Commonwealth of Australia Explanatory Memoranda

[Index] [Search] [Download] [Bill] [Help]

JUDICIARY AMENDMENT BILL 2008

                             2008




THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




             HOUSE OF REPRESENTATIVES




         JUDICIARY AMENDMENT BILL 2008




            EXPLANATORY MEMORANDUM




       (Circulated by authority of the Attorney-General,
           the Honourable Robert McClelland MP)
                        JUDICIARY AMENDMENT BILL 2008


OUTLINE


This Bill responds to the High Court decision in British American Tobacco v Western
Australia [2003 HCA 47] (BAT case). This case involved proceedings in federal
jurisdiction for the recovery of invalid taxes paid under Western Australian law.
The High Court held that provisions in Western Australian law containing a special
notice requirement and limitation period for actions against the Crown in right of Western
Australia were not applied by section 79 of the Judiciary Act 1903 (Judiciary Act).
Section 79 of the Judiciary Act applies the laws of a State or Territory to proceedings in
courts exercising federal jurisdiction in that State or Territory, `except as otherwise
provided by the Constitution or the laws of the Commonwealth'.
In the BAT case, the High Court held that a Western Australian special limitation period
applicable to actions against the Crown would be inconsistent with section 64 of the
Judiciary Act as the limitation period would not apply as between subject and subject. As
the law was inconsistent with section 64, it was `otherwise provided...by a law of the
Commonwealth' and so was not picked up by section 79 of the Judiciary Act.
It was also held that the right to proceed and related notice provision conferred by the
Western Australian law was not picked up by section 79 of the Judiciary Act as it would
have been inconsistent with section 39(2) of the Judiciary Act which implies a right to
proceed.
All of the States and Territories have special limitation periods with respect to the
recovery of taxes paid under a mistake of fact or law, including constitutionally invalid
taxes. For example, Victoria, New South Wales, Queensland, Tasmania, and
Western Australia impose a 12-month limitation period from the date of the payment of
the tax. South Australia, the Northern Territory and the Australian Capital Territory
impose a 6-month restriction. These limitation periods are different from the general
limitation period of 6 years which applies in ordinary proceedings between subject and
subject, for example, in contract and tort.
The Bill assists in restoring the States and Territories to the position it was thought they
were in prior to the BAT case. It does so by amending section 79 of the Judiciary Act to
provide that nothing in the Judiciary Act prevents State and Territory laws related to the
recovery of invalid State and Territory taxes from applying in federal jurisdiction in
proceedings for the recovery of a tax (or an amount paid in connection with a tax)
invalidly imposed by a law of a State or Territory.
This implements recommendations of the Standing Committee of Attorneys-General
which have as their objective the protection of State and Territory revenue.
FINANCIAL IMPACT STATEMENT
The amendments are not expected to have any significant financial impact.




                                         2
NOTES ON CLAUSES

Clause 1: Short title

1.   Clause 1 is a formal provision specifying the short title of the Bill.

Clause 2: Commencement

2.   All sections of the Act will commence on the day on which it receives Royal
Assent.

Clause 3: Schedules

3.  Clause 3 provides that each Act that is specified in a Schedule to the Bill is
amended or repealed as set out in the applicable items in the Schedule.

Schedule 1 ­ Limits on actions to recover invalidly raised taxes

Item 1: Section 79

4.      Item 1 amends section 79 of the Judiciary Act 1903 to reflect the insertion by
Item 2 of proposed new subsections in section 79 to clarify the relationship between
section 79 and the rest of the Judiciary Act.

Item 2: At the end of section 79

5.     Item 2 adds proposed new subsections (2), (3) and (4) to section 79 of the
Judiciary Act.

6.      The effect of proposed new subsection (2) is that State/Territory laws, which
would apply to a suit if it did not involve federal jurisdiction, for the recovery of amounts
paid in connection with a purported tax that is found to be invalid will operate in federal
jurisdiction. Examples of such laws are set out in proposed new subsection (3).

7.      Proposed new subsection (2) achieves the requisite effect by providing that other
provisions of the Judiciary Act do not prevent the application of section 79 to allow the
operation in federal jurisdiction of a law of a State/Territory that would otherwise apply
to the recovery of amounts paid as invalid State or Territory taxes or purported taxes.

8.     Section 79 applies State and Territory laws `except as otherwise provided by the
Constitution or the laws of the Commonwealth'. An example of a law that might
`otherwise provide' is section 64 of the Judiciary Act, which provides that parties who
have an action against the Commonwealth or State should as nearly as possible be in the
same position as in a suit between two ordinary subjects. The BAT case found that this
provision prevented section 79 from applying a Western Australian special limitation




                                            3
period which limited the time in which an action for the recovery of an amount paid as a
tax under a law of Western Australia could be commenced.

9.       Proposed new subsection (2) also overcomes another problem identified in the
BAT case, relating to the operation of s 79 of the Judiciary Act. The difficulty was that,
if a right to proceed conferred by a State law was not picked up by s 79 of the
Judiciary Act because this would be inconsistent with s 39(2) of that Act, which
impliedly confers a right to proceed, then a condition on the State right to proceed such as
a notice requirement would also not be picked up by s 79.

10.      Proposed new subsection (3) gives examples of the types of State/Territory laws
to which proposed new subsection 79(2) may relate. These include laws limiting the time
period for bringing a suit, laws requiring notice to be given to the person against whom a
suit is brought and anti-windfall provisions. The list of examples is not intended to be
exhaustive. The laws may be of general application or may be specifically directed at
suits relating to the recovery of invalid taxes.

11.     Proposed new subsection (4) gives examples of amounts paid in connection with a
tax. The list of examples is not intended to be exhaustive. These amounts include
penalties for failure to pay a tax in time or to pay all the tax that is due, and other amounts
that may be paid in relation to a tax.

Item 3: Application

12.    Item 3 adds an application provision that makes clear that the amendment applies
prospectively only, that is, in relation to the recovery of amounts paid after the
commencement of Schedule 1.




                                            4