Mutual Pools & Staff Pty Ltd v Commonwealth [1994] HCA 9;

High Court of Australia|1994-03-09|Before: Mason CJ

background to the enactment of s.12A must be kept in mind. Werrin was

a case where the taxation authorities had acted in good faith on a

view of the legislation which was clearly open. It does not follow

exacted as a "tax" is necessarily a valid law pursuant to the

combination of powers conferred by s.61 and s.51(xxxix). A law

barring recovery which is founded on those two provisions must be

incidental to the execution of a power vested in the Parliament or "in

the Government of the Commonwealth". Barring the right to recover

payments will not be incidental to the execution of such a power if

what the Executive has done was not done in good faith or had no

reasonable connection with a power actually vested in the Executive.

However, if the executive government, acting in good faith, has

mistakenly collected a tax from a person while purporting to act under

a provision of a valid law of the Parliament of the Commonwealth, the

combination of s.61 and s.51(xxxix) is sufficiently comprehensive to

enable the Parliament to enact a law barring recovery of the tax so

paid if the exaction of the tax was reasonably referable to the

15. Although the combination of s.61 and the incidental power may

be sufficient to validate or prevent action in respect of unlawful

executive activity in many cases, the power conferred by the various

paragraphs of s.51 to pass retrospective laws or to bar remedies is

more comprehensive. Conduct may be validated under s.51 even though

it was not carried out in good faith or was not reasonably referable

to a power vested in the executive government, provided that the

conduct in question was within one of the heads of power conferred by

s.51. There can be few, if any, examples of a law validating conduct

or barring a remedy concerning a subject matter of s.51, which would

be valid under the combination of s.61 and s.51(xxxix) but which would

not be valid under the relevant head of power conferred by s.51

itself. Thus, s.51(ii) seems the preferable source of power for the

16. The power of the federal Parliament to bar remedies or validate

conduct is subject, however, to two restrictions. One is the

acquisition of property power (s.51(xxxi) of the Constitution). The

other is the principle that what the Parliament cannot do directly, it

17. Where the conduct which the federal Parliament seeks to validate

or to protect from legal action involves or involved an acquisition of

property, any attempt to validate that conduct or to bar a remedy for

the recovery of that property will be invalid unless it complies with

the provisions of s.51(xxxi) of the Constitution. That is to say, the

legislation validating the acquisition or barring the right to recover

the property will be invalid unless it provides "just terms" for the

acquisition. It is well established that, so far as possible, the

powers conferred by s.51 are to be read subject to the provisions of

s.51(xxxi) which are both a source of power to acquire property and

a constitutional guarantee that property will be acquired by the

Commonwealth only on just terms ((168) Johnston Fear and Kingham and

The Offset Printing Co. Pty. Ltd. v. The Commonwealth [1943] HCA 18; (1943) 67 CLR 314

at 318; Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1 at 349, 350;

W.H. Blakeley and Co. Pty. Ltd. v. The Commonwealth of Australia [1953] HCA 12; (1953)

87 CLR 501 at 520; Attorney-General (Cth) v. Schmidt [1961] HCA 21; (1961) 105 CLR 361

18. Furthermore, if the federal Parliament had no power to enact the

law which gave rise to the conduct or receipt of money or acquisition

of property, it would seem to follow that the Parliament cannot

validate that conduct, receipt or acquisition or bar remedies in

respect of it. In a federation such as Australia, the legislative and

executive powers of the federating government are circumscribed. To

allow a government of the federation to validate or bar action in

respect of conduct purporting to be done under a statute which it had

no power to enact would be to usurp the constitutional scheme and set

aside the Constitution's allocation of legislative power. If a

legislature has no power to enact a statute, its executive government

has no power to enforce it. A law purporting to bar the recovery of

money collected under such a statute would not be a law with respect

to any relevant head of power. Nor would it be a matter incidental

to any "power vested by this Constitution" in the Parliament or the

government of the Commonwealth within the meaning of s.51(xxxix) of

the Constitution. The validity of a law barring the right to recover

moneys paid under an invalid enactment cannot depend, therefore, on

whether the executive government has acted in good faith and whether

its actions are reasonably referable to a "power" conferred by the

invalid enactment. "The Constitution is not to be mocked by

substituting executive for legislative interference with freedom" of

the citizen ((169) James v. Cowan (1932) AC 542 at 558 per Lord Atkin.).

Nor does the federal Parliament acquire any special power to pass

validating legislation in cases where the government has spent the

moneys raised under the invalid statute. To accept any of these

propositions would mean that the taxpayer would be left in the same

position as if the statute imposing the tax was within the

constitutional power of the government enacting the statute. "If a

State cannot take by unconstitutional means it cannot retain by

unconstitutional means." ((170) Amax Potash Ltd. v. Government of

Saskatchewan (1976) 71 DLR (3d) 1 at 12.) This is simply an

application of the principle that what the legislature cannot do

19. In Antill Ranger and Co. Pty. Ltd. v. Commissioner for Motor

Transport ((171) [1955] HCA 25; (1955) 93 CLR 83.) and Barton v. Commissioner for

Motor Transport ((172) [1957] HCA 50; (1957) 97 CLR 633.), the Court held invalid

legislation enacted by the Parliament of New South Wales abolishing the

legal right of the plaintiffs to recover moneys which had been paid by

interstate carriers under legislation which the Privy Council

subsequently held was in breach of s.92 of the Constitution. Because

s.92 withdrew the power to tax interstate carriers, it followed that it

prohibited legislation which sought to prevent the recovery of money

obtained in breach of s.92. On appeal in the Antill Ranger Case ((173)

Commissioner for Motor Transport v. Antill Ranger and Co. Pty. Ltd.

[1956] UKPCHCA 5; (1956) 94 CLR 177 at 179-180.), the Judicial Committee said that

"(n)either prospectively nor retrospectively ... can a State law make

lawful that which the Constitution says is unlawful". In Deacon v.

Grimshaw ((174) [1955] HCA 25; (1955) 93 CLR 83.), the Court also held that the

legislation considered in Antill Ranger was invalid in so far as it

purported to abolish the plaintiff's right of action for the wrongful

detention of his motor vehicle during the course of an interstate

20. The principle which is the basis of these cases is equally

applicable to cases where the Constitution has not granted to a

Parliament the power to enact the statute which it purported to enact.

It would be a curious result if the Commonwealth, for example, could

bar claims in respect of money obtained by "legislation" outside the

scope of the powers affirmatively granted to it by the Constitution

even though it could not bar claims for the recovery of money obtained

in breach of s.92 of the Constitution. In Canada, the Supreme Court

has held that the Provinces of Canada cannot bar remedies in respect

of conduct purporting to be authorised by a statute going beyond the

Constitution's grant of affirmative powers to the Provinces. Thus, in

Amax Potash Ltd. v. Government of Saskatchewan ((175) (1976) 71 DLR

(3d) 1.), the Supreme Court held invalid a sub-section of the

Proceedings Against the Crown Act, R.S.S. 1965, c.87 which provided

that no proceedings would lie against the Crown in respect of anything

done under a statutory provision which is, was or may be beyond the

jurisdiction of the Legislature. Dickson J, who gave the judgment of

(I)f a statute is found to be ultra vires the Legislature

which enacted it, legislation which would have the effect of

attaching legal consequences to acts done pursuant to that

invalid law must be equally ultra vires because it relates

to the same subject-matter as that which was involved in

the prior legislation. If a State cannot take by

unconstitutional means it cannot retain by unconstitutional

means."

21. Consequently, where the Parliament of the Commonwealth has

no power to create obligations of the kind which it purported to

create, any right to retain property received in discharge of those

"obligations" would seem to depend upon private law principles such

as change of position etc. The argument for the Commonwealth did not

accept that this was so. The Commonwealth contended that, whatever

the position may be in other federations, s.78 of the Constitution

enabled it to enact legislation preventing the recovery of money owed

by the Commonwealth to a taxpayer even though that money had been

obtained by force of legislation which was outside the power of the

Commonwealth to enact. Section 78 provides:

"The Parliament may make laws conferring rights to

proceed against the Commonwealth or a State in respect of

matters within the limits of the judicial power."

22. It would be surprising if s.78 was intended to enable the federal

Parliament to protect itself against the consequences of enacting a

statute beyond its constitutional powers. The primary purpose of s.78

was to ensure that federal Parliament could remove the immunity of the

Crown in right of the Commonwealth or the States from actions of tort

or breach of contract ((177) See Official Record of the Debates of the

Australasian Federal Convention, Melbourne, 1 March 1898, at

1653-1654.). It is another question whether it was intended to ensure

that the Commonwealth could protect itself in respect of conduct which

is outside the scope of the powers of the Commonwealth. The principle

which is the basis of the decisions in Antill Ranger, Deacon, Barton

and Amax Potash Ltd. would be set at nought if s.78 conferred a power

so comprehensive that it enables the Commonwealth to protect itself

against the consequences of enacting legislation beyond its other

powers. It could hardly be thought that s.78 would authorise the

Parliament to protect the Commonwealth against the consequences of a

breach of s.92 of the Constitution. While the powers conferred by s.51

are conferred "subject to this Constitution", that fact provides no

reason why any distinction should be drawn between a law which is

invalid because it breaches s.92 and a law which is outside the

affirmative grant of powers of the Commonwealth. It seems almost

absurd to think that, relying on s.78, the Commonwealth could bar the

right to bring an action for the recovery of, or damages for, property

acquired by the Commonwealth otherwise than on just terms, contrary to

23. Section 78 must be read in the context of a constitutional

document which allocates powers between the Commonwealth and the

States and creates a High Court in which it vests the judicial power

of the Commonwealth for the purpose, inter alia, of enforcing the

Constitution's allocation of power. Because the Constitution creates

the Commonwealth and defines its constitutional powers, rights and

duties, the right to sue the Commonwealth in respect of matters

concerned with the scope of its constitutional powers is arguably

conferred by the Constitution itself (see covering cl.5 and

s.75(iii)). In a case concerned with the scope of the constitutional

powers of the Commonwealth, s.75(iii) of the Constitution, which

declares that the High Court shall have original jurisdiction in all

matters "(i)n which the Commonwealth, or a person suing or being sued

on behalf of the Commonwealth, is a party", might be thought to be

intended to give this Court jurisdiction in a suit which is concerned

with the scope of the constitutional powers of the Commonwealth. In

that respect, it might be thought that the jurisdiction conferred by

s.75(iii) was similar to that conferred by s.75(v), which this Court

has said cannot be taken away by Parliament ((178) The Commonwealth v.

New South Wales (1923) 32 CLR 200 at 216; R. v. Hickman; Ex parte Fox

and Clinton [1945] HCA 53; (1945) 70 CLR 598 at 614-617; R. v. Commonwealth Rent

Controller; Ex parte National Mutual Life Association of Australasia

Ltd. [1947] HCA 32; (1947) 75 CLR 361 at 369; quoted with approval in R. v. Central

Reference Board; Ex parte Thiess (Repairs) Pty. Ltd. [1948] HCA 9; (1948) 77 CLR 123

at 130; O'Toole v. Charles David Pty. Ltd. [1991] HCA 14; (1990) 171 CLR 232 at 292,

s.75(iii) is expressed in terms of parties while s.75(v) is expressed

in terms of remedies. If the Constitution does confer the right

to proceed against the Commonwealth in this Court in respect of

constitutional matters, the jurisdiction conferred should extend to

the determination of any question or claim which is not severable from

the determination of the scope of the constitutional powers of the

Commonwealth ((179) cf. Philip Morris Inc. v. Adam P Brown Male

24. In The Commonwealth v. New South Wales ((180) (1923) 32 CLR 200.),

the Court held that s.75(iii) of the Constitution conferred

jurisdiction on the Court to hear an action in tort brought by the

Commonwealth against a State without the consent of the State. The

decision in The Commonwealth v. New South Wales has never been

overruled although later cases have virtually ignored its reasoning and

acted as if ss.75 and 78 of the Constitution and ss.39, 56 and 64 of

the Judiciary Act 1903 (Cth) or some combination of them is the source

of the Commonwealth's liability in tort and contract ((181) See Maguire

v. Simpson [1977] HCA 63; (1977) 139 CLR 362; The Commonwealth v. Evans Deakin

Industries Ltd. [1986] HCA 51; (1986) 161 CLR 254 at 263-264; Breavington v. Godleman

[1988] HCA 40; (1988) 169 CLR 41 at 68-69 per Mason CJ, 101-105 per Wilson and

At a glance

Court

Decision date

Before

Source

Judgment (473 paragraphs)

Parties

Legislation Cited (22)

Cases Cited (148)

Mutual Pools & Staff Pty Ltd v Commonwealth [1994] HCA 9; (1994) 179 CLR 155; (1994) 94 ATC 4103; (1994) 119 ALR 577; (1994) Aust Sales Tax Cases 85-181; (1994) 27 ATR 357; (1994) 68 ALJR 216 (9 March 1994)