have changed in any way since the time Ha has decided.  Indeed, if anything, the position has got worse for our friends because – and I will come to this – in fact, I think your Honours were taken to it – in Betfair (No 1), of course, a key strand of the reasoning was relied upon by six members of the Court.

Now, to then take you – to make good my proposition that all of this had been said before, can I first make the point that, in broad terms, there are three general strands to the arguments that our friends are making.  The first is the assertion that the word “excise” had a particular meaning as at Federation.  You see that, for example, in paragraphs 41 to 46 of their written submissions, and if I could then invite your Honours to – in the argument in Ha – look to page 477, which is, in fact, a part of the argument for the then Solicitor‑General for the State of Victoria.  You will see commencing:

Those concerned with drafting them saw no need for definitions of “customs” or “excise” because there was a clearly identifiable body of colonial legislation relating to both forms of duty.  The duties of customs and excise to which those provisions refer were the very provisions that operated in the colonies at Federation.

If your Honours go over the page 479, you will see Mr Selway makes a similar point for South Australia.  In the sentence starting:

In the Australian colonies, the only taxes described as excises were on production, with the amount of the tax determined according to the quantity or value of the goods produced or manufactured.

And goes on.  Would your Honours also note – sorry, I will complete that quote:

There does not appear to be any instance of “excise” being applied to a tax on goods other than at the stage of production or manufacture.  In the Convention Debates the only existing excise duties referred to were those imposed on beer, spirits or tobacco.

Then the next sentence, if you look down to the footnote, you will see Quick and Garran, which features prominently in all of our friend’s submissions, and Mr Selway says that the approach that one finds embodied in colonial legislation reflects:

the approach of commentators at the time.

The other strand of our – or one of the other strands of our friend’s arguments on this point is to invite your Honours to look at the Convention Debates, and if you look on the previous page at 478 and the submissions of Mr Meadows, you will see just after footnote 42 in the text:

There can be no doubt from the Convention Debates that the intention of the framers of the Constitution was that the word “excise” was to be used to refer to a duty chargeable on the manufacture and production of goods.

Just while I am dealing with the Convention Debates reference, can I note that at 484, Mr Jackson, who had quite a notable legal team, puts the contrary argument – this is at the top of page 484:

While the term was inherently capable of a number of meanings in 1900, the Convention Debates demonstrate that the delegates did not choose one definition.

If your Honours look to – I am sorry, your Honours, I moved too quickly.  If you could go back to 478, just to make another point in respect of what it was that Mr Selway put in relation to the Convention Debates – this is 479 – you will see footnote (46).  That is a passage to the debates in Sydney in 1891 on which a number of our friends place reliance, and I will come back to those.

On our review of the transcript, going back to what was said by Mr Jackson, Mr Jackson took the Court to the very passage that features very prominently in a number of our friend’s submissions; that is, the debates at Sydney in 1897 where Mr Isaacs made reference to the Wallaston Report.  You do not see this in the report of the CLR.  It is on the transcript of the argument.  It appears on I will come back to that in addressing the substance of our friend’s submissions, but can I say it is very clear that the Court was very well aware of all of that.  So, too, was it aware of the point that is really a related point made at 478, again by Mr Graham for Victoria, towards the bottom of the page:

That meaning was adopted not only in Peterswald . . . but also in R v Barger.

Your Honours will recall that our friends say a number of times that Peterswald is a very early indication – including by members of the Court who participated in the conventions – that the word had a particular meaning.  In Ha, the Court rejected those arguments.  I think Mr Merkel took your Honours to this – but just to remind your Honours where it is, at 493, they note the submission that is made but say – referring to Justice Dixon in Matthews:

the history of the word “excise” . . . “does not disclose any very solid ground for saying that, according to any established English meaning, an essential part of its connotation is, or at any time was, that the duty called by that name should be confined to goods of domestic manufacture or production”.

Also, on that page, your Honours will see the Court notes the Convention Debate point – this is towards the bottom of the page – and says:

There is no common use of the term “excise” in the Convention Debates which might illuminate its meaning, save that it does not include the fees for a licence to carry on a business which, in England, were sometimes called excise licences.

I have mentioned now that the Court was taken to the Wollaston exchange with Mr Issacs.  I am going to show your Honours that passage when I am addressing the substance of our friend’s argument, but can I ask your Honours to note it because it is apparent that that passage derives, in large part, from that aspect of the Convention Debates which the Court was shown.

Your Honours, I note the time.

KIEFEL CJ:   Yes, thank you, Mr Lenehan.  The Court adjourns until 2.15 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15PM:

KIEFEL CJ:   Yes, Mr Lenehan.

MR LENEHAN: Your Honours, can I answer the questions that I was asked before lunch. In relation to Justice Steward’s question about the duty on hire of goods, that was formally dealt with in chapter 6 of the Duties Act 2000. It has been abolished, according to our researches, since January 2007, which is presumably why Victoria does not specifically rely on that duty in responding to our John submissions.

In relation to the question your Honour Justice Gordon asked me about the Duties Act, that was the legislation that we have sought to refer to in our reply in paragraph 15, where we have noted that in relation to those transactions stamp duty on goods is imposed only if the goods are the “subject of an arrangement that includes a dutiable transaction over an estate or interest”; that being an estate or interest in the land.  There are also carve‑outs – it may, in fact, assist if we provide, given this has been a subject of submissions, a copy of the legislation to the Court.

The point that we were perhaps not entirely clearly accepting was that these duties may well be excises, but that is nothing to do with the submissions that we are making in respect of consumption taxes.  That is because of a broad definition of excise, which your Honours have now been taken to a number of times in Ha at 499; what I have described as the definitive definition.  But that will, of course, depend on a particular analysis of the particular transaction in issue.

So, one can envisage, for example, that an argument may be available that that is a tax that is really on the primary dutiable transaction; that is, the transaction involving land.  But the overriding point that we make as regard as those examples is that all of this really flows from Ha, and it is not a reason for identifying, in terms of the last John factor, some sort of inconvenience that would prevent your Honours reopening Dickenson’s.

The other question that I was asked, but inadequately answered, was the question of onus, and I failed to take your Honours to Wurridjal and a passage in the reasons of Justice French at paragraph 85.  So that is at joint book page 2068.  It is in volume 7 of the book ‑ ‑ ‑ 

KIEFEL CJ:   What was the paragraph, again, Mr Lenehan?

MR LENEHAN:   It is paragraph 85, and it is the top of, your Honour, 359 of the report.  Well, actually, I should start at 358.  What his Honour says there is that:

there is no evidence that it has been independently acted upon in a way which militates against reconsideration in this case. 

So, the reference to “no evidence” certainly makes good – although it is not entirely clear – the proposition that I was putting before lunch.  That is, we certainly bear no evidentiary onus.  We do, I accepted, bear an onus of persuading your Honours.  But, again, the John factors are not set in stone.

Now, I was before lunch then addressing your Honours on the question of what arguments were put in Ha and Capital Duplicators and how they mirror the arguments that are put by our friends for Victoria and the interveners here, and I had finished what I described as the first broad argument; that is, what our friends seek to say can be discerned from the historical materials.

The second broad argument your Honours will have seen is the constitutional context, and all of our friends who address this issue place particular reliance, your Honours will have seen, on section 93 of the Constitution, which was a provision that, of course, Justice Dawson also place some emphasis in his various reasons in the authorities that your Honours have.  If I can take you back to Ha and page 472 of the report – this is in the submissions of then Mr Spigelman – and at about point 7 on the page he referred to:

Section 93 expressly draws the inference available from s 90 itself by referring to “duties of excise paid on goods produced or manufactured in a State”.

Your Honours have seen that a similar argument is put here.  Now, in the reasons in Ha, that submission was, of course, considered and rejected.  You see that at 493.  Their Honours in the majority said that it:

throws no light on the connotation of the term –

Now, as to the other contextual point that our friends make about the terms “excise” and “customs”, they use the term “collocated”; the terms are collocated in various provisions.  That was put by Mr Jackson in Capital Duplicators.  That is in the same volume at joint bundle page 459 and 567 of the report.  You will see towards the bottom of the page he said:

The expression “duties of excise” is repeatedly used in the Constitution together with “duties of customs” –

gives most of the provisions that our friends rely on and goes on.  The third broad argument that was put in Ha and is now repeated by our friends is that the purpose of section 90 is said to be not that identified by Justice Dixon in Parton, and you see that in particular in our friends for Victoria’s submissions at paragraphs 47 to 49, and then see similar points made by the interveners in their submissions.  If I can invite your Honours to go back to the argument in Ha, if you turn to page 473 you will see at the top of the page Mr Spigelman expressly submits that that identified purpose is not the purpose and there is a narrower purpose.  Again, the same argument – just to give your Honours the reference – had been put by Mr Doyle and it is at joint bundle 463 and page 571 of the report.

In Ha, the reasons of the majority, that submission is rejected by reference to historical and contextual matters at 495 to 496 of the report.  And, as Mr Merkel noted this morning – and in relation to Betfair (No 1), perhaps it would be useful to invite your Honours to turn to that authority.  It is in volume 3 of the authorities at tab 14, and at joint bundle page 373 and 452 of the report.  You will see paragraphs 12 and 13 at the top of the page.  The first point made in paragraph 12 is that – and I will come back to this:

the character of State “licence fees” as duties of excise to which s 90 of the Constitution applied –

This is what was recognised in Ha:

and at a more general level, the place occupied by both s 90 and s 92 in Ch IV of the Constitution.

And then the observation about national unity, which your Honours are well familiar with.  Then, in paragraph 13, what it was that Ha decided – so:

not limited to the more modest purpose of protection of the integrity of the tariff policy of the Commonwealth.

KIEFEL CJ:   Mr Lenehan, do you think it would be possible for you or your juniors to prepare a table which sets out – saving us going through the transcript ‑ ‑ ‑

MR LENEHAN:   Yes.

KIEFEL CJ:   ‑ ‑ ‑ which sets out the argument which you say has been presented earlier and rejected.

MR LENEHAN:   I was going to offer to do that, your Honour, yes.

KIEFEL CJ:   I am sorry, I am getting ahead of you – but thank you.  If that could be provided, that would be of assistance.

MR LENEHAN:   We will do that.  I apologise for taking your Honours through that in some detail, but it is clear when your Honours look at those passages in the argument and then how they are dealt with by the court in Ha that there is nothing in the formulation of our friend’s arguments that your Honours now see that relevantly differs from those arguments that were put and rejected in both Capital Duplicators and Ha.  Our friends certainly do not identify any difference and, in terms of developments in doctrinal principles, there is nothing, we say, that has occurred that suggests they should be reconsidered again.

So, your Honours are really left with this position – Victoria and the interveners simply do not like the answers that were given on those issues in Ha, even though leave to reopen the relevant line of authority was authority was granted in Ha.  We say that tells your Honours that that is just not sufficient to justify reopening again that extensive line of authority.  What we would ask your Honours to accept is that the application that is now made is really indistinguishable from, for example, the application to reopen Dennis Hotels and Dickenson’s on the licence fee issue.  In Evda Nominees – your Honours have that in volume 4 at tab 22 – where leave to make full argument was refused at the threshold.  That is what we say your Honours should do. 

STEWARD J:   Is there any difference between the arguments presented for Dickenson’s Arcade that an excise should include a consumption tax in your argument today?  I am just looking at page 180 of the report where Mr Deane says that if a tax on last retail sale is an excise, there is no reason to think why a consumption tax would not be included.

MR LENEHAN:   Yes, your Honour, there is no doubt the same points can be made in respect of me and what I say about Dickenson’s.  But, of course, the difference is, we say, Dickenson’s stands as an anomaly which is now being overtaken by Capital Duplicators and Betfair.  So, we are in quite a different position.  We are not simply seeking to reargue the very same point that has been, very recently, the subject of – well, relatively recently the subject of a reopening application, which was granted.

STEWARD J:   I suppose you might say that because of what was said in Betfair – there is a difference.

MR LENEHAN:   Yes.  Yes, there is.  Your Honour prompts me to say that I promised before that we would deal with the possible comparison that you might see in Ha; that is, where there is a reopening application to deal with the franchise – the licencing cases and the need to delineate constitutional principle, but we say there is no analogy.  The reason we say that is that reopening here in relation to Dickenson’s is sought to address a single issue of principle that was expressly left outstanding as a result of Ha.  So, picking up on your Honour Justice Steward’s point, our application to reopen Dickenson’s to resolve that single point does not justify a correlative reopening of 80 years of authority which has again relatively recently been reopened and considered, and reconsidered and reaffirmed.

Now, I have said to your Honours that the position that we invite your Honours to take is to reject the application to put the argument at the threshold.  I am going to go on, unless your Honours tell me not to, to address the substance of the arguments that are put by our friends, and I will do that as efficiently as I can.  So this part of the argument proceeds on the basis that your Honours reject everything I have to say and grant leave to reopen.  That, of course, is on the contingency that your Honours first grant leave to reopen Dickenson’s, so there are a few variables involved.

I have already said that there are three broad strands to the arguments that our friends make.  I am going to address each of those.  Before I do, there is a preliminary issue, which is really this.  So, Victoria contend that an excise should be understood to be:

a tax that falls selectively on locally produced or manufactured goods, in the sense that it falls on such goods rather than imported goods or falls on all goods indiscriminately.

You see that in paragraph 39 of their written submissions.  The point that that leaves somewhat undeveloped is what is meant by “locally produced goods”.  Your Honours have seen from the authorities that there are two broad alternatives.  The first is the view preferred by Justice Murphy; that is, that locally produced means produced within the taxing jurisdiction, the particular State.  On the other side there is the view preferred by Justices Toohey and Gaudron in Capital Duplicators; that is, “locally produced” means produced within Australia as opposed to outside Australia.

Now, although those tests must be alternatives – they both cannot be correct – our friends have tended to avoid committing themselves to a firm view.  In the submission that I have just identified at paragraph 39, they offer up both, but then you see in footnote (57) they say that Justices Toohey and Gaudron’s view “represents the correct conclusion”.  As I have said, they are strict alternatives.  If Justice Murphy’s view is correct, a State tax that was imposed on Australian goods generally would not be an excise, and so to embrace Justice Toohey’s and Justice Gaudron’s view is to reject Justice Murphy’s view. 

And just to give your Honours the reference to where this is perhaps most clearly discussed – without taking you to it, if you look at Capital Duplicators at pages 630 to 631.  Now, our friends acknowledge ‑ ‑ ‑ 

EDELMAN J:   I may be wrong, but my recollection is that Justice Murphy’s view was closer to Justice Dawson’s view.

MR LENEHAN:   Your Honour is right.  And so, there is, I think, in Philip Morris, tentative agreement with that view by his Honour.  And I am highlighting that as a preliminary point because it is relevant for your Honours to have that in mind when you are considering the strength of our friends’ arguments or repeated arguments from Ha about text and history, because – and I will develop this further – to the extent that text and history suggest anything, they suggest that Justice Murphy’s view might prevail over Justices Toohey’s and Gaudron’s view in Capital Duplicators.  But our friends’ approach glides over the important difference between them, and I am going to say that that is significant.

So, can I then return again to the three broad strands in the argument?  So, again, the first limb is the proposition that excise had an established meaning at the time of Federation.  You will find that, for example, in Victoria’s submissions at paragraph 42.  Now, stated in those bald terms, that proposition is plainly incorrect.  It is plainly incorrect because, as your Honours have seen, in Justice Dixon’s survey – extensive survey of the materials in Matthews at 293 to 299, there were differing views of the term at that time.

EDELMAN J:   You are not suggesting it did not have any essential meaning at all?

MR LENEHAN:   I am not.

EDELMAN J:   It must have – it undoubtedly had some core meaning at the time of Federation.  The question is, what are the boundaries of that?  That is all.

MR LENEHAN:   Yes, that must be so.  But what I am saying is that the materials that our friends have given your Honours suggest a number of meanings, and, in particular, the debates show that both of those – or the range of possible meanings were all in play.

GORDON J:   Is the high‑water mark Peterswald, for the contrary proposition?

MR LENEHAN:   I am sorry, your Honour, I did not hear your question.

GORDON J:   Is the high‑water mark for the contrary proposition Chief Justice Griffith in Peterswald, which said it did have ‑ ‑ ‑ 

MR LENEHAN:   Yes.  Yes it is, but that in itself involves some difficulty, because our friends, of course fix on that case and say that it demonstrates the fixed meaning, but in their submissions they omit the words that Chief Justice Griffith uses, that is:

not in the sense of a direct tax or personal tax.

And so, if there was a fixed meaning that you find in Chief Justice Griffith’s reasons, then it includes that notion of indirect tax.  That is the notion that, of course, has been repeatedly criticised in the cases and, as we understand it, our friends do not embrace it.

STEWARD J:   Well, it is criticised because it is not determinative, but it is not irrelevant.

MR LENEHAN:   Yes, I accept that, your Honour.  What I am saying is that saying that there is a singular fixed meaning that you somehow divine from the historical materials is difficult in this context because of the wide possible meanings that those materials illustrate.

EDELMAN J:   But that is a proposition I think that, accurately stated, everyone would be in furious agreement about, which is that there is, as I understand you to accept, some core meaning, but at the boundaries of the meaning of excise there is dispute as to what might at one time been described as the denotation of the term.

MR LENEHAN:   Yes, and all I am putting, your Honour, is the more modest submission that one – our friends put this material and say you can take from this that there was one meaning and it is ours, but if I can try your Honours’ patience and show you how that in particular can be seen in the Convention Debates, the position is much less clear.

GLEESON J:   Well, is a possible example of a core meaning, taxes, which had been described as excises at the time of Federation?

MR LENEHAN:   I think I would accept that, your Honour, but that is a very broad category.

GLEESON J:   Perhaps excluding licence, the kinds of licence excises.

MR LENEHAN:   Yes.  Your Honour, that is the very point that I was going to come to because that, your Honour, is shortcutting it for me.  That is how one understands the exchange between Mr Isaacs and Mr Barton, that our ‑ ‑ ‑

GORDON J:   Would you mind speaking up, Mr Lenehan?  I must be getting deaf in my old age.

MR LENEHAN:   I so sorry, your Honour.  No, your Honour, I am too soft.  That is the way that your Honours are to understand the exchange between Mr Isaacs and Mr Barton that all of our friends have identified.

Perhaps I can – and I have mentioned this now a few times before.  I have mentioned also that this passage was in fact something – a passage that Mr Jackson for the plaintiffs in Ha took the Court to, and after the Court had seen it, it put to Mr Spigelman for the defendants that the Wollaston Report that our friends rely on was really a warning of the very thing that I have been trying to identify, that is the uncertain, at that time, nature of the term “excise”.  You can in fact see that in the terms of the report itself.  Your Honours have that in volume 9 of the bundle, and it starts at 2307.

EDELMAN J:   Which tab is that?

MR LENEHAN:   I am so sorry, your Honour, it is tab 46.  When your Honours have it, if you could turn up 2316, and you will see the heading “Excise”, and the authors of this report – they are identified on page 2319 – say they:

have found some difficulty in determining what “excise” includes.

They then, indicate their understanding of the Adelaide Convention and that would tend to suggest the narrower approach that our friends prefer.  But their concern was that it was not at all apparent that it was achieved by the Bill.  You see that in the final couple of sentences of that first paragraph:

In interpreting the Constitution the meaning of the word as used in British legislation will very probably have a preponderating weight, and if this should be the case the Federation Bill will have a different meaning in that respect to that intended by the Convention. It would be well, therefore, to consider the meaning of the word in British law.

In the next paragraph, having identified the broader English position, which reflects what your Honour Justice Gleeson, said to Mr Merkel this morning, suggests that:

Although in Great Britain the original meaning of the word is being restored to that which it bore in Pym’s ordnance, and the substitution of Inland Revenue Commissioners for Excise Commissioners is evidence of this, yet the meaning is not sufficiently certain to allow of the word standing without a definition, and we would suggest that it should be defined as follows:– “Excise shall mean the duty chargeable on the manufacture and production of commodities.”

That is then how they approach the tables that they prepare and that you see in the balance of the report.  That, then, puts in context the ‑ ‑ ‑

STEWARD J:   What about what is said at the end of that paragraph?

MR LENEHAN:   The end of the second paragraph on 2316, your Honour?

STEWARD J:   Yes.

MR LENEHAN:   Yes, yes.  That is the definition that is being suggested.

STEWARD J:   Yes.

MR LENEHAN:   So, that puts in context what is said in the Convention Debates that I have referred to a number of times.  Your Honours have those in the same volume, and it is at 2499.  I am just turning up the ‑ ‑ ‑

GORDON J:   You want tab 60, I think, Mr Lenehan.

MR LENEHAN:   Thank you, thank you, your Honour.  So, the passages that I want to draw your Honours’ attention to start at the bottom, left‑hand side of the page, where Mr Isaacs says:

I wish to draw attention to the very important question of excise.

Then refers to the report.  Then, on the right‑hand side, about point 3 of the page:

On this particular clause there is a very full reference to the meaning of the word “excise”.

That is the one that I have just shown your Honours:

At the present day the word “excise” –

and we emphasise “at the present day” because our friends say that some of the alternative meanings that we put are lost in the past:

has a very much wider meaning than we intend in this bill.  It includes –

and this is your Honour Justice Gleeson’s point:

in England, all auctioneers’ licences, gun licenses, licenses of various descriptions, taxes on carriages.

There is then a response by Mr Barton.  Then Mr Isaacs says he does not think that they include those by definition:

What we intend by excise would be covered by the definition in this report, “a duty chargeable on the manufacture and production of commodities.”  The word is variously defined in standard dictionaries.  We should give attention to this matter, so as not to be carried further than we intend to go.  In modern times, excise is used as a very wide term.

Now, of course, the definition that Mr Isaacs seemed to be concerned to add to the bill never makes its way into the bill.  It is really a matter of speculation as to why that is so, but a significant clue, we say, is found a few pages over, at 2501, in the speech of Mr Barton, where he first summarises the effect of the report, and then says – this is about point 6 on the page:

I am rather under the impression that, looking at the interpretations which have been given to excise in the sense in which that term is used in the Constitution of the United States – and we know that the meaning given to it has been such as not to interfere with the regulation of their own internal concerns by the states on such matters as the granting of licenses to hawkers, auctioneers, and so on – I am rather of the opinion that the use of the word as it occurs in this bill will be held to carry with it the same meaning; but, if on consideration we find there is any doubt about that, I think it will be a comparatively easy matter to provide for it.

What is being said there is not that the text carried with it some sort of implied limitation of the kind proposed by the authors of the Wollaston Report, that is, duty is chargeable on manufacture and production.  What is seemingly in the mind of Mr Barton is that that will be ultimately dealt with in a different way, that is, via something akin to a US doctrine, which approaches the phrase so as not to interfere with the regulations of States’ internal concerns on, particularly:

licenses to hawkers, auctioneers

et cetera.  So, that bears some obvious analogy to notions of reserved powers.

STEWARD J:   Is the meaning that Mr Barton is referring to that which is set out at the bottom of 2499, in the right‑hand corner?

MR LENEHAN:   Yes.

STEWARD J:

It is quite clear that the word “excises” is used –

in the United States:

in the sense of excise on the manufacture of commodities.

MR LENEHAN:   I think you then read what Mr Barton says as:

It has been held all along that it does not interfere with the regulation of trade by way of licenses by the states.

Then, you will see Mr Isaacs suggest that there might be a different meaning in the United States authorities, and that is the point that I was just about to make to your Honours by reference to Ha.

So, if you go back to Ha, and, again, that is in volume 4 of the bundle.  And at page 793 of the joint bundle, which is page 493 of the report, you will see two things:  first, the answer to your Honour Justice Steward’s question, that is, in the United States, this was adopted in – I am sorry, I should start a little earlier.  Their Honours are discussing the reasons of Justice Dixon in Matthews and pointing out that:

His Honour noted that in Tasmania in 1829 duties of excise were levied indifferently on spirits of Tasmanian origin and on spirits imported from New South Wales.  Blackstone identified an excise duty as “an inland imposition, paid sometimes upon the consumption of the commodity, or frequently upon the retail sale, which is the last stage before the consumption.”

And then:

In the United States –

that position, that Blackstonian position:

this was adopted in construing the power given by Art 1, s 8 of the United States Constitution to Congress –

And then you see, footnote (105), some American authorities and those authorities were some of those given by Mr Jackson to the Court in Ha.  And so, in short, the passage that our – sorry, I said there were two things, the other is the point which appears next after footnote (105) in the text.  That is:

There is no common use of the term “excise” in the Convention Debates which might illuminate its meaning, save that it does not include the fees for a licence to carry on a business which, in England, were sometimes called excise licences.

So, we say that their Honours have looked to the very passages that our friends have relied on and have accepted the explanation that I have been seeking to give your Honours.  That is, the Wollaston report was a warning that was not heeded and that left the meaning of the term very difficult to discern.  And so, I am not departing from what I have accepted in answer to your Honour Justice Edelman, but these materials simply do not get our friends to the position that they seek to have your Honours accept.

GORDON J:   What about what might be described as the intermediate position?  At the moment, we have, in effect, two extremes, arguably, put before us, and that is what set out the bottom of 493 to the top of 494, and that is it is a recognition that there was to be this national unity or a bringing together by the transition provisions for this national economy.

MR LENEHAN:   Yes.

GORDON J:   But what was to be withdrawn from the States was not all its sources of revenue, just its principal sources.  And it goes on, on the top of 494, to identify with some particularity what those sources were.  Does that alter the, in effect ‑ ‑ ‑

MR LENEHAN:   Yes.

GORDON J:   Yes.

MR LENEHAN:   Your Honour, that is the point that we seek to have your Honours embrace.

GORDON J:   I am so sorry, I missed that.

MR LENEHAN:   That is the aspect of the reasoning that we seek to say is undoubtedly correct, and which we say should be reaffirmed.

GORDON J:   But does that go – does not your primary submission or that or your learned leader go further than that?  Because you would have it, that is, a tax on all goods and that all sources of revenue to the extent that they are a tax on goods are removed or withdrawn.

MR LENEHAN:   Your Honour, what we say ‑ ‑ ‑

GORDON J:   Just to be fair, if you keep reading, in that first full paragraph on 494 it identifies being the tax, as was imposed on the point of sale, and it has other particularities identified which would bring about, arguably, you may not be right, but arguably some limit on the proposition you put would have us accept.

MR LENEHAN:   Some limitation, your Honour.  So, no doubt, the term is not the full English version, that is so.  But what we say, and what I say your Honours should accept, is the principle in 497.  That is:

the States yielded up and the Commonwealth acquired to the exclusion of the States the powers to impose taxes upon goods which, if applied differentially from State to State, would necessarily impair the free trade in those goods –

That is based not on the indeterminate historical materials.  That is based more firmly – although no doubt the history is important in their Honours’ reasoning – that is based upon their Honours’ approach that you see at 494 to 495, where they reason from the:

objective of the movement to Federation was “inter‑colonial free trade on the basis of a uniform tariff” –

Through to the proposition that:

Dixon J was surely right . . . in Parton –

STEWARD J:    Can I ask you this?  If you are right that the Convention Debates do not provide us with a clear meaning, and if Sir Owen Dixon was right to say that the term “excise” had a whole lot of historical meanings, then were did he get his assumption from?  Did that come from the Convention Debates somewhere?  Presumably not, because we did not look at them then, or ‑ ‑ ‑ 

MR LENEHAN:   No, he ‑ ‑ ‑ 

STEWARD J:   So where did it come from, then?

MR LENEHAN:   Pre‑Cole v Whitfield, of course he would not have thought that.

STEWARD J:   No.  So, where does it come from?

MR LENEHAN:   Your Honour, in my submission, one can say that that proposition is supported by the reasoning that I have just shown your Honours in Ha.  So ‑ ‑ ‑ 

STEWARD J:   But the premise of Ha is the assumption.

MR LENEHAN:   Yes, well, it actually goes the other way.  If you look at 494 to 495, their Honours are going from an approach which looks to the text and context of the Constitution and says, Justice Dixon was surely right to say what he said in Parton.  So, one way of understanding what his Honour said, is that he undertook a similar analysis.

STEWARD J:   Without putting it in the judgement.

GORDON J:   To be fair, I mean the whole of Chapter IV, as I understand the reasons of the majority from 491 on following, including from the preface to Stephen Mills, would provide some explanation for ‑ ‑ ‑ 

MR LENEHAN:   Yes, yes.

GORDON J:   I mean the history set out, in at least some detail by the majority in Ha, to explain the need for a national unity and a national economy, drawn from the Constitution itself and, to the extent, rather than the debates, from Mills’ analysis of taxation in Australia.

MR LENEHAN:   That is so, your Honour.  And your Honours find a similar textual analysis, of course, in Capital Duplicators, at 585.  So, reasoning from first principles and undoubtedly with – it is sometimes called the nebulous notion that – the nebulous but obvious notion that the Constitution was drafted on the basis of there being a uniform power and an area of free trade, and that, we say, is far more helpful than slicing and dicing snippets from Convention Debates and dictionaries.

Now, I think that, then, is all I wanted to say about the way our friends put their first point.  The next argument that they – broad argument that I have identified is context, and your Honours will recall that at the ‑ your Honours, I am so sorry, I am at my limit.

KIEFEL CJ:   Yes.

MR LENEHAN:   May I have 10 minutes more to complete my argument?  I do apologise.

KIEFEL CJ:   Yes.

MR LENEHAN: If it please the Court. So, at the forefront of that argument is section 93 and, in particular, as your Honours have seen, you have in section 93(i) a reference to:

duties of excise paid on goods produced or manufactured in a State –

That, of course, has proved to be a point which both the majorities and the minorities in Ha and Capital Duplicators have discussed. Consistent with the minority view, Victoria’s position is that the words “goods produced or manufactured in a State” are descriptive – this appears in their submissions at paragraph 50 – of what is an excise for the purposes of the Constitution.

Now, at this point I come back to what I said before about Justice Murphy because that could only be true if Justice Murphy’s view of section 90 is correct, which seems to be a proposition that our friends reject. His Honour made precisely this point – I will give your Honours the reference without taking you to it – in Logan Downs, at page 84 of the report.  Logan Downs is in volume 5 of the authorities and the passage is at 1088 of the joint bundle. We say that illustrates that section 93 is not descriptive at all and why the majority in Ha were correct to say that it does not assist.

Now, the further point of context, which is made by both Victoria and a number of the other interveners, is the collocated point that I have already referred to, so that relates to sections 55, 69, 85, 86, 87, 90 and 93, and your Honours can immediately cross off from that list both sections 69 and 85 because they are descriptive of the nature of departments, not of the taxes themselves.

Then, as for the other provisions, the fact that they refer to both customs and excise duties in the same provisions we say is entirely equivocal.  It could equally support our submission that one does get from that that there is a relationship between those two forms of duties, but the relationship as we put it is the point made in Capital Duplicators, that is, taken together, they exhaust the categories of taxes on goods.  So we say that that point does not go very far.

Then, there is a further point regarding context made by our friends for both Queensland and Northern Territory, and they note in sections 90 and also 91, your Honours see a reference to granting “bounties on the production or export of goods” and that, as I understand it, is said to throw some light on the meaning of “excise” in section 90 because a bounty, I think the argument goes, could be described as a negative tax and you have there the term “production”.

But if anything, those phrases, particularly the term “export”, indicate that the objects of section 90 travel beyond tariff policy and to illustrate that, can I give an example, which is not my example, it is an example given by Mr Jackson during argument in Ha.  Mr Jackson accepted that there was no doubt that a bounty on export of goods may be used to encourage production of those goods in a jurisdiction that grants the bounty.  So, that is a matter that would stand to affect Commonwealth tariff policy.

But bounties on export can be used to encourage other matters, for example, the use of the infrastructure of a State. And to illustrate that, Mr Jackson observed that were it not for section 90, Queensland for example, could say to the northern New South Wales sugar producers: export through the Brisbane bulk sugar terminal and we will pay a bounty per ton, and the reason for that would be to improve the efficiency of the Brisbane terminal by giving it a greater throughput.

And that is just one way of illustrating that the operation of a provision extends to matters that have nothing to do with the production of goods in Queensland and nor does the correlative prohibition. That can rather be regarded as a further way in which section 90 addresses possible distortions in the national market, see again the passage from Capital Duplicators that I have already drawn attention to.

But we say, in any event, none of that detracts from the reasoning of the majority in Ha.  If you turn back to Ha and look to page 497 of the report, you will see, in the first full paragraph of that page, there is recorded a similar submission.  And their Honours go on to say, and we say your Honours should embrace this:

So far as it goes, it can be accepted that a purpose of s 90 is to give the Commonwealth fiscal control over imports, domestic production and exports. But free trade within the Commonwealth would not have been ensured by exclusive federal fiscal control of imports, domestic production and exports. As earlier noted, the imposition of State taxes upon other inland dealings with goods as integers of commerce, even if those taxes were not protectionist, would have created impediments to free trade throughout the Commonwealth.

And so, we say your Honours would not be persuaded by the reliance that our friends place on the inclusion of bounties. Now, what I have just said leads neatly to the criticisms that our friends make of the purpose of section 90 discerned in Ha, and the correlative rejection of the narrow purpose that they advance.

And your Honours saw, from the passage that I just read from Ha and the other parts of Ha that I have been taking your Honours to, that that high constitutional purpose is one that is concerned with preventing differential taxes which would impair free trade.  And what is material – this was the passage that I read to your Honour Justice Gordon before, is that the States yielded up and the Commonwealth acquired, to the exclusion of the States, the powers to impose taxes on goods which, if applied differentially from State to State, would necessarily impair free trade.

That purposive principled approach is what led to the reaffirmation of the Parton line of authority at page 499 and also led their Honours to reject the proposition that section 90 was confined to the more modest tariff policy purpose.

Now, I have mentioned before that that aspect of the reasoning in Ha is then relied on by six members of the Court in Betfair and notably they did so – and this is to answer a question that your Honour Justice Edelman asked Mr Merkel this morning – in the context of a claim concerning section 92 and was seemingly unconcerned at the notion that the two provisions might operate in a complementary fashion, which is a point that our friends – perhaps the principal point that our friends put against us in relation to purpose.

Can I invite your Honours to go back to Betfair – and I am sorry to do this – because there is a passage at paragraph 22 of their Honours’ reasons where their Honours say – this is at page 454 of the report and 375 of the joint bundle:

The relationship between ss 90 and 92 was explained as follows by Brennan CJ, McHugh, Gummow and Kirby JJ in Ha –

Then they set out the passage that I directed your Honours’ attention to before. They do that, again, without any suggestion that our friends say possible overlap with section 92 or perhaps in some way detracting from section 92 was something that was problematic because of the approach taken in Ha.  The principal reason that that is so can be seen in a passage, in fact, from the minority in Capital Duplicators at page 631 of the report.  Their Honours are here dealing with a point made by Justice Murphy in Sleigh and you see that on page 630 towards the end of the second‑last paragraph on that page. So, one of the points that his Honour made in support of his interpretation of section 90 is that:

a tax on goods entering a State would discriminate against their production outside the State and therefore “be a duty of customs prohibited by s. 92” –

His Honour obviously has in mind cases like Fox v Robbins. That was one of the reasons that his Honour gave for adopting his State‑specific approach to section 90. Their Honours deal with that over the page about halfway down and say this:

The second difficulty inherent in the approach of Murphy J. is that it denies the possibility of overlap, duplication and reinforcement in the Constitution. There is nothing in the Constitution that dictates that Commonwealth or State legislation may infringe only one constitutional principle at a time. It is clearly possible that a State tax may infringe both s. 90 and s. 92, and possibly other constitutional restraints as well. Sections 90 and 92 have related purposes but those purposes may, in one case, overlap and, in another, diverge.

We say that notion of duplication and reinforcement entirely aligns with what is said by the majority in Ha when they are discussing the broad purpose of Chapter IV. So, the suggestion that in some way section 92 is a problem for the purpose adopted in Ha, we say your Honours would reject for those reasons.

Can I finish with this? The final point regarding purpose that our friends for Victoria make – and which is then repeated by a number of the interveners – is that, of course, the States could, nevertheless, regulate their markets in other ways which could affect the price of goods. The obvious examples that are given are Health and Safety laws, laws regarding transport and, for that matter, exactions that are not excises. That is said to suggest that section 90 may not be fit for purpose – seems to be the point. It is under‑inclusive. That, in fact, was acknowledged by the majority in Ha at 497, who said that it was immaterial.  It is immaterial for the reason that is, in fact, given by our friends for New South Wales referring to the statutory construction principle from Mammoet– that is, it is a mistake to assume that a statute – or, here, a constitutional provision – pursues a particular object at all costs.

What section 90 did was eliminate one form of exaction which stood to impair the free trade in those goods through the Commonwealth – that it did not provide for free trade exhaustively, or in other ways, is really beside the point. So, we say, for all those reasons, your Honours should embrace the purposive approach that is taken in Ha – reflecting what was decided earlier by Justice Dixon in Parton – and if your Honours do grant our

friends a reopening application, you should reaffirm that entire line of authority as was done in Ha.

Unless your Honours have any further questions, those are the submissions for the plaintiff – and I thank your Honours for your indulgence.

KIEFEL CJ:   Thank you, Mr Lenehan.  The Solicitor‑General for the Commonwealth.

MR DONAGHUE:   Your Honours, the overarching purpose of Chapter IV of the Constitution, including sections 90 and section 92 was, and I quote:

The creation and fostering of national markets –

so as to:

further the plan of the Constitution for the creation of a new federal nation –

Those are the words of six Justices of this Court in the joint judgment in Betfair (No 1), to which Mr Lenehan just took your Honours, in paragraph 12.  They are words that were uttered by the Court immediately after the sentence following reference to the majority judgment in Ha, and in the paragraph following the words I just read, their Honours noted with approval, or apparent approval, that the majority in Ha had rejected the:

more modest purpose of protection of the integrity of the tariff policy of the Commonwealth.

That the States had sought to attribute to section 90, and which, of course, the States and Territories again, in this matter, seek to attribute to those provisions.

As such, Betfair (No 1) is the latest in a line of cases in which this Court has favoured interpretations of Chapter IV that recognise its significance in terms of the federal project and the creation and maintenance of Australia as a federal nation.  In each of Capital Duplicators and Ha, in joint majority judgments of the Court in passages I will come to in a moment, the Court affirmed that differential taxes on goods were anathema to the operation of that free trade purpose – free trade within the geographical territory of Australia. 

And each case, in passages your Honours have been taken to this morning, explains that that is why section 90 makes the power to impose taxes on goods exclusive to the Commonwealth. That exclusivity in combination with other provisions of the Constitution that prevent the Commonwealth from exercising its powers in a discriminatory way, particularly 51(ii) and section 99, ensuring that taxes on goods do not operate in a fashion that distorts trading goods within the geographical territory of Australia.

As a factual proposition, historically in Australia inland taxes normally have been imposed on some step in the manufacture, production, distribution or sale of goods. And taxes at any of those points have an evident tendency to affect the market in those goods, supply or demand in the market for those goods. And it is, therefore, we submit, not surprising and entirely consistent with the purpose of section 90 identified in the terms that I have just summarised, that the Court has accepted, at least since Parton, that taxes on any of those steps are excises. They would be inconsistent with the purpose of section 90 as articulated.

The question that now falls for decision is whether taxes on what we would prefer to call the use of goods should be recognised as also falling within the scope of section 90. I will try to refer to taxes on use except where I need to talk about consumption because that is the word that is used in the authorities at various points. But when I say consumption, I mean in the context of a durable good the use of that durable good, and I do not articulate it – I cannot see any difference in the way that the Commonwealth uses the term from the usage that Mr Merkel took you to in paragraph 14, footnote 35 of his written submissions just after the morning break. I think we at least are using the word in the same way.

EDELMAN J:   It might depend on what you mean by “use”.  Does use include mere possession?

MR DONAGHUE:   No, your Honour, but can I – I hesitated because I do want to explain in some detail what I mean by that and the very appropriate approach to be taken, but I think the answer ultimately on the submissions I will put is that merely possessing the good would be unlikely to be an excise, but perhaps I have said no, can I caveat that, and return to it once I have developed the submission.

Your Honours, numerous justices of this Court – and you have been taken to some of the passages and given references to some of the others by Mr Merkel – but numerous justices have recognised that taxes on the use of goods, logically, have the same tendency to distort the market in those goods, or for those goods, as taxes imposed at earlier steps, or at least can have the same tendency. To the extent that that is right, it follows that to permit the States to impose taxes of that kind is to permit the possibility that the States may impose taxes of a kind that are inconsistent with the purpose of section 90 that the Court has accepted.

That is not to say that all taxes on consumption would necessarily have that effect.  We do not seek to ask your Honours to embrace a categorical proposition.  What we ask your Honours to do is to reject a categorical proposition, to reject the idea that simply because a tax is a tax on the use of goods it for that reason cannot be an excise.

GORDON J:   So does that mean – just so I am clear, Mr Solicitor – that some of the submissions you made in your written submissions are to be qualified by what you have just said?

MR DONAGHUE:   I do not think so, your Honour, but ‑ ‑ ‑

GORDON J:   I have read them as being a tax on goods being – not being qualified in the way you just put it.

MR DONAGHUE:   Well, your Honour, what we said in writing – particularly, I think, at paragraphs 13 and 14, from memory – is that the question ultimately is:  is there a sufficient connection between the tax and goods?  And that that test involves an evaluative inquiry by reference to which a number of factors are relevant.  On that submission, it is possible that a tax on goods might be imposed on the use of those goods and that other evaluative factors might together lead properly to the conclusion that the tax is a tax on goods, but other taxes might not be applying that evaluative approach.

Our point is that to say that, as a matter of definition without more, without further inquiry, if the tax is imposed at a point after the goods reach the hands of the first consumer, it cannot be an excise, is to revive a version of the criterion of liability.  It is to say that factor without more means that there is not an excise irrespective of the substance of the matter.

EDELMAN J:   You may, then, wish to come back to it at some stage, but that very argument may apply equally to possession, because possession of goods may have a stronger tendency to affect demand and price of a good than the use of goods, which is a marginal cost.

MR DONAGHUE:   The reason that I qualified or hedged my answer your Honour earlier is that I needed to develop the submission that I have just sketched.  I do not seek to categorically rule out that the possibility that your Honour puts to me.

In our submission the authorities in this Court, to the extent that they have either assumed or held in one case – Dickenson’s Arcade – that taxes on consumption or use are not excises, did not do that because of the view that the economic effect or the effect on those goods as articles of commerce – the tendency to affect the goods as articles of commerce, was not equivalent to other steps.  They did so because the economic effect was thought to be irrelevant, because they were decided under the influence of the criterion of liability where that effect did not matter.

That approach, having been authoritatively rejected – particularly in Capital Duplicators and Ha – in our submission, the Court should consistently, with the logic of those judgments and the purpose of section 90 that they identify, accept the possibility that in an appropriate case, where there is a sufficient connection to goods demonstrated, that a tax on consumption can be an excise.

STEWARD J:   Is that explanation quite right with what Justice Mason said in Dickenson’s Arcade as his justification?  He just seems – he has a sufficient connection test himself and he says that consumption tax is insufficiently connected.

MR DONAGHUE:   Your Honour, I will come to that passage.

STEWARD J:   Okay.

MR DONAGHUE:   My short answer to that is that his Honour was, in my submission, saying, as a matter of logic, consumption tax – from the bottom of the page before the passage your Honour is referring to, he is saying, as a matter of logic, he might think consumption taxes should be dealt with in the same way as sales taxes – as a matter of authority, that is not open to me at the moment – and he then attempts a rationalisation of that distinction.  That is in my submission.

STEWARD J:   I think that is a fair way of reading it, yes.

MR DONAGHUE:   So, in my submission, his Honour is ‑ ‑ ‑

STEWARD J:   But we still have to deal with the rationalisation, though.

MR DONAGHUE:   We do.  And I will do that when I come to Dickenson’s, if I might.

Your Honours, I propose to structure our submissions as follows.  First, and very briefly in light of what you have already heard from Mr Merkel, to point out some passages in Capital Duplicators and Ha that make good the purpose I have just sketched; second, to identify and develop the submission I have just sketched to Justice Gordon in particular about the current law about how one identifies an excise – a duty of excise; third, to deal specifically with taxes on use, what the authorities and the courts say about them, and, in that context, I will take your Honours to Dickenson’s Arcade and make submissions both first that, as a result of the subsequent cases, it no longer has any authority that your Honours need to reopen and overrule, but, in the alternative, that it should be reopened and overruled – although, in that respect, I will largely adopt Mr Lenehan – and, fourth, Mr Thomas will address the application of the principles I will have sketched to the ZLEV Charge Act.

In that sketch of where I propose to go, I have not said anything about the reopening of Ha or Capital Duplicators.  Your Honours will note that the way that application is put by Victoria is contingent; it is said to depend on what your Honours choose to do with the reopening of Dickenson’s Arcade.

If the application is ultimately pressed, in our submission, the first question to your Honours – and in my submission this is a case where it is a serious question – is whether your Honours will permit Victoria to advance the full argument on the point at all.  Your Honours might recall – and this case is not in the joint book – but in Federal Commissioner of Taxation v Travelex (2021) 271 CLR 605 at paragraph 19 – in the joint judgment, five of your Honours referred to Evda Nominees – which is in the book – as establishing:

the “procedural convention” of requiring a party seeking to contend that a previous decision of this Court was wrongly decided to obtain –

and I emphasise these words:

the leave of the Court before being permitted to present full argument.

Your Honours there cited Allders, which is in the book – in volume 3 tab 10 – which was a case where that convention was applied and where the Court heard argument as a preliminary point on whether or not reopening should be permitted and announced at the conclusion of that argument that it was not.

The procedural convention in Evda was actually a product of section 90 jurisprudence in this Court. It was a product of there having been several attempts to re‑argue the franchise cases refused by the Court – or several attempts to re‑argue, then the Court had affirmed its jurisprudence in a number of occasions – and in Evda, Mr Shaw, QC stood up to make a similar argument and was interrupted at the outset by the Court who said, why should we hear your argument, and there having been a debate on that question, leave was refused.  The same thing happened again in Philip Morris – another section 90 case.

In our submission, in light of – I will not take your Honours back to it, but in light of what you see on page 499 of Ha, it is evident that their Honours would not have permitted re‑argument in Ha itself, but for the fact that the franchise cases were on the table, and the Court thought in circumstances where it was reopening that very significant aspect of its section 90 jurisprudence, it should allow the whole matter to be argued. That is explained – your Honours see it at the top of 499:

The repetition . . . does nothing to enhance their cogency –

of the arguments:

despite the care and vigour with which they were presented.

And Evda is cited, but then, at the bottom of the page, their Honours say, having revisited the franchise cases, everything should be opened up again but Parton should be re‑affirmed.

If this case – this exact case – had come before the Court a year or two after Ha, in my submission, it is difficult to conceive that the States and Territories would have been able to run it again.  Capital Duplicators, Ha – same sets of arguments.  The passage of 25 years should not make the position better, it should make the position worse.  The position has been well‑settled by those two decisions of the Court over that period of time and, as Mr Lenehan has just spent the time since lunch explaining to the Court, this is just a rerun of those cases.  And, in our submission, there is a real question – obviously a question for the Court – as to whether that should be permitted.

My present purpose of sketching this, at this point, is not to deal with the reopening application but to submit that, if the application is pressed and the Court allows full argument on it, in our submission, the Commonwealth should be permitted to respond to that application after it has been made, rather than anticipating what is going to be said.  Mr Griffith, the then Solicitor‑General for the Commonwealth, made that same submission in Capital Duplicators and the Court did allow the Commonwealth to respond to the reopening application at that point in time.  That, your Honour the Chief Justice, is why that that period of time was built into the timetable in that way in the event that your Honours ‑ ‑ ‑

KIEFEL CJ:   Although you have got it at the end of full argument.  You want to bring it forward now.

MR DONAGHUE:   Your Honour, there was no prospect the parties were going to agree to a timetable that required the threshold issue.  We are, of course, in the Court’s hands as to that.

KIEFEL CJ:   Yes.

MR DONAGHUE:   But, as to the Commonwealth answering the reopening application after Victoria had put it, as I understand it, Victoria is content with that as long as they have, themselves, a rejoinder to anything that we say.  Again, that is, of course, a matter for the Court, but I do not oppose that.

Where we part ways with Victoria – and again, of course, I am in your Honours’ hands – is that we will also seek 15 minutes more general leave to reply, really on the basis that after I sit down there will be two days of argument wholly adverse to the Commonwealth’s interests, and we would seek some opportunity to touch upon anything that might emerge there.  But I am in your Honours’ hands as to whether the Court will permit that.

Can I start, then, with very brief submissions about the purpose of section 90, made in a context where the Court has recognised, first in Matthews and more recently in Capital Duplicators and Ha, that the word “excise” had no clearly established meaning at the time the Constitution was brought into existence. There were usages about, undoubtedly, but that feature of the section has had the consequence that the purpose of section 90, within the constitutional scheme, has assumed very significant importance in the interpretation of the provision 1(6) – obviously, and understandably, an interpretation that advances the purpose of the provision. In our submission, that is very significant here because once one accepts the free trade purpose – the preventing distorting differential taxes – then, if your Honours accept that a tax on use might have such a distorting consequence, that is a powerful reason for accepting that a tax on use properly falls within the ambit of the section.

As I say, Mr Merkel has identified almost the same passages as bearing significantly on this argument as we did.  I will not take your Honours back to those passages, but can I take your Honours to a couple of others, starting with Capital Duplicators (1993) 178 CLR 561 in volume 4, tab 17, and ask your Honours to go to page 585 in the majority judgement. I do not think Mr Merkel took your Honours to this page. There are three brief sections on it that I would emphasise. The first is at about point 4:

On the other hand, ss. 90 and 92, taken together with the safeguards against Commonwealth discrimination in s. 51(ii) and (iii) and s. 88, created a Commonwealth economic union, not an association of States each with its own separate economy.

Then, about four or five lines down:

Differential taxes on goods, if permitted, could have distorted local markets within the Commonwealth.  That possibility was averted by –

the provisions I have mentioned: 

which created a single legislative authority to impose taxes on goods –

Then, about eight lines up from the bottom, after footnote (6):

The purpose is not difficult to detect.  It was to ensure that differential taxes on goods and differential bonuses on the production or export of goods should not divert trade or distort competition.

Then, on the last line of that page, running over to the next page: 

If taxes on the distribution of goods were excluded –

So that is referring to the narrow view.  The narrow view is just if it only captures production and manufacture: 

If taxes on the distribution . . . were excluded from the operation of s. 90, the purpose which uniformity of customs, excise and bounties was intended to achieve would be prejudiced and the Parliament would not have effective control over economic policy affecting the supply and price of goods throughout the Commonwealth.

And then, there is a reference to Parton, which your Honours have seen.  In the middle of the page, Mr Merkel noted the passage, just after footnote (8) referring to the tax on distribution: 

like a tax on production or manufacture, has a natural tendency to be passed . . . down the line of distribution and thus to increase the price of, and to depress the demand for, the goods on which the tax is imposed.

In our submission, for reasons I will come to in the next section of my submission, taxes on “use” or “consumption” might have a similar tendency; natural tendency to depress demand for goods, and thus, a natural tendency to have the same effect:  distortions within the market.  At the bottom of that page – 586, at about point 8 – there is an approving reference to the earlier remarks of Justices Brennan, Deane, and Toohey in Capital Duplicators (No. 1), where their Honours: 

saw s. 90 as “a necessary part of the constitutional mechanism for achieving an essential objective of the federal compact: the creation and maintenance of a free trade area throughout the Commonwealth –

Then, there is the critical reasoning at the top of 590, down to about point 6 on 590 – that has already been read to you – concluding with the express observation that it was not necessary in this case to consider taxes on the consumption of goods – which it obviously was not, because the tax in question was a tax on sale, not on consumption.

So, there is a very strong endorsement in that case of section 90’s role being to divert taxes that distort the market and are inconsistent with the free trade area within the Commonwealth identified in the passages I have just read. In Ha, one sees, very much, the same focus.  Ha, of course, is another four-three split, as in Capital Duplicators, but we will draw your Honours’ attention to the fact that it is not the same four-three split.  By the time Ha was decided, Chief Justice Mason and Justice Deane had both left the Court; so, two members of the four-member majority in Capital Duplicators had left the Court, then replaced by Justices Gummow and Justice Kirby.  The minority is the same, but the majority reflects the two new justices.  So while it is true that there were two closely divided decisions over the course of time, in fact, the justices who looked at these issues across those two cases were less closely divided than might at first appear, because both of the new justices ‑ ‑ ‑

KIEFEL CJ:   I think you meant Justices Gummow and Kirby ‑ ‑ ‑

MR DONAGHUE:   Is that not what I said, your Honour?

KIEFEL CJ:   You said McHugh, I think.

MR DONAGHUE:   I did mean Justices Gummow and Kirby, sorry, your Honour.  Again, Ha did not concern a tax on the use of goods; it was tax on tobacco sold, so the usage issue did not squarely arise. The purpose of section 90 is addressed from page 488 and following with a quote – a long quote from Capital Duplicators, which Mr Merkel read, so I will not entertain your Honours on it.  If you go forward to 491, at about point 5 on the page, their Honours say: 

To assess the validity of these arguments, it is necessary to see the provisions of ss 90 and 93 in the context of Ch IV . . . and to understand the operation which Ch IV was designed to have at the time of Federation.

So, the purpose is front and centre in the reasoning.

EDELMAN J:   Which page are you reading from now?

MR DONAGHUE:   Sorry, that was 491, your Honour, at about halfway down.  And I will not, then, take your Honours through the few pages that follow, much of which you have been taken to already.  If you then go on to 494, there is a passage that I think Mr Merkel read but that I seek to emphasise, at about point 6.  

It is clear that an objective of the movement to Federation was “inter-colonial free trade on the basis of a uniform tariff” as this Court pointed out in Cole v Whitfield.That objective could not have been achieved if the States had retained the power to place a tax on goods within their borders.

And I go there mainly in response to a question your Honour Justice Stewart raised, because while it is true that Capital Duplicators and Ha build on Parton, it is not true that Parton is the whole universe of the underlying purpose.  Most of these justices actually decided Cole v Whitfield but they were plainly conscious of Cole v Whitfield, of course, with the benefit of the Convention Debates in identifying the underlying purpose of Chapter IV and drew on it expressly in reasoning that you can see, in part, at the bottom of page 494.

I also rely on 497, but the relevant passages have already been drawn to your Honours’ attention, and 499, where they have likewise been drawn to your Honours’ attention.  On 499, which is the passage where the ratio ultimately appears at the bottom of the page, it does appear to us that Victoria’s submissions, particularly at 17.2, seek to rely upon the fact that the Court, near the bottom of that page, reaffirms that duties of excise are taxes:

“on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin” –

That appears to be relied upon as a statement of authority of the exclusive bounds of an excise and, in our submission, it just can not fairly be read in that way because, immediately after having said that, the Court reserves the position of consumption taxes.  There is no implicit exclusion of consumption.  There is a statement that these things at least are included and the position on consumption or usage taxes is reserved.

So, I rely on that paragraph because of the statement that the plaintiff has also exercised that it emphasises that the category of taxes on goods is exhaustibly covered by customs and excise duties between them, and it says at the end:

Both are taxes on goods, that is to say, they are taxes on some step taken in dealing with goods.

We rely upon that, but we submit that our friends cannot get any support for the notion that consumption or usage taxes are not included from the fact that they are not included in the list, because the Court was simply seeking to leave that question for a case where it arose.

EDELMAN J:   But nor can one leap arguably, as Mr Merkel does, from saying, well, dealing in goods includes consumption, so therefore they must have intended to include consumption there. 

MR DONAGHUE:   Ultimately, your Honour, the question is whether the consumption or the usage tax is a tax on goods according to the appropriate methodology for answering that question.  I do not submit that their Honours answered that in that passage.

EDELMAN J:   But there may be a divide – and how significant it is may be another question – between taxes on the supply side and taxes which might be described as on the demand side.  So, a tax at any stage, up to the sale to the consumer, is a tax on the good as it is being supplied to the consumer.  A tax on what the consumer does with the good is a tax on a different entity, a different person.  Whether that has a significant economic effect may be another question, but we do not have any evidence on that.

MR DONAGHUE:   Can I come to that?  I am coming to those issues and I appreciate I need to grapple with them.  But, in my submission, really the point I am seeking to get from that passage is that while it is true – and I will have more to say about these a little later – but while it is true that under the influence of the criterion of liability there are many statements in the Court that talk about those steps – production, manufacturer, sale or distribution up to the hands of the consumer – that last part is avowedly and deliberately left out of that formulation, not because I am saying it is decided in my favour in this passage, but because it is to be left open.  In that respect, that aspect of the criterion of liability test does not sit at all well with either Ha ‑ ‑ ‑

GORDON J:   Can I just test that.  The bit that you have just taken us to in Ha which we have been taken to now a number of times at 497 does draw a distinction between sale and consumption, which is the point I think Justice Edelman was making to you.

MR DONAGHUE:   At 497, your Honour?

GORDON J:   At 499, I meant to say.  I apologise.  That is the point.  In other words, if it is included in its concept, as Justice Edelman put to you, one side of it, the supply side – because it is up to and including sale – as distinct from consumption, which you described as use.

MR DONAGHUE:   Well, in the sense that sale is clearly included, and it has been clear that sales tax has been included for a long time.

GORDON J:   That is the only point I seek to make.

MR DONAGHUE:   But one way of reading what happened in this case is that one can say, well, the economic logic of the reasons would be such that it would include consumption, but there are things that can be said on both sides of that debate, as this case shows, and that the Court therefore thought it was not appropriate to take that step until the issue was properly articulated.

EDELMAN J:   It was also making that statement in light of the passage that you took us to in Capital Duplicators at 586 which talks about:

effective control over economic policy affecting the supply and prices of goods –

which, on one view, is talking about the supplier’s side of the equation.

MR DONAGHUE:   There are also passages – I think one of the passages I took your Honours to also referred to the effect on the demand for the goods, so if I can just – give me a minute, your Honour, and I will try to – so, for example, in Capital Duplicators at 586, their Honours say:

A tax on distribution, like a tax on production or manufacture, has a natural tendency to be passed . . . down the line of distribution and thus to increase the price of, and to depress the demand for, the goods on which the tax is imposed.

EDELMAN J:   Of course, that is still on the supply side.  You increase the price on the supply side, fewer people will buy it, is the argument.

MR DONAGHUE:   Yes, your Honour, but equally – and I will develop this – in our submission, just as a matter of natural or ordinary human experience, if you say to a consumer, this is the price that you have to pay, but there will be an ongoing price associated with your ownership of the good, that makes the good less attractive.  It will be more expensive to the consumer to buy that good, going forward, and that is so notwithstanding that the charge comes after the point of purchase rather than before.

EDELMAN J:   As a generalised proposition, that is a huge proposition of behavioural economics.  It may be right in some cases, but to generalise that proposition as one of behavioural economics is a very large proposition.

MR DONAGHUE:   In my submission, the natural tendency of a tax to increase the cost to the consumer of possessing the good or using the good, having bought – has the natural tendency that I identified.  I cannot submit that it will necessarily have it in every case but, in my submission – and I will take your Honours to one or two cases down the line – in my submission, it is not necessary in assessing the validity of a tax to have economic evidence to prove that point.  The Court has never approached validity ‑ ‑ ‑

STEWARD J:   But there is a difference in – I agree.  Leaving aside economic evidence, there is a difference between saying there is a natural tendency of the kind the Court has described, where you are dealing with a trading tax and it is going from manufacture to point of sale, where logically, rationally, businesspeople will want to recompense themselves from the costs of their production and sale.

We are talking about consumers here, and I think that is a different question, whether they have the same natural tendency, whether we should assume that they will act like rational individuals.  I mean, some consumers will be in a business where that may be so, where you buy a truck for a business.  But there will be consumers who are using these things for purely domestic purposes.  I mean, for example, do we know whether the ongoing cost of compulsory insurance depresses the price of cars in this country?  The ongoing payment and registration fees.

EDELMAN J:   Or increases in the price of fuel.  What is the price elasticity of a significant increase in the price of fuel on the demand for cars, or a particular type of car?

MR DONAGHUE:   Your Honours, without trying to destroy my structure too much, I am about to come to ‑ ‑ ‑

STEWARD J:   Well, then, you come to it when you ‑ ‑ ‑

MR DONAGHUE:   I am about to come to the way that I ‑ ‑ ‑

STEWARD J:   We will remember we have asked you.

MR DONAGHUE: ‑ ‑ ‑ would seek to answer those – hopefully within a matter of minutes, your Honours. So, I have largely said what I want to say about the purpose of section 90. The only remaining point that I would briefly make, is that even if one assumed the narrow purpose, the tariff protective purpose of section 90, which is undoubtedly one of the purposes of section 90 – it was accepted in Ha at 494 and 495 – it would still not follow that it was sensible or correct to exclude, entirely, categorically taxes on the use of goods.

To give your Honours one illustration of why that might be so, if Australia were to develop a local manufacturing industry in hydrogen-powered cars, one possible option available to the Commonwealth would be to protect that industry by the imposition of tariffs on any hydrogen-powered cars made overseas, so as to help the local industry. The ZLEV charge, if it is valid, if it is outside of section 90, means that States can impose taxes that, even on the narrowest view of section 90, on the tariff-type purposes, the States could impose taxes to increase the cost of using locally produced ZLEVs and therefore work against the tariff policy that the Commonwealth was seeking to put in place. So, even if that was all that section 92 was doing, there is the inconsistency with the Parton identified purpose and the potential for distortions within the market.

EDELMAN J:   This is the same point that Dennis Rose makes in criticism of the minority in Ha on their own terms.

MR DONAGHUE:   I think that that is right, I have not read that article recently, but ‑ ‑ ‑

EDELMAN J:   Although, his criticism is qualified by the fact that, well, he would need to see economic evidence to make sure that it is right.

MR DONAGHUE: Your Honour, in my submission, it would be not consistent with the way that the Court has approached section 90 litigation to make the validity of any particular legislative measure imposing a tax contingent on evidence of that kind. It just creates too unstable a foundation for the validity of laws to depend on what evidence the party has put before the Court, which might actually change over time in terms of – as market conditions might change over time.

None of this – and some of the exchanges between Mr Merkel and your Honour this morning may have proceeded on the basis that it was being suggested that economic consideration were not relevant.  I am not putting that, but I am putting that the way that the Court has approached it is not at the level of needing expert economic evidence, it is by reference to the Court’s understanding of the tendency of the tax.

EDELMAN J:   There is a line.  At some point one crosses the line into making guesses, and the question is where that line is.

MR DONAGHUE:   Yes, your Honour, and I am about to – this is the point that I keep anticipating, but I am about to say that one of the evaluative factors is the Court’s assessment of that.  So, if in the end the Court is not satisfied that the tax does have a sufficient connection so as to affect the – the tax is of not such a nature so as to affect the goods as articles of commerce – that is Justice Dixon’s words from Matthews – but if the Court is not satisfied of that fact it might conclude the tax is not an excise because it does not see the connection.

GORDON J:   Do you propose to expand on that submission?

MR DONAGHUE:   Yes, I am, very shortly.  So, that is what I wanted to say about purpose.  In terms of our submission as to the current law about identifying an excise, we submit that the current law is that a duty of excise is a tax that has a sufficient connection with goods so that as a matter of substance it is properly characterised as a tax on goods or on some step taken in dealing with goods, to use the language from the bottom of 499 in Ha.

That means there are two main steps.  Step 1:  is the impost in question a tax?  If it is not a tax, it cannot be an excise.  Your Honours do not have to trouble yourself with that here because Victoria has accepted in its defence that the ZLEV charge is a tax in paragraph 43 of its defence.  So we go immediately to step 2:  is there a sufficient connection between the tax and the class of goods identified?  At that point, Victoria says the Commonwealth is making an ambitious attempt to completely abandon the contours of the Ha formulation.  Not so, in our submission.

Can I ask your Honours to go back to Capital Duplicators, which is volume 4, tab 17 at 583 – a passage your Honours have already seen but I just need to remind your Honours.  In the middle of the page ‑ ‑ ‑

GORDON J:   This is the passage I took Mr Merkel to this morning.

MR DONAGHUE:   It is precisely the passage you took Mr Merkel to, and I am embracing what your Honour said, as I understand and recall what your Honour said, in that what the Court says here, having explained that the criterion of liability has been rejected as the exclusive determinant, it says a few lines down in the middle paragraph:

in determining whether an exaction is or is not an excise, the Court has regard to matters of substance rather than form.  That approach, which looks to the practical or substantial operation of the statute as well as to its legal operation, requires that a variety of factors be taken into account.

Then there is a footnote to paragraph 99 that your Honour Justice Gordon mentioned, which is Chief Justice Barwick in Anderson’s Case, giving a non‑exhaustive list of relevant evaluative factors.

One sees that same approach in quite a number of cases – and, indeed, I will not take your Honours to it, but at 601 to 602 Justice Dawson in the minority adopts – well, does not adopt because his Honour disapproves of it, but his Honour says there everyone agrees that an excise is a tax on good and that the only dispute is whether there is a sufficient relationship with the goods.  And he then accepts that there are these lists of evaluative factors and is critical of that state of affairs.  But the current law is you look at the substance which requires that kind of question.

But there is – illustrative of the need for this kind of evaluative inquiry – quite a body of law in the Court concerning what the Court called, in the criterion of liability era, the no closer connection test.  The no closer connection test – test still exists.  It is endorsed or maintained by Ha.  Ha at page 504 says the:

test of “no closer connection” . . . is maintained.

What their Honours mean by that you can see at page 501 of the report, where their Honours refer, near the bottom of that page, to Justice Kitto’s judgment in Dennis Hotels:

to use the test stated . . . “no closer connection with production or distribution than that it is exacted for the privilege of engaging in the process at all”.

So, the no closer connection test, at least as I understand it, was used by the Court to attempt to draw a line between fees that had no closer connection with production or distribution than that they were engaged in for the privilege of engaging in the business.  If you are on that side of the line, not an excise, and, on the other side of the line, excises, because they had a sufficiently close connection to goods.

Sorry to jump your Honours around in the authorities, but in Philip Morris, which is volume 6, tab 35 ‑ ‑ ‑

GORDON J:   I am sorry.  Just before you go to Philip Morris, do you propose to go back, or is it a different part of your argument where you there seek to apply these different tests and approaches to the characterisation ‑ ‑ ‑

MR DONAGHUE:   I am coming to that.  The application, yes.  So, I am going to come to a more detailed articulation of the factors, but I am just trying to illustrate the evaluative nature of the inquiry because Victoria put against us that we are abandoning certainty, and, in my submission, we are not; that the law already reflects what we are putting.

Philip Morris, if your Honours go to Chief Justice Mason and Justice Deane’s judgment at 436, discussing the no closer connection test, about point 2 on the page, their Honours say – sorry, the last line of the previous page:

The test for distinguishing between a mere licence fee and a duty of excise has been expressed negatively in this way:  a tax which has no closer connexion with the production or distribution of goods than that it is exacted for the privilege of engaging in the process of production, manufacture, distribution or sale is not an excise.

So, that is probably a more accurate statement of the test.  And then their Honours say:

In a context where regard must be had to substance, the “no closer connection” test is not an absolute one.  It postulates a question of degree, to be answered not by reference merely to the form of the statute imposing the tax but by reference to its operation.  There are diverse factors which are relevant to the nature and extent of any connection –

And there is another cite to that Anderson’s passage.  So, that test is coming at the location of the line between excises on the one hand and license fees on the other, but it is trying to identify the same line and doing so by reference to what their Honours described as a “question of degree” informed by diverse relevant factors.  

That is what we put as the appropriate approach and we submit that one should not seek to run away from that approach, really for the reasons that your Honour Justice Gageler explained in Palmer v Western Australia, which is volume 8, tab 45.  Your Honours perhaps do not need to go to it.  But at Palmer in paragraph [147] Justice Gageler explained:

Australian constitutional history has taught us, the hard way, that evaluative judgment is inescapable in constitutional adjudication and that no good can come of attempting to avoid it or unduly to canalise it. The natural judicial tendency to the creation of rules in the hope of generating predictable outcomes on constitutional issues of social and economic significance drove the adoption of both the “criterion of operation” doctrine formulated to govern application of s 92 and the associated “criterion of liability” doctrine formulated to govern application of s 90 of the Constitution.  Both doctrines were shown through experience to produce neither predictability nor transparency but only confusion.

And your Honour then goes on to quote from Sir Kenneth Jacobs in terms that we respectfully adopt.

GORDON J:   Can I ask one more question just before we get to the implications, and that is the passages that you have taken to us which follow on from 499 that I discussed with Mr Merkel, including 436 which you have just taken to us, I think are in the context of the distinction drawn between excise and licence fees as an analysis which is quite particular thing undertaken in those passages.  Are they entirely analogous, and are they entirely transportable?  Do they require adaption when we are dealing with something different from a licence fee, given the kinds of factors that are identified in those passages?

MR DONAGHUE: Your Honour, not all of them will always be helpful and, in my submission, that is recognised in the passages themselves. Often in section 90 cases, as is apparent from even a cursory review of the authorities, they often arise in the context of that debate – is what is being done a fee for a privilege or is it a duty of excise?

But, in my submission, they recognise from whatever end you approach it, that the ultimate question is, as indeed Justice Dixon put it in his rather farsighted judgment in Matthews – he said, well, an excise is a tax on goods, but there is a lot wrapped up in that.  There is a need to evaluate what exactly that means, and it calls for a judgment as to the closeness of the relationship between the tax and the goods which will be influenced by a variety of factors, and I think everybody is reluctant to pin them down because, as Justice Dixon also explained in Matthews, there is a concern about subterfuge and unreal distinction and evasion. 

So, there is a need for flexibility because if the Court draws too bright a line that says, well, as long as you are on this side of the line it will not be an excise, that is an invitation to the States and Territories to structure their taxes in that way and to formalistically avoid the operation of section 90. So that is part of the reason that one asks about, well, how close is the connection.

Without seeking to be in any way comprehensive, and this is the point that I have kept deferring in answer to your Honour’s question, but we have identified in our outline in paragraph 5 what we say are at least four considerations which we submit will commonly be helpful, although they will not always be present. 

It is those four factors I seek to develop a little now, and they will answer, I hope, some of the questions that your Honours have been putting to me that I have been deferring.  The first cleaves to or endeavours to respect Justice Dixon’s observation at page 3 or 4 of Matthews which is volume 5, tab 29 where, immediately after the passage I have just mentioned, to be an excise, the tax must be:

levied upon goods –

But those apparently simple words permit much flexibility of application.  His Honour says

The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods –

at that point, he is not distinguishing of goods:

and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce.

So, that idea is sometimes given a shorthand trading tax type label or a tax on commercial dealings or a tax on integers of commerce, but, in my submission, it is always referable back to that concept that there is a commerciality dimension.

EDELMAN J:   What does it mean?  What does is mean by affecting, then – affecting the goods?  Does it mean affecting the price of the goods?  Affecting the manner in which a consumer deals with the goods?  What does affect the goods mean?

MR DONAGHUE:   In our submission, one needs to take the whole phrase.  The tax must be:

of such a nature as to affect them –

the goods, which, here, means the class of goods as articles of commerce.  We are characterising the tax itself rather than any individual application in any individual good.  In our submission, usually one does not need a great focus on that question because in the context of a tax on the steps your Honour Justice Edelman has been putting to me – the supply side steps about production, manufacture and distribution – it is obvious that that nexus is there on the goods as articles of commerce – articles that are able to be bought or sold in a market.

EDELMAN J:   So, what you mean is the same as the plaintiff – that you mean the demand for goods.

MR DONAGHUE:   Principally, I mean the demand for goods.  Although the supply for goods could also be so, but that is what I am focusing on.

GORDON J:   In Ha, and their discussion of Justice Kitto’s analysis in Dennis Hotels, they – I think dealing with this relevant close connection which is part of your proposed analysis which, I think, his Honour had spoken about in that case – they ultimately determine it by reference to Acts, and the phrase was, I think, done in the course of business which was, I think, a recognition that one looks at this production, manufacture, sale and distribution, one is looking at – to pick up your language – as articles of commerce.  Is that a narrow idea of what it is, is the limits of the excise?

MR DONAGHUE:   Your Honour, one does have to be, in my respectful submission, one has to be careful with Justice Kitto and Dennis Hotels.  I took your Honours to the known close connection test, which has been maintained post Ha, but that judgment is at the foundation of the criterion of liability.

GORDON J:   No, I know it is, but we are trying to here tie down this idea that you proffered as articles of commerce, and the way that some of the other cases have looked at it has been, “in the course of business”.  You describe it yourself as ‑ ‑ ‑

STEWARD J:   I was going to put it slightly differently to you, Mr Solicitor, and that is, this is really the nub of the problem.  The ZLEV car which you buy for your eighteen‑year‑old daughter so she can drive to university has ceased to be an article of commerce.

MR DONAGHUE:   Yes.  That seems to be the heart of one of the main arguments that are put against us.  And partly that is why – and your Honours are attributing to me the formulation – I attribute it to Justice Dixon ‑ ‑ ‑

STEWARD J:   Who also uses the word “trading tax” in both Matthews and in Parton.

MR DONAGHUE:   But the more complete description, in my submission, is, is the tax of such a nature as to affect the relevant kind of good either as a subject of manufacture or production or as an article of commerce, but ‑ ‑ ‑

STEWARD J:   I was going to say, that might justify a consumption tax, which is a tax upon first consumption by an individual because it might have a bearing upon demanded price.  But going forward 15 years hence on your second‑hand ZLEV car, it is harder to see that.

MR DONAGHUE:   I certainly embrace what your Honour puts to me, that it would support, in my submission, the tax in the hands of the consumer, so that alone ‑ ‑ ‑

STEWARD J:   At the first point of home consumption.

MR DONAGHUE:   First point of home consumption – but that alone suggests the categorical exclusion of the consumption tax is wrong.

STEWARD J:   Yes, it might.  But it might nonetheless mean that Victoria can pass this tax.

MR DONAGHUE:   It might not get you the whole way, I accept that, but taking it one step at a time, it means the categorical exclusion is wrong and that one is asking the substantive question.  The next, then, in my submission, there are a couple of points we would seek to develop.  One is that the question is not, does the tax affect a particular good at a time when that particular good is an article of commerce?  The articles of commerce – that the tax is affecting the ZLEVs as a class of goods, some of which are in the market seeking to be sold, and some of which may already have been sold to the consumers, but it affects that class.

I do not accept that once a durable good has passed to the first consumer it is necessarily the case that it has ceased – or certainly not forever ceased to be an article of commerce because, in my submission, the nature of the ZLEV charge is such that if someone seeks to sell their ZLEV on the well‑established second‑hand car market the ZLEV will affect that good as an article of commerce in that market in much the same way as it actually affects the first sale.

STEWARD J:   What if it is never sold?

MR DONAGHUE:   Well, if it is never sold it might be that at that point in time it is not an article of commerce, but I go back to my earlier point that it may still become one again – but even if it does not, the class are articles of commerce.  And if one then says, well ‑ ‑ ‑

GORDON J:   Can I just raise one temporal issue about that submission – and I do not know what the answer is – and so, if one looks at it from the supply versus up to the point of consumption by the first user, and one looks at the natural tendency to affect the price of the good, one can, as has been put to you, rationally explain that all of the integers that have gone to get that good into the hand can be identified as costs spent and therefore affect the demand for that good.

It is very different, is it not, when we are then looking at a tax which is dealing with a market which is ultimately changing and is prospective, rather than retrospective.  In other words, we are looking at it forward, in circumstances where the market, for example, ZLEVs, we know, I think from just reading the press, has dramatically changed.  And so, how does one deal with this kind of analysis of affecting a class, in a temporal sense, with the same kind of certainty that we have done in relation to what are clearly identifiable and not fixed, of course, but clearly identifiable and available charges affecting the ultimate price?

MR DONAGHUE:   The answer to that, in my submission, your Honour, is that right now, for ZLEVs that are on the market in Victoria, one characteristic of those vehicles is that they are vehicles of a kind that will, the purchaser can reasonably be taken to know, attach an ongoing usage charge going forwards.  So, that is a characteristic that will affect, logically – different consumers will react to it different ways.  Some consumers might be very rich and might not care, but it is an input into the cost that those consumers will know that will be associated with their purchases of vehicle.

If we change the example to make it a little easier for me to test the point, if the tax were varied to be a flat tax of whatever figure your Honours prefer – $5,000, $10,000 – payable on the first use of the car, a month after purchase, the good, the ZLEV that they have purchased – will, on our friend’s case, have ceased to be an article of commerce.  And they then assert it cannot be taxed as an excise, because it is not an article of commerce.  But the proposition that the $10,000 fee, payable on the first use a month after purchase will not affect demand for the cars is, in my submission, untenable.

STEWARD J:   But this is where looking at it in substance will make all the difference.

MR DONAGHUE: But we must look at it in substance, according to the authorities, and that tax that I hypothetically posit, if permitted for the State, is profoundly inconsistent with the purpose of section 90. It will be distorting in the market by differentiating between goods.

EDELMAN J:   But that is because it is really a tax on sale.

MR DONAGHUE:   When your Honour says it is really a tax on sale ‑ ‑ ‑ 

EDELMAN J:   It is a direct increase in the sale price for the consumer.

MR DONAGHUE:   It is a direct increase in ‑ ‑ ‑ 

EDELMAN J:   It is just being paid later.

MR DONAGHUE:   The same is true for usage charge, your Honour.  It is a direct increase; if the charge – which is being paid later – spread out over the period that the person uses the car.  If we change my example and make it payable monthly, instead of a flat tax at $10,000, you split it up and spread it over a period of time.  In my submission, the position is the same.  It is still going to influence the purchasing decision of the person to know, I will pay X amount for the car, and then I will pay another $10,000 either as a lump sum or spread out as I use it.  And, in my submission, those ‑ ‑ ‑ 

STEWARD J:   Say that – if that were a tax on the value of the car, that might be so.  But this is a tax on usage, which you cannot predict.

MR DONAGHUE:   But, your Honour, if it was a tax on the value of the car that would be coming to one of my later factors ‑ ‑ ‑ 

STEWARD J:   Sorry, more accurately, you cannot always predict.  I mean ‑ ‑ ‑ 

MR DONAGHUE:   All that it needs to be is a tax.  In my submission, a tax on the use of the good that affects it, affects goods of that class as an article of commerce.  A tax of the kinds I have been hypothesising to your Honours, in my submission, clearly would ‑ ‑ ‑ 

EDELMAN J:   Why do you need “use” then?  I know you are going to deal with it at some point, but possession would, potentially, have an even greater effect.

MR DONAGHUE:   If one was to tax possession of the good in a way that affected that class of goods as article of commerce, I accept what your Honour puts to me.

EDELMAN J:   When would it not, on your submission?  When would a direct tax on the possession of a good not affect the demand for the good as a price, on your submission?

MR DONAGHUE:   It may be that it would be an entirely trivial impost, so that your Honours might not be satisfied – because I am accepting that your Honours have to evaluate the substance of the matter .  Your Honours might not be satisfied that there was a sufficient connection there.  But also, I am not putting – I hope, being clear, that I am putting an analysis that says, consistently with the cases I have pointed to, that one has to evaluate the substance of the matter by reference to a range of relevant factors.  So, something might impact on the market for the relevant good, but not have any other indicia of connection to the good – the payroll tax type example. 

So, the fact that the tax has some capacity to affect the market for the good will not, by itself, give you a sufficient connection to the good.  But the effect on the good as an article of commerce is one of the things which is embodied in the kind of commercial dealings idea that we submit does have a relevant bearing.

Having regard to the purpose stressed in Ha and Capital Duplicators, there is an integration, if you like, of the legal test that Justice Dixon articulated and the purpose that the Court has more recently made clear, because what, in our submission, your Honours are trying to do is to identify an operational construction of section 90 that best achieves the purpose that the provision serves within the constitutional scheme.

One thing that you are asking for is the potential to affect demand or supply in the relevant market as a class.  It is no answer to that, in our submission, for our friends to say, well, once one’s ZLEV has been sold, it is no longer an article of commerce, because that denies the capacity of the charge to affect the rational purchaser of goods of that class, when they know that if they buy the car they will incur the charge.

The second factor that I think I can deal with very briefly before the Court rises is the criterion of liability.  I say that because, while it is now obviously clear that the criterion of liability is not decisive of the character of a tax and excise or not, it nevertheless remains relevant – as indeed the footnote reference that Justice Gordon drew my attention to earlier makes clear.  That makes very good sense because, if one is asking, is there a sufficient connection between the tax and the good – and on the face of the legislation, one can see a connection between the tax and the good, because the taxing point is identified by reference to a dealing with the good – then that is a useful indicator of the existence of the requisite nexus.

So, it is the fact that, in our submission, where it is present – where a tax is expressed to be on production, manufacture, sale, distribution or, in our submission, use – it is expressed to be by reference to a “dealing with goods” – to use the words from the bottom of Ha at 499 – that is a useful indicia of the existence of an excise.

Of course, where it is not present, it is not decisive – and that has been explained since Philip Morris – but, in our submission, one sees – I will not take your Honours back to it, but in 583, point 4 in Capital

Duplicators, the acknowledgement of its ongoing relevance is clear – and, of course, that factor is present in relation to the ZLEV charge.

Your Honours, I see the time.

KIEFEL CJ:   Yes, thank you, Mr Solicitor.  The Court proposes to recommence hearing tomorrow at 9.45 to catch up a little time.

The Court will now adjourn until 9.30 am for the pronouncement of orders and otherwise to 9.45 am.

AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 15 FEBRUARY 2023