Bell Group N.V. (in liquidation) v Western Australia; W.A. Glendinning & Associates Pty Ltd v Western Australia; Maranoa Transport Pty Ltd (in liq) v Western Australia [2016] HCA 21
Constitutional law; inconsistency between Commonwealth and state laws; application of section 109.
Facts: In 2015 the Parliament of Western Australia enacted the Bell Group Companies (Finalisation of Matters and Distribution of Proceeds) Act 2015 (WA) (‘the Bell Act’). This Act provided a framework for the dissolution and administration of property of The Bell Group Ltd and its subsidiary companies, all of which were insolvent and in the process of being wound up. The Bell Act set up a fund into which all of the assets of the companies would be transferred. The Act also created an ‘authority’ which was given an almost unlimited discretion to determine the liabilities of each company.
Issue: Was the Bell Act inconsistent with Commonwealth legislation, specifically federal tax legislation which determined the tax liabilities for companies?
Decision: The Bell Act was inconsistent with federal tax legislation and was therefore invalid.
Reason: By giving a new authority unlimited power to determine each company’s liabilities, the Bell Act ignored and contradicted the tax liabilities which had already accrued for each company under federal tax legislation. The High Court found that many provisions of the Bell Act were inconsistent with federal tax legislation. The court said (at [70]) that merely severing these provisions, as allowed by s 109 of the Commonwealth Constitution, ‘would result in a radically different and essentially ineffective residue’ which the Western Australian parliament had never intended to create. Because the offending provisions were ‘so fundamental to the scheme of the Bell Act’, the entire legislation was invalid.