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

s.51(xxxi) of the Constitution.

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

Gaudron JJ, 117-118 per Brennan J, 139-140 per Deane J, 151-153 per

Dawson J, 169 per Toohey J See also Cowen and Zines, Federal

Jurisdiction in Australia, 2nd ed. (1978) at 35-38; Wynes,

Legislative, Executive and Judicial Powers in Australia, 5th ed. (1976)

at 455-461.). However, even if, as I think is the case,

s.75(iii) is not itself the source of the Commonwealth's liability

in tort and contract, it may well be that its inclusion in the

Constitution enables an action to be brought against the Commonwealth

in this Court in respect of matters concerning, or not severable from,

the scope of the Commonwealth's constitutional powers. In that event

it would not be open to the federal Parliament to bar the right to

proceed against the Commonwealth in respect of the scope of its

25. However, irrespective of the basis of the liability of the

Commonwealth to be sued in this Court, I am of the opinion that the

Refund Act was authorised by s.51(ii) of the Constitution and does not

involve any acquisition of property within the meaning of s.51(xxxi).

It is therefore not necessary for the Commonwealth to rely on s.78 to

26. In my opinion, subject to the question whether the Refund Act

acquired the property of the taxpayer for the purposes of s.51(xxxi),

it was authorised by the provisions of s.51(ii) of the

Constitution ((182) If the Refund Act constituted an acquisition of

property "for any purpose in respect of which the Parliament has power

to make laws", the only source of power to make the law would be

s.51(xxxi): Johnston Fear (1943) 67 CLR at 318; W.H. Blakeley

(1953) 87 CLR at 521. Thus, a law for the acquisition of a

building for the Department of Taxation is a law made under

s.51(xxxi) and not s.51(ii).). It was not, and could not be, disputed

that, if the Federal Parliament had re-enacted the substance of the

Amending Act and made it operate retrospectively, such an Act would

have been a valid law with respect to taxation within the meaning of

s.51(ii) of the Constitution. Furthermore, it would have been a law

with respect to taxation even if it provided that amounts paid under

the Amending Act were to be "confiscated" and credited towards the

liability of the taxpayer under the re-enacted legislation ((183) Air

Canada v. British Columbia (1989) 59 DLR (4th) 161.). Does it make

any difference that the Refund Act does not impose a retrospective tax

but provides that the moneys refundable by the Commonwealth as the

result of the invalidity of the Amending Act are only to be paid in

accordance with the provisions of the Refund Act, which in some

instances, is to persons other than those who paid the tax?

27. If the Refund Act had provided for no more than a procedure for

repaying the sums collected under the Amending Act to those who had

paid those sums, it would undoubtedly be a law with respect to

taxation. Although such a hypothetical enactment would not itself

impose a tax, the repayment of moneys wrongly collected as taxes is

an incident of the subject matter of taxation; a law dealing with the

consequences of an invalid attempt to collect a tax is as much a law

with respect to taxation as a law providing for the refund of taxes

overpaid. Although it is likely that, in many cases falling within

the operation of the Refund Act, the repayment of the "tax" will be

made to a person other than the taxpayer - because the burden of the

tax was passed onto that person - the Refund Act is a law which deals

with the repayment of moneys unlawfully collected as taxes. It is,

28. Furthermore, the present case is not one which is concerned with

an attempt by the Commonwealth to retain moneys obtained or exacted

by legislation outside the scope of its constitutional powers. The

Amending Act, although invalid by reason of its failure to comply

with s.55 of the Constitution, was nevertheless a law with respect

to taxation within the meaning of s.51(ii) of the Constitution.

Furthermore, to uphold the validity of the Refund Act does not

undermine the constitutional purpose which is performed by s.55, for

it was open to the Senate to delete or amend any provision of the

Refund Act. The Refund Act does not suffer from the defect which

29. Accordingly, in my opinion, the Refund Act was a law authorised by

s.51(ii) of the Constitution.

The effect of s.51(xxxi)

30. Section 51(xxxi) provides that the Parliament may make laws with

respect to "(t)he acquisition of property on just terms from any State

or person for any purpose in respect of which the Parliament has power

to make laws". Whether or not the Commonwealth has acquired property

in a particular case is to be examined as a matter of substance and

not form ((184) Bank of N.S.W. v. The Commonwealth (1948) 76 CLR at

349; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR

397 at 407.). If legislation involves an acquisition of property

for the purpose of s.51(xxxi), it must comply with the terms of that

paragraph ((185) Johnston Fear (1943) 67 CLR at 318; W.H. Blakeley

(1953) 87 CLR at 521; Schmidt (1961) 105 CLR at 371-372.). Section

51(xxxi) is, therefore, both a source of power and a guarantee that the

property of a State or an individual citizen will not be sacrificed for

the public welfare of the Commonwealth. If the Parliament wishes to

acquire property belonging to a State or individual, the cost of the

acquisition has to be borne by the taxpayers of the Commonwealth and

not by the owner of the property. However, not every taking or receipt

of property by the Commonwealth constitutes an acquisition of property

for the purpose of s.51(xxxi). In Attorney-General (Cth) v. Schmidt

((186) [1961] HCA 21; (1961) 105 CLR 361 at 372.), Dixon CJ, with the concurrence

of Fullagar, Kitto, Taylor and Windeyer JJ, said that s.51(xxxi) "does

not mean that property can never pass to or become vested in the

Commonwealth or its officers except under a law made in pursuance of"

31. When the taking of property is an inevitable consequence of the

exercise of a power conferred by s.51 ((187) See The Commonwealth v.

Tasmania (The Tasmanian Dam Case) [1983] HCA 21; (1983) 158 CLR 1 at 282 per Deane J)

or is a reasonably proportional consequence of a breach of a law

passed under one of those powers, no acquisition of property within the

meaning of s.51(xxxi) takes place. Although s.51(xxxi) abstracts the

power of acquisition from other legislative powers in s.51, it cannot

be interpreted so broadly as to render meaningless the legitimate use

and operation of other powers conferred by s.51. The compound

conception ((188) Grace Brothers Pty. Ltd. v. The Commonwealth [1946] HCA 11; (1946)

72 CLR 269 at 290 per Dixon J) of an "acquisition of property on just

terms" predicates a compulsory transfer of property from a State or

person in circumstances which require that the acquirer should pay

fair compensation to the transferor. When, by a law of the Parliament,

the Commonwealth or someone on its behalf compulsorily acquires

property in circumstances which make the notion of fair compensation to

the transferor irrelevant or incongruous, s.51(xxxi) has no operation.

Thus, property taken from the citizen by taxation is in substance an

acquisition of property but it is not an acquisition of property for

the purposes of s.51(xxxi). It has often been suggested, however,

that taxation is outside the operation of s.51(xxxi) because taxation

consists of no more than the creation and discharge of a debt to the

Commonwealth. On this theory, the moneys paid by the taxpayer simply

discharge the debt owed to the Commonwealth ((189) Trade Practices

Commission v. Tooth and Co. Ltd. (1979) 142 CLR at 453-454; MacCormick

v. Federal Commissioner of Taxation [1984] HCA 20; (1984) 158 CLR 622 at 638-639;

Australian Tape Manufacturers Association Ltd. v. The Commonwealth

[1993] HCA 10; (1993) 176 CLR 480 at 527.). However, the purpose behind s.51(xxxi)

would be but a pious aspiration if the terms of that paragraph could be

avoided by the device of raising a debt and then requiring the citizen

to pay it or have his or her property sequestrated. Furthermore, the

creation of debt theory does not explain the provisional tax cases.

The Court has held that the system of provisional taxation does not

constitute an acquisition of property for the purpose of s.51(xxxi)

notwithstanding that, at the time of payment of provisional taxation,

no debt has been incurred by the taxpayer ((190) Commissioner of

Taxation v. Clyne [1958] HCA 10; (1958) 100 CLR 246 at 263, 270; and see Moore v. The

Commonwealth [1951] HCA 10; (1951) 82 CLR 547.). In Commissioner of Taxation v.

Clyne ((191) (1958) 100 CLR at 263.), Dixon CJ said that once it was

held that the system of provisional taxation was authorised by s.51(ii)

"it seems absurd to say that, within the meaning of s.51(xxxi.), the

sums paid or payable as provisional tax constitute property acquired

for a purpose in respect of which the Parliament has power to make

laws". His Honour pointed out that the very purpose of the power

conferred by s.51(ii) is to enable the Commonwealth to raise moneys for

32. Although I have previously been attracted to the view that

taxation does not involve any acquisition of property by the

Commonwealth ((192) See Australian Tape Manufacturers (1993) 176 CLR at

528 where I agreed generally with the reasons of Dawson and Toohey JJ)

the elaborate argument on s.51(xxxi) which the Court heard in this

case and the associated cases of Health Insurance Commission v.

Peverill ((193) Unreported, 9 March 1994.) and Georgiadis v.

Australian and Overseas Telecommunications Corporation ((194)

Unreported, 9 March 1994.) has convinced me that Deane J was correct

when he expressed the view in The Commonwealth v. Tasmania (The

Tasmanian Dam Case) ((195) [1983] HCA 21; (1983) 158 CLR 1 at 282.) that compulsory

taxation does involve an acquisition of property but is nevertheless

outside the scope of s.51(xxxi) ((196) cf. Epstein, Takings; Private

Property and the Power of Eminent Domain, (1985) at 100, 285.). This

is because the exercise of the taxation power necessarily involves an

33. Similarly, when a statute provides for the forfeiture of property

obtained in breach of Commonwealth law even when the property has

passed into the hands of a bona fide purchaser for value, the case is

outside s.51(xxxi). The notion that the Commonwealth should pay fair

compensation to the owner of the property in such a situation is

simply absurd. In Burton v. Honan ((197) [1952] HCA 30; (1952) 86 CLR 169.), the

Court upheld the validity of provisions of the Customs Act 1901 (Cth)

which provided, inter alia, for the forfeiture of goods obtained as the

result of breaches of the Customs (Import Licensing) Regulations.

"(T)he whole matter lies outside the power given by

s.51(xxxi.). It is not an acquisition of property for any

purpose in respect of which the Parliament has power to make

laws. It is nothing but forfeiture imposed on all persons

in derogation of any rights such persons might otherwise

have in relation to the goods, a forfeiture imposed as part

of the incidental power for the purpose of vindicating the

Customs laws. It has no more to do with the acquisition of

property for a purpose in respect of which the Parliament

has power to make laws within s.51(xxxi.) than has the

imposition of taxation itself, or the forfeiture of goods in

the hands of the actual offender."

34. Similarly, in Schmidt, the Court upheld legislation, the effect of

which was (1) to preclude the return to German ownership of property,

taken control of in Australia in wartime, and (2) to apply the

property in or towards the satisfaction of claims upon Germany for war

reparations. The Court held that the legislation was a valid law with

respect to the defence power. Dixon CJ said ((199) Schmidt (1961)

105 CLR at 373.) that the "whole subject is altogether outside the

35. Thus, Burton, Schmidt and Clyne establish that, if the purpose of

a law passed under s.51 is to impose sanctions for breach of a law

passed under that section or to use the property of alien enemies to

satisfy war reparations or to facilitate the collection of taxes, that

law is not within the scope of s.51(xxxi) even though it incidentally

or even directly results in the Commonwealth acquiring the property of

a State or person. Such a law is not a law for the acquisition of

property for a purpose "in respect of which the Parliament has power

to make laws" but an exercise of the power itself. It would have been

absurd, for example, to construe the laws considered in Burton and

Clyne as providing for the acquisition of property for the purposes

of s.51(xxxi). The notion of paying compensation for the property

acquired was incompatible with the purpose for which the law was

enacted and the power exercised. The nature of the law considered in

Schmidt was no doubt more debatable. However, the three cases are

authority for the general proposition that, where the particular

implementation of a valid exercise of s.51 power necessarily involves

an acquisition of property or is a reasonably proportional sanction

for a breach of a s.51 law, the acquisition is outside the scope of

The Refund Act does not involve an acquisition of property for the

36. In the light of these principles, the Refund Act does not involve

any acquisition of property for the purpose of s.51(xxxi).

37. No doubt the promise made by the Commissioner on behalf of

the Commonwealth to repay the money constituted a chose in action

enforceable against the Commonwealth. The chose in action was also

property for the purpose of s.51(xxxi) ((200) Minister of State for the

Army v. Dalziel [1944] HCA 4; (1944) 68 CLR 261 at 290; Bank of N.S.W. v. The

Commonwealth (1948) 76 CLR at 299, 349.). In some circumstances,

it could attract the protection of that paragraph. For example,

the chose in action would constitute property for the purpose of

s.51(xxxi) if a federal enactment purported to acquire all the

38. Furthermore, in substance the Commonwealth has acquired the chose

in action of the plaintiff. In The Tasmanian Dam Case ((201) (1983)

"(I)t is not enough that legislation adversely affects or

terminates a pre-existing right that an owner enjoys in

relation to his property; there must be an acquisition

whereby the Commonwealth or another acquires an interest in

property, however slight or insubstantial it may be".

The Refund Act, however, did more than terminate the plaintiff's

pre-existing right to payment of the sum of $1,522 and interest.

Its effect was to increase, albeit momentarily, the assets of the

Commonwealth when the chose in action of the plaintiff was

extinguished. True it is that the Commonwealth immediately thereafter

came under a new obligation to repay the moneys collected under the

Amendment Act. Nevertheless, although in form the Commonwealth did

not acquire the debt it owed to the plaintiff, in substance it did.

The Refund Act had the effect of increasing the value of its own

assets, albeit momentarily, by the precise amount of the debt and

interest which it owed to the plaintiff. It is true that the

Commonwealth did not obtain any new proprietary interest as the result

of the Refund Act. But it was the direct beneficiary of the taking of

39. In construing an important constitutional guarantee such as

s.51(xxxi), the Court must be astute to ensure that the Parliament

does not evade the guarantee by devices which have the effect that

in substance, although not in form, the Commonwealth acquires the

property of a State or individual without providing just terms. What

may be regarded as an extinguishment and not an acquisition of

property rights under the general law of property may have to be

regarded differently in the context of a constitutional guarantee

such as s.51(xxxi). Thus, when the Parliament legislates so as to

extinguish a property right of a person or State which is not

dependent for its continued existence on federal law and the effect of

the extinguishment is to vest a corresponding benefit of commensurate

value in the Commonwealth, the law should be characterised as one

providing for the acquisition of the property of that person or State

by the Commonwealth. Thus, if the Commonwealth legislates to abolish

a right of way over its land, it acquires that right of way even

though the legislation does no more than free the land of an

encumbrance. Similarly, when the Parliament legislates to abolish

a debt of the Commonwealth, the legislation should be seen as an

acquisition of property by the Commonwealth. The common law has never

treated "indebtedness in a sum certain for an executed consideration

as a mere breach of contract: it is rather the detention of a sum of

money" ((202) Young v. Queensland Trustees Ltd. [1956] HCA 51; (1956) 99 CLR 560 at

567.). In a case such as the present, the substantial effect of the

legislation is that the Commonwealth acquires that sum of money for

40. Nevertheless, the Refund Act did not involve an acquisition

of property for the purpose of s.51(xxxi). If the Parliament had

re-enacted the substance of the Amending Act, given it a retrospective

operation, and provided that moneys paid under the invalid Amending

Act were to be set off against the taxes levied under the

re-enactment, no question of acquisition of property would arise ((203)

cf. Air Canada v. British Columbia (1989) 59 DLR (4th) 161.). If, in

those circumstances, the Commonwealth would not have acquired the

property of the plaintiff for the purposes of s.51(xxxi) of the

Constitution, how can its election to enact the Refund Act to repay

those moneys to those who have borne the burden of the invalid tax

constitute an acquisition of property for the purpose of s.51(xxxi)?

41. The purpose of the Refund Act is to repay the "taxes" unlawfully

obtained as the result of the enforcement of a law which was

authorised by the taxation power but invalid because it breached s.55

of the Constitution. It is correctly characterised as a law with

respect to taxation for the purpose of s.51(ii). What is validly

within s.51(ii) is outside s.51(xxxi), for the two powers are mutually

exclusive. In so far as the Refund Act acquires property, it does so

incidentally. The acquisition of property is merely an incident of a

law which seeks to repay invalid taxes to those who have really borne

the burden of paying the "taxes". An enactment can fall within

s.51(ii) and outside the operation of s.51(xxxi) even though it

provides for the acquisition of property and does not itself impose

a tax, provided that it is a law with respect to taxation. Thus,

in Clyne, the imposition of provisional tax was held to be outside

s.51(xxxi) even though the liability to pay provisional tax was "not

a separate tax but a liability ancillary to the income tax and social

service contribution which s.17 of the Assessment Act provides shall

be levied and paid ... for each financial year, upon the taxable

income derived during the year of income by any person" ((204) (1958)

100 CLR at 260 per Dixon CJ). Consequently, the Refund Act did not

effect an acquisition of property for the purpose of s.51(xxxi).

42. The questions in the case stated should be answered as follows: