MUTUAL POOLS & STAFF PTY LTD v THE COMMONWEALTH OF AUSTRALIA

Judges:
Mason CJ
Brennan J
Deane J
Dawson J
Gaudron J
McHugh J
Toohey J

Court:
Full High Court

Judgment date: Judgment handed down 9 March 1994

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Mason CJ

This case, which was stated by McHugh J., arises out of this Court's decision in Mutual Pools & Staff Pty. Ltd. v. Federal Commissioner of Taxation ^[1] Mutual Pools and Staff Pty Limited and Anor v FC of T 92 ATC 4016 ; (1992) 173 CLR 450 . . By that decision, the Court declared that the sales tax imposed on so much of a swimming pool as is constructed in situ was invalid and of no effect on the basis that the legislation imposing the tax was contrary to s. 55 of the Constitution. The facts stated in the case can briefly be summarized.

The facts

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

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

This agreement was made on 19 November 1990.

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

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

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

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

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

then the Commonwealth is only liable to make the in situ pool tax refund payment to the pool builder to the extent that it equals the sum of:

• (c) the amount of the tax that was not passed on; and
• (d) the amount of the tax that was refunded.

(3) If, before the commencement of this Act or within 2 years after its commencement, the pool builder in respect of an in situ pool tax refund payment and the pool purchaser in relation to the swimming pool concerned have jointly made a declaration to the Commissioner, in a form approved by the

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ATC 4105

Commissioner for the purpose, that a specified amount, being the whole or part of any of the in situ pool tax concerned that was passed on to the pool purchaser, has not been refunded to the pool purchaser, then subsection (4) applies.

(4) If a declaration is made under subsection (3), the Commonwealth is liable to make so much of the in situ pool tax refund payment as equals the amount of the tax that was passed on to the pool purchaser and not refunded, but is liable to make the payment to the pool purchaser instead of to the pool builder.''

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

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

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

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

``1. If the said amount of $1,522 was paid pursuant to the SPASA agreement, was the Defendant legally obliged, before the Refund Act was enacted, to repay the said amount to the Plaintiff by reason of the facts and matters referred to in paragraphs 5, 6, 7, 8 and 10 hereof.

2. Is the Refund Act invalid in its application to the circumstances of this case?''

Question 1

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

Question 2

(a) The source of power

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

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ATC 4106

with s. 61 authorizes the enactment of the Refund Act.

This approach accords with the views expressed by Rich J., Starke J. and Dixon J. in Werrin v. The Commonwealth ^[6] Werrin v The Commonwealth (1937-1938) 59 CLR 150 . . In that case, s. 12A of the Sales Tax Procedure Act 1934 (Cth) barred recovery of certain payments made as sales tax on the ground that the goods had gone into use or consumption before the relevant transactions of sale allegedly attracting duty. Rich, Starke and Dixon JJ. upheld the validity of the section. The basis for the conclusion reached by Rich J. is not at all clear. His Honour said that ^[7] ibid. at 161. :

``it was clearly within the competence of the Federal Parliament to say that a sum of money erroneously collected under a tax Act by administrative officers acting in good faith should be retained.''

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

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

(emphasis added)

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

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

The Refund Act may be said to operate retrospectively by authorizing the retention of moneys previously paid. However, it is well settled that the Parliament may exercise its legislative powers so as to alter or abrogate rights which would otherwise be enforced by judicial determination ^[13] Nelungaloo Pty. Ltd. v. The Commonwealth (1947-1948) 75 CLR 495 at 503-504, 579-580 ; R v. Humby ; Ex parte Rooney (1973) 129 CLR 231 at 250 ; Australian Building Construction Employees' and Builders Labourers' Federation v. The Commonwealth (1986) 161 CLR 88 at 95-96 . . It is also well settled that, at least outside the realm of criminal law, the Parliament can enact ``a retrospective or retroactive law dealing with substantive rights or liabilities'' ^[14] Polyukhovich v. The Commonwealth (1990-1991) 172 CLR 501 at 534-540 . .

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

The Refund Act is therefore validly enacted unless it can be demonstrated that it contravenes some other provision of the Constitution. The plaintiff's argument that the Refund Act is contrary to s. 55 of the Constitution was abandoned in argument. The only remaining challenge to the validity of the Refund Act is based on s. 51(xxxi) of the

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Constitution - that the regime established by the Refund Act amounts to an acquisition of property otherwise than on just terms.

Section 51(xxxi)

Section 51(xxxi) confers a power upon the Parliament to legislate with respect to the acquisition of property from any State or person on just terms for any purpose in respect of which the Parliament has power to make laws. The provision has been described as a provision of a fundamental character, having the status of a constitutional guarantee, which was designed to protect citizens from being deprived of their property except on just terms ^[15] Minister of State for the Army v. Dalziel (1943-1944) 68 CLR 261 at 276 per Latham C.J., 284-285 per Rich J. ; Clunies-Ross v. The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs C.J., Mason, Wilson, Brennan, Deane and Dawson JJ.; Australian Tape Manufacturers Association Ltd. & Ors v. The Commonwealth (1993) AIPC ¶ 90-965 at 39,190-39,191; (1991-1993) 176 CLR 480 at 509 . .

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

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

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

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

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

Likewise, a law made in the exercise of the power with respect to bankruptcy and insolvency, which provides for the sequestration of the property of a bankrupt and its vesting in the Official Receiver, is not a law with respect to the acquisition of property within s. 51(xxxi) ^[20] Schmidt (1961) 105 CLR at 372. . It is no more and no less than a law which regulates the incidents and effects of bankruptcy, the provision for the vesting of title to the bankrupt's property in the Official Receiver being subordinate to sequestration. That element in the law would not enable one to describe it with any semblance of accuracy as a law for the acquisition of property. So also with a law which provides for the forfeiture of prohibited imports ^[21] Burton v. Honan (1952) 86 CLR 169 at 180-181 . or for forfeiture as a consequence of conviction for a criminal offence or for breach of some statutory provision which regulates conduct ^[22] Schmidt (1961) 105 CLR at 372. . Such a law would not be described as a law with respect to the acquisition of property within s. 51(xxxi) simply because

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ATC 4108

acquisition in the form of forfeiture of property is prescribed as a penalty for engaging in conduct proscribed by the law, proscription of that conduct being the primary purpose and effect of the law. The law which provided for the application of enemy property as war reparations was in the same category because it was a subsidiary provision in a general scheme for the disposition of enemy property and had to be characterized against the common law subjection of the property of enemy aliens to seizure and forfeiture by the Crown ^[23] ibid. at 373; TPC v. Tooth & Co. Ltd. & Anor (1979) ATPR ¶ 40-127 at 18,393-18,395; (1979) 142 CLR 397 at 456-457 per Aickin J. .

Again, because the purpose served by an exercise of the taxation power conferred by s. 51(ii) is compulsorily to acquire money for public purposes ^[24] FC of T v. Clyne (1958) 11 ATD 428 at 432; (1958) 100 CLR 246 at 263 per Dixon C.J.; TPC v. Tooth & Co. Ltd. (1979) ATPR at 18,392-18,393; (1979) 142 CLR at 453-454 per Aickin J. , a law that relates to the imposition of taxation will rarely, if ever, amount at the same time to a law with respect to the acquisition of property within the meaning of s. 51(xxxi) ^[25] But cf. Australian Tape Manufacturers (1993) AIPC at 39,190-39,191; (1991-1993) 176 CLR at 509-510 per Mason C.J., Brennan, Deane and Gaudron JJ. . Of its nature ``taxation'' presupposes the absence of the kind of quid pro quo involved in the ``just terms'' prescribed by s. 51(xxxi) ^[26] ibid. at AIPC at 39,190-39,191; CLR 509. . Although this conclusion virtually disposes of the second question in the case stated, it will be convenient to consider later the general nature of the relationship between s. 51(xxxi) and other specific legislative powers of the Parliament and the precise meaning of the expression ``acquisition of property''.

The examples given above of instances in which a law dealing with property or a chose in action necessarily stands apart from s. 51(xxxi) demonstrate that the words ``for any purpose for which the Parliament has power to make laws'' do not support the proposition that s. 51(xxxi) applies to any law providing for acquisition of property enacted by the Parliament. Instead, the Court has decided that acquisitions of various kinds, even though they might perhaps fall prima facie within the general power, are to be regarded as authorized by the exercise of specific powers otherwise than on the basis of just terms. Of these instances, it may be said that they are all cases in which the transfer or vesting of title to property or the creation of a chose in action was subservient and incidental to or consequential upon the principal purpose and effect sought to be achieved by the law so that the provision respecting property had no recognizable independent character. Indeed, the taxation cases apart, they were all cases in which the relevant statute provided a means of resolving or adjusting competing claims, obligations or property rights of individuals as an incident of the regulation of their relationship, e.g., the relationship between a bankrupt and the creditors in the bankruptcy, between the Crown and the person who brings in prohibited imports, and between the Crown and an enemy alien with respect to enemy property. In a context in which the law resolves or adjusts competing claims, obligations or property rights, it is not possible to regard the law as a law for the acquisition of property within the meaning of s. 51(xxxi). In Australian Tape Manufacturers Association Ltd. v. The Commonwealth ^[27] (1993) AIPC at 39,191; (1991-1993) 176 CLR at 510. , Mason C.J., Brennan, Deane and Gaudron JJ. said:

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

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

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

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The meaning of the expression ``acquisition of property''

In conformity with the liberal interpretation which is given to a legislative power subject to a safeguard such as ``just terms'' <sup>[29]</sup> Bank Nationalization Case (1948) 76 CLR at 349. , the word ``property'' has a broad meaning ^[30] See The Commonwealth v. New South Wales (1920-1923) 33 CLR 1 at 20-21 ; Dalziel (1943-1944) 68 CLR at 285, 290; Bank Nationalization Case (1948) 76 CLR at 349; The Commonwealth v. Tasmania. The Tasmanian Dam Case (1983) 158 CLR 1 at 145, 246-247, 282-283 ; Australian Tape Manufacturers (1993) AIPC at 39,190-39,191; (1991-1993) 176 CLR at 509. . Thus, a contractual right, amounting to a chose in action, is ``property'' for the purposes of s. 51(xxxi) <sup>[31]</sup> Dalziel (1943-1944) 68 CLR at 290; Norman v. FC of T (1963) 13 ATD 13 at 21-22; (1963) 109 CLR 9 at 26 ; Australian Tape Manufacturers (1993) AIPC at 39,190-39,191; (1991-1993) 176 CLR at 509. , as are ``innominate and anomalous interests'' ^[32] Bank Nationalization Case (1948) 76 CLR at 349. . And a legislative imposition of an obligation to pay money, depending upon the contract, may amount to an ``acquisition of property'' ^[33] Australian Tape Manufacturers (1993) AIPC at 39,190-39,191; (1991-1993) 176 CLR at 509-510. . On the other hand, the mere extinguishment by the Commonwealth of a right enjoyed by an owner in relation to his or her property does not amount to an acquisition of property ^[34] The Tasmanian Dam Case (1983) 158 CLR at 145. ; in the absence of an acquisition of a benefit or an interest in property, however slight or insubstantial it may be, the complete extinguishment of contractual rights does not constitute such an acquisition ^[35] R v. Ludeke ; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653 . .

Although the distinction between extinguishment and acquisition of rights is clearly recognized in the law of property, it may be that in some circumstances the extinguishment of a chose in action against the Commonwealth would amount to an acquisition of property. The extinguishment of such a cause of action could have the same effect as an assignment of the chose in action to the Commonwealth. It has been said that what the Constitution forbids directly cannot be achieved indirectly or by means of some circuitous device ^[36] Bank Nationalization Case (1948) 76 CLR at 349-350; see also TPC v. Tooth & Co. Ltd. (1979) ATPR at 18,364; (1979) 142 CLR at 407 per Gibbs C.J.; The Tasmanian Dam Case (1983) 158 CLR at 283 per Deane J. .

There is some authority to suggest that the Commonwealth may legislate to extinguish a cause of action against it without contravening s. 51(xxxi). In Werrin , Dixon J. said ^[37] (1937-1938) 59 CLR at 165. :

``There is, I think, no constitutional provision preventing the Parliament from extinguishing a cause of action against the Commonwealth, unless implications be discovered in sec. 75 which do so.''

Although Dixon J. did not specifically mention s. 51(xxxi), clearly his Honour did not consider that provision to be an impediment to the extinguishment of a cause of action against the Commonwealth, at least in the circumstances of that case. The section of the Sales Tax Act in question in Werrin , s. 12A, was in effect very similar to that in question in this case. However, in Werrin the cause of action in question was a claim for restitution of taxes mistakenly paid and was not based on a contractual right. As such, the cause of action, if there was one, which the Court in Werrin assumed but did not decide ^[38] ibid. at 164. , was not assignable and his Honour may have thought that it did not amount to property for the purpose of s. 51(xxxi) ^[39] See Australian Capital Television Pty. Ltd. v. The Commonwealth (1992) 177 CLR 106 at 165-166 per Brennan J. See also Poulton v. The Commonwealth (1952-1953) 89 CLR 540 at 602 per Williams, Webb and Kitto JJ. But cf. Trendtex Trading Corpn v. Credit Suisse [1982] AC 679 at 703 per Lord Roskill. .

In Perpetual Executors and Trustees Association of Australia Ltd. v. Federal Commissioner of Taxation ^[40] Perpetual Executors and Trustees Association of Australia Ltd v FC of T (1948) 77 CLR 1 . , the Commonwealth, by certain bonds that it had issued, had promised that it would pay interest on the bonds without deduction for any taxes. In Magrath v. The Commonwealth ^[41] Magrath v The Commonwealth (1944) 7 ATD 369 ; (1944) 69 CLR 156 per Rich, McTiernan and Williams JJ. , a majority of the Court had decided that this promise amounted to a term of the contract between the Commonwealth and the bondholder that interest would not form part of the assessable income of the taxpayer. Subsequent to the issue of the bonds to the bondholder in Perpetual Executors and Trustees , the Income Tax Assessment Act 1936 (Cth) levied income tax upon such interest. The Court held by majority that the interest was taxable under the statute and that the assessment and collection of the tax was not a breach of contract. Dixon J. stated that ^[42] (1948) 77 CLR at 28. :

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

A similar conclusion had been reached in Magrath by Rich J. and Williams J., although in that case it had been unnecessary to decide the point because the Commonwealth had stated that, if the Court found the existence of a contract, then the Commonwealth would honour its contractual obligations. In Magrath , Rich J. observed that ``[t]he Commonwealth, by its legislature, can, without any breach of the law, repudiate promises given by its Executive Government'' ^[43] (1944) 7 ATD at 376; (1944) 69 CLR at 170. . In neither case did the Court consider s. 51(xxxi) to be a possible bar to the validity of the imposition of the tax.

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

So understood, both Magrath and Perpetual Executors , as well as Werrin , are consistent

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with the general proposition that a law with respect to taxation which regulates competing claims and interests is not a law for the acquisition of property. And here there is no additional element in the Refund Act which would enable the Court to say that, though it is a law with respect to taxation, it is also a law for the acquisition of property.

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

Accordingly, I would answer the questions asked as follows:

• 1. Yes.
• 2. No.