ACN 005 057 349 Pty Ltd v Commissioner of State Revenue
[2015] VSC 76
•6 March 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
TAXATION LIST
S CI 2013 1395
| ACN 005 057 349 PTY LTD (ACN 005 057 349) | Plaintiff |
| v | |
| COMMISSIONER OF STATE REVENUE | Defendant |
- and -
S CI 2013 1396
| ACN 005 057 349 PTY LTD (ACN 005 057 349) | Plaintiff |
| v | |
| COMMISSIONER OF STATE REVENUE | Defendant |
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JUDGE: | SLOSS J |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 21 and 22 October 2013 |
DATE OF JUDGMENT: | 6 March 2015 |
CASE MAY BE CITED AS: | ACN 005 057 349 Pty Ltd v Commissioner of State Revenue |
MEDIUM NEUTRAL CITATION: | [2015] VSC 76 |
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TAX – Land tax – Taxpayer alleged that assessment of duplicate property led to overpayment of land tax – Overpayment discovered outside prescribed statutory period for recovery – Taxpayer alleged moneys were paid under a mistake of law – Whether taxpayer entitled to bring a common law restitutionary claim in circumstances where statutory objection and other recovery procedures not utilised – Whether mandamus available to compel Commissioner to exercise discretion to amend land tax assessments and refund alleged overpayment – Land Tax Act 1958 (Vic) ss 19, 24A(1), 90AA, 92A.
LIMITATION OF ACTIONS – Whether common law action for recovery barred – Whether action for mandamus barred – Whether ‘reasonable diligence’ in discovering mistake – Limitation of Actions Act 1958 (Vic) ss 5(1)(a), 20A(1)(a), 27 – Land Tax Act 1958 (Vic) ss 90AA(3), (4) and (8).
INTEREST – Whether compound interest available on overpaid moneys as part of restitutionary relief – Whether simple interest available in the court’s equitable or statutory jurisdiction – Supreme Court Act 1986 (Vic) ss 58, 60.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N J Young QC with Mr T Grace | Daniel Allison & Associates Legal Pty Ltd |
| For the Defendant | Mr P H Solomon QC with Mr N A Kotros | Solicitor for the Commissioner of State Revenue |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Factual narrative................................................................................................................................. 3
The statutory framework................................................................................................................ 10
Land Tax Act 1958........................................................................................................................ 10
Limitation of Actions Act 1958..................................................................................................... 20
Issues for determination................................................................................................................. 26
(1). Where a taxpayer contends it has ‘overpaid’ land tax assessed under the LTA 1958, is it open for the taxpayer not to avail itself of the objection process and instead sue at common law to recover the alleged ‘overpayment’ amount as money had and received?....................... 27
In any event, was there a relevant mistake made by the plaintiff?..................................... 50
(2). Is the plaintiff’s action in restitution for relief from the consequences of a mistake barred by a limitation provision – be it one or more of s 90AA of the LTA 1958, s 20A(1) of the Limitation Act or s 5(1) of the Limitation Act, as extended by s 27 as the case may be?.................. 54
Does s 90AA bar the proceeding?............................................................................................. 54
Does s 20A bar the proceeding?................................................................................................ 58
Does s 27 apply so as to extend the limitation period?......................................................... 60
‘Reasonable diligence’....................................................................................................... 62
Does s 5(1) bar the proceeding?................................................................................................ 67
(3). Is an order for mandamus (or other order on judicial review) available to direct the Commissioner to exercise the discretion conferred by s 19 of the LTA 1958 and issue amended assessments to the plaintiff for each of the 1990 to 2002 land tax years?........................ 69
The power conferred on the Commissioner under s 19 of the LTA 1958........................... 72
(4). Is the plaintiff’s action for mandamus (or other order on judicial review) barred by any limitation provision?................................................................................................................. 87
(5). If the plaintiff establishes that it is entitled to a refund of, or to recover, the alleged ‘overpayment’ amount, is compound interest recoverable as part of the restitutionary relief or is the plaintiff limited to recovering simple interest, in the Court’s equitable jurisdiction or alternatively pursuant to ss 58 or 60 of the Supreme Court Act 1958 (Vic)?.................... 90
The plaintiff’s claim for compound interest as part of its restitutionary claim................. 92
Conclusion....................................................................................................................................... 103
HER HONOUR:
Introduction
The primary issue in this case is whether the defendant (‘the Commissioner’) is required to repay to the plaintiff, ACN 005 057 349 Pty Ltd,[1] the sum of $363,680 (or such other amount as the Court may determine) which the plaintiff contends represents ‘overpayments’ it made on account of land tax for the years 1990 to 2002 (inclusive), together with interest. In essence, the plaintiff says that in response to notices of assessment issued on an annual basis by the Commissioner, it paid amounts on account of land tax that were not payable under the Land Tax Act1958 (Vic) (‘LTA 1958’)[2] for those years, in the sense that the assessments so made were excessive and wrongfully demanded more than could validly be exacted or due and owing. The plaintiff paid the amounts as assessed in each year to the Commissioner, but says it did so based on a mistaken belief that they were lawful demands. Accordingly, the plaintiff now seeks restitution at common law for these overpayments, together with interest.[3] Further or alternatively, it seeks an order for mandamus or other orders on judicial review directing the Commissioner to issue amended assessments to the plaintiff for each of the 1990 to 2002 land tax years and to refund the overpaid land tax, with interest.[4]
[1]The plaintiff was formerly called ‘65 Albany Road Pty Ltd’.
[2]The LTA 1958 applies to land tax liabilities for periods prior to the 2006 land tax year.
[3]See its proceeding commenced by Writ (No 1396 of 2013).
[4]See its proceeding commenced by Originating Motion (No 1395 of 2013).
The Commissioner contends that the plaintiff’s restitution claim cannot be maintained. First, he says the only means by which a taxpayer can establish that an assessment made under the LTA 1958 is excessive is by means of the objection procedure. Here, as the plaintiff has not utilised the objection procedure in the manner prescribed, it is unable to establish that the assessments it paid are excessive, and hence is unable to establish the ‘overpayments’ necessary to make out its case in restitution. Secondly, the Commissioner contends that s 90AA of the LTA 1958, which deals with ‘Refund of tax’, bars the plaintiff’s refund proceeding. In essence, the Commissioner says that the amounts the plaintiff now seeks to recover were amounts paid in discharge of statutory tax debts. As such, they are plainly capable of characterisation as amounts ‘of tax paid under, or purportedly under’ the LTA 1958 and s 90AA(1) provides that proceedings for the refund or recovery of such amounts may only be brought as provided for in s 90AA, which relevantly excludes common law proceedings. Thirdly, the Commissioner challenges the plaintiff’s contention that when it paid the land tax assessments it believed it had a legal obligation under the LTA 1958 to do so, but that that belief was mistaken. Rather, the Commissioner argues that the plaintiff did have a legal obligation under the LTA 1958 to pay the assessments as made, that each such amount assessed was ‘due and payable’, and that each payment made by the plaintiff relevantly discharged a legal obligation. Fourthly, the Commissioner relies on s 20A(1)(a) of the Limitation of Actions Act 1958 (Vic) (‘the Limitation Act’) as barring the proceeding. Further, if s 20A(1)(a) does apply, the Commissioner says that s 27 does not operate to postpone the commencement of the limitation period because the plaintiff has not made good the necessary proposition that it could not ‘with reasonable diligence’ have discovered the alleged mistake. Finally, the Commissioner also relies on s 5(1)(a) of the Limitation Act as barring the proceeding.
The Commissioner contends that the plaintiff’s proceeding brought by way of Originating Motion, seeking an order for mandamus or the like compelling the Commissioner to amend the 1990 to 2002 land tax assessments under s 19 of the LTA 1958, is misconceived. The Commissioner argues that he cannot be compelled by mandamus, or other order by way of judicial review, to exercise the s 19 discretion in the particular manner sought by the plaintiff, and therefore, the proceeding for mandamus should be dismissed. After the proceeding was issued, the Commissioner decided to exercise the discretion conferred on him by s 19, but not in the manner requested by the plaintiff. Rather, he determined not to make any amendment to the assessments. The Commissioner submits that he was not under any duty to exercise the s 19 discretion but says that if he were, then he has fulfilled that duty by making the decision he made.
The question of interest being payable on the overpaid moneys only arises if the plaintiff establishes that it is entitled to a refund. The plaintiff claims interest on the amount of the ‘overpayments’ for the 1990 to 2002 years and on the ‘overpaid’ land tax for the 2003, 2004 and 2005 years for which the Treasurer authorised an ‘ex gratia’ payment. The plaintiff argues that it has been denied the use of these moneys from their respective dates of payment and says that, in the circumstances, it is entitled to restitution in the form of interest, calculated on a compound basis. The plaintiff contends the law has developed to the point where compound interest is now claimable and recoverable as part of its restitutionary relief. Alternatively, the plaintiff says that it is entitled to simple interest, in the Court’s equitable jurisdiction or alternatively pursuant to ss 58 or 60 of the Supreme Court Act 1986 (Vic).
The facts are essentially agreed between the parties. No oral evidence was given. Both proceedings were heard together and the trial proceeded by way of each party formally tendering their respective affidavit evidence[5] and then making submissions on the issues raised.
[5]In each proceeding, the plaintiff relied upon three affidavits: an affidavit of Mr Wayne Houlyon Ngo sworn on 31 May 2013 and two affidavits of Mr Kim Francis Davis sworn on 6 June 2013 and 10 October 2013 respectively. The Commissioner relied upon two affidavits of Ms Sarah Faith Cockburn sworn on 16 August 2013 and 29 August 2013 respectively.
For the reasons which follow, I have found that the plaintiff’s proceeding brought by Writ seeking restitution, and its claim by way of Originating Motion for mandamus, should be dismissed.
Before turning to consider the specific issues for determination, it is necessary to set out the background facts and legislative history in a little more detail.
Factual narrative
Between 1988 and December 2007, the plaintiff was the registered proprietor of two adjoining properties in Toorak, each with a street address of 2 Ottawa Road, being the whole of the land comprised in Certificates of Title Volume 8055 Folio 686 (also known as Lot 1 on Lodge Plan 27424) and Volume 4567 Folio 364 (also known as Lot 1 on Title Plan 598039) respectively.
In each of the land tax years from 1990 to 2001 inclusive, the plaintiff was assessed in respect of land described in the land tax assessments as ‘2 Ottawa Rd, Toorak, 3142’ with a Land ID/Reference of ‘995176/1 27424 L’ and ‘65 Albany Rd, Toorak, 3142’ with a Land ID/Reference of ‘22429086/1 598039 T’. For the 2002 land tax year, the plaintiff was assessed in respect of land described in the land tax assessment as ‘2 Ottawa Rd, Toorak, 3142’ with a Land ID/Reference of ‘000995176/1 L27424’ and ‘65 Albany Rd, Toorak, 3142’ with a Land ID/Reference of ‘022429086’. The plaintiff says it paid each of these land tax assessments in good faith and in the belief that each land tax assessment constituted a proper and lawful demand for the payment for all of the tax assessed. In respect of the 2003-2007 land tax years, the plaintiff was similarly assessed for (and paid) land tax on land described as ‘2 Ottawa Rd, Toorak, 3142’ with a Land ID/Reference of ‘000995176/1 L27424’ and ‘65 Albany Rd, Toorak, 3142’ with a Land ID/Reference of ‘022429086’.
In December 2007, the plaintiff transferred the two properties to Streetriver Pty Ltd (‘Streetriver’), a related company.[6] Thereafter, the Commissioner assessed Streetriver for land tax on an annual basis.
[6]Streetriver and the plaintiff are related entities, with some common directors.
On 23 March 2012, following a request from the solicitors acting for Streetriver concerning the availability of a ‘principal place of residence’ exemption, the Commissioner informed them, by email, that an error had been detected in the land tax assessments issued to Streetriver for the 2008 to 2011 land tax years. The error was essentially that the municipal valuation that was applied for land tax purposes to 2 Ottawa Road encompassed both Lot 1 Lodge Plan 27424 and Lot 1 Title Plan 598039. The City of Stonnington valuer, Mr Peter Fitzgerald, confirmed that the municipal valuation so used encompassed both lots. The result of this ‘error’ was that the property described on the land tax assessments as ‘65 Albany Rd’ was determined to be a ‘duplicate property’. In those circumstances, the Commissioner said that ‘fully settled re-assessments’ for 2008 to 2011 would be issued with the deletion of the property described as ’65 Albany Rd’ and that a refund would follow.[7]
[7]On 12 April 2012, the SRO dispatched a cheque to Streetriver for the refund amount of $300,238.75.
Once the plaintiff became aware of the error in the assessments issued to Streetriver, the plaintiff instructed its solicitors (who were also Streetriver’s solicitors) to investigate whether the land tax assessments issued to it in earlier years also contained the same ‘duplicate property’ and whether it had also overpaid land tax as a result. Mr Kim Davis, who is a director of the plaintiff and of Streetriver, made enquiries and searched the plaintiff’s records. While Mr Davis was only able to locate copies of the land tax assessments for the 2002 to 2007 tax years, he informed Mr Wayne Ngo, a tax adviser with the plaintiff’s solicitors, that he believed ‘the plaintiff had paid all land tax assessments issued to it, including in the period from 1990 to 2002 inclusive.’
On 27 March 2012, Mr Ngo conducted a property search of 2 Ottawa Rd, Toorak through the Victorian Department of Environment and Primary Industries. The Property Report showed the site as comprising two parcels of land, with a combined total area of 1,967 square metres, from which he ascertained that Lot 1 on LP27424 has a total land area of 1,058 square metres and Lot 1 on TP598039 has a total land area of 909 square metres.
On about 12 April 2012, Mr Ngo instructed Mr Daniel Mitchell of his firm to contact the State Revenue Office (‘SRO’) to obtain copies of the land tax assessments issued to the plaintiff for the 1983 to 2001 years. An officer from the SRO advised Mr Mitchell that land tax assessments for this period were unable to be retrieved from the SRO’s records, but said the SRO could provide ‘Assessment Reports’ for each of these years. [8] The SRO emailed the suite of Assessment Reports to Mr Mitchell on 26 April 2012. Mr Ngo described the SRO Assessment Reports as containing ‘all of the relevant information used by the defendant in raising the land tax assessments which were issued to the plaintiff for these years.’
[8]The ‘Assessment Reports’ comprised a series of excel format spreadsheets detailing a statement of lands owned by the taxpayer as at midnight on 31 December in each year (from 1983 to 2001), the land ID/reference for each parcel, the amount of single holding tax or proportional tax, the site value/eq factor and the unimproved value of each parcel of land.
On 1 May 2012, Mr Mitchell followed up with Mr Fitzgerald, the land valuer for the City of Stonnington, to ascertain the valuation history of the properties. Mr Fitzgerald responded to Mr Mitchell the next day. He emailed to him a table which listed, in relation to the property he referred to as ‘2 Ottawa Rd, Toorak’, the dates when a new valuation of the property was determined and the new site value determined. Relevantly, the table recorded:
Level of Value Yr Date of New Valuation New SV New CIV New NAV 1992 1/10/1992 1,089,000 1,090,000 54,500 1996 1/10/1996 1,300,000 1,300,000 65,000 2000 1/07/2000 2,010,000 2,053,000 102,650 2002 1/07/2002 2,941,000 2,970,000 148,500 2004 1/07/2004 3,591,000 3,630,000 181,500 2006 1/07/2006 4,630,000 4,815,000 240,750 2008 1/07/2008 6,970,000 7,190,000 359,500 2010 1/07/2010 7,400,000 7,580,000 379,000
Mr Ngo reviewed the information provided by Mr Fitzgerald and observed that the new site values provided by Mr Fitzgerald ‘broadly corresponded to the site values used by the defendant in the land tax assessments to the plaintiff.’
The next day, Mr Mitchell emailed Mr Fitzgerald, requesting that he clarify whether the valuations he had provided for ‘2 Ottawa Rd, Toorak’ were based on land at LP27424 alone or whether the valuations also included land at TP598039. Mr Fitzgerald responded by email confirming that ‘the same land area (2,000 approx.) was used in relation to all’.[9]
[9]The two parcels of land have a combined total area of 1,967 square metres, with Lot 1 on LP27424 having a total land area of 1,058 square metres and Lot 1 on TP598039 having a total land area of 909 square metres.
On the basis of the available information, including the SRO’s admission in the context of the assessments for Streetriver that ‘[t]he property at 65 Albany Rd has been determined to be a duplicate property’, Mr Ngo formed the view that in raising land tax assessments for the plaintiff for the 1990 to 2007 years, a similar error had occurred. That is, he believed that the Commissioner had used the Fitzgerald/City of Stonnington valuations for the 2 Ottawa Rd property but had also erroneously duplicated the value of the 65 Albany Rd landholding, and thereby overstated the land tax payable such that the assessments issued to the plaintiff were incorrect.
On 3 May 2012, Mr Ngo contacted Mr Martyn Pritchard, a senior revenue officer in the land tax branch at the SRO, and informed him that he believed the Commissioner had also made a duplication error in raising land tax assessments for the plaintiff for the 1990 to 2007 tax years. Mr Pritchard advised Mr Ngo to make a written request to the SRO seeking a refund of tax on behalf of the plaintiff. He added, however, that as the Commissioner was only obliged to provide a refund within a five year period of the making of the original payment, it was unlikely that refunds would be made to the plaintiff outside of this period.
The outcome of the investigations and steps taken by or on behalf of the plaintiff to pursue recovery of the alleged overpayments are set out in Mr Ngo’s affidavit. They may be summarised as follows:
(a)on 18 May 2012, the plaintiff sent a formal ‘Application for a refund’ request to the Commissioner requesting a refund in the amount of $103,800 being the land tax the plaintiff estimated it had overpaid for the 2007 year;
(b)on 22 May 2012, the plaintiff lodged objections, albeit, out of time, against the land tax assessments for the 2006 and 2007 years (under the Land Tax Act2005 (Vic) (‘LTA 2005’));[10]
[10]The LTA 2005 applies to land tax liabilities for the 2006 land tax year onwards.
(c)on 22 May 2012, the plaintiff also lodged objections, albeit out of time, against the land tax assessments for the 1990-2005 years (under the LTA 1958);
(d)on 24 October 2012, the Commissioner:
(i)decided to allow the plaintiff’s objections against the 2006 and 2007 assessments (having exercised his discretion under s 100 of the Taxation Administration Act1997 (Vic) to accept them out of time); and
(ii)informed the plaintiff that he did not have the power to accept the objections lodged out of time against the assessments for the 1990 to 2005 years;
(e)on 3 December 2012, the plaintiff requested that the Commissioner issue amended assessments for the 1990 to 2005 years pursuant to s 19 of the LTA 1958;
(f)on 6 December 2012, the plaintiff wrote two letters to the then Treasurer. In the first, the plaintiff requested an extension of the time limited under s 94 of the LTA 1958[11] for the plaintiff to lodge objections and also of the time limited under s 90AA(2) of the LTA 1958 for the plaintiff to apply for a refund of tax paid or purportedly paid. In the second letter, the plaintiff also requested the then Treasurer ‘by way of alternative but without prejudice to all [its] other legal rights’ to make an ex gratia refund of the amounts overpaid for the 1990 to 2005 years;
(g)on 17 January 2013, the Commissioner informed the plaintiff that the assessment notice issued to it for the 2008 year had been withdrawn when a notice of acquisition was lodged in October 2008 in respect of the transfer of the property to Streetriver in December 2007. The Commissioner informed the plaintiff that this further overpayment of $157,230 (paid on 20 June 2008 in respect of the 2008 assessment) would also be refunded by cheque;
(h)on 1 February 2013, the Commissioner issued re-assessments for the 2006 and 2007 years[12] and provided a refund to the plaintiff for the overpayments for these years ($110,635 for the 2006 year and $103,800 for the 2007 year) together with that for the 2008 year ($157,230);
(i)on 15 February 2013, the Commissioner responded to the plaintiff’s request that interest be paid on the amounts refunded for the 2006 and 2007 years, by providing a cheque for the sum of $66,926.38 to the plaintiff;[13]
(j)on 20 February 2013, the then Treasurer responded by letter, informing the plaintiff that the power under s 94 (to extend time) could not be used to assist the taxpayer. He also informed the plaintiff that given its ‘unique circumstances’ he has ‘decided to grant ex gratia relief for the additional land tax that the Trust paid in the 2003, 2004 and 2005 land tax years to align with the three year refund period provided under the Act’; and
(k)on 13 March 2013, the Treasurer provided by way of ‘ex gratia relief’ a cheque for the sum of $351,994 representing ‘the additional land tax paid by [the plaintiff] for the 2003, 2004 and 2005 land tax years’,[14] but without interest thereon. (The plaintiff nevertheless seeks the payment of interest on the ex gratia relief sum.)
[11]Section 94 of the LTA 1958 is headed ‘Power to extend time for doing anything under Act’ and provides:
(1)If anything required by or under this Act to be done at or within a fixed time cannot be or is not so done the Governor by Order in Council may from time to time appoint a further or other time for doing the same whether the time within which the same ought to have been done has or has not expired.
(2)Anything done within the time prescribed by such Order in Council shall be as valid as if it had been done within the time fixed by or under this Act.
[12]Whereas in each of the original assessments for 2006 and 2007 the ‘Statement of lands owned as at midnight 31 December’ listed both ‘2 Ottawa Rd, Toorak’ and ’65 Albany Rd, Toorak’, the re-assessments listed only ‘2 Ottawa Rd, Toorak’. Letters accompanying the re-assessments advised that:
The following changes have been made to your statement of lands.
Land ID
Property Address
Amendment Reason
039663162
2 Ottawa Rd, Toorak, 3142
Property Added
Properties removed since the last assessment was issued
000995176
2 Ottawa Rd, Toorak, 3142
Property 995176 removed
022429086
65 Albany Rd, Toorak,3142
Property 22429086 removed
[13]The letter from the SRO stated:
[14]The land tax overpayment the subject of ‘ex gratia relief’ was comprised as follows:
2003 tax year: $107,970.00
2004 tax year: $129,250.00
2005 tax year: $114,774.00
Against this background, on 21 March 2013, the plaintiff commenced the present proceedings against the Commissioner seeking restitutionary relief and relief in the nature of mandamus.
On 15 August 2013, a delegate of the Commissioner, Mr Graeme Robinson, wrote to Mr Ngo in response to the plaintiff’s request that the Commissioner issue amended assessments for the 1990 to 2005 years pursuant to s 19 of the LTA 1958. Mr Robinson informed Mr Ngo that:
After careful consideration of all the issues involved, I advise that the Commissioner has decided to exercise the discretion conferred on him by section 19 of the [Land Tax Act 1958]. The decision of the Commissioner is not to make any amendment to the assessments.
The discretion conferred by section 19 must be exercised having regard to [the] subject matter, scope and purpose of the Act as a whole. The primary reason for the Commissioner’s decision is that, whether or not each of the assessments were now amended as requested, and even putting to one side the fact that no objection was lodged in accordance with section 24A, your client would not be entitled to the consequential relief sought; that is, pursuant to section 90AA of the [Land Tax Act1958], your client would still not be entitled to the refund it seeks.
Thus, it is clear that for the 1990 to 2002 tax years, the Commissioner has now exercised his discretion under s 19 of the LTA 1958 and decided not to make any amendments to the assessments. Accordingly, no amended assessments have issued and the Commissioner has not refunded any amount referable to the land tax which the plaintiff alleges it overpaid in each of the 1990 to 2002 tax years.
The statutory framework
Land Tax Act 1958
Land tax is an annual tax on the unimproved value of land. The relevant Act which applies to each of the 1990 to 2005 land tax assessments is the LTA 1958. Section 4 provides that the Commissioner has ‘the general administration of this Act and the regulations.’
Section 6 of the Act provides for the rate of land tax imposed in each year, as follows:
Subject to this Act there shall in the case of each owner of land be charged levied and collected by the Commissioner and paid for the use of Her Majesty in aid of the Consolidated Fund for each and every year a duty of land tax upon land for every dollar of the unimproved value thereof in accordance with the provisions of the Second Schedule.[15]
[15]The Second Schedule prescribes different rates for successive years: before 1994 – as per cl. 1 and Table A; after 1993 – as per cl. 1 (but subject to cl.1A) and Table B for 1994-1997; for 1998-2001, as per cl. 3 and Table C; for 2002, as per cl. 4 and Table D; for 2003 and 2004, as per cl. 5 and Table E; for 2005, as per cl. 6 and Table F (but subject to any rebate under cl. 6A and Table FA); for 2006, as per cl. 7 and Table G; for 2007, as per cl. 8 and Table H; and for 2008 and subsequent years – as per cl. 9 and Table I. The rates of land tax applicable to Trusts was set out in cll. 10 (2006), 11 (2007) and 12 (2008 and subsequent years).
Under s 8 of the Act, land tax is ‘assessed charged levied and collected by the Commissioner’ on ‘the total unimproved value of all land’ held by the owner at ‘midnight on the thirty-first day of December immediately preceding the year for which such tax is assessed charged levied and collected’. Certain lands are exempted from land tax under s 9. There is also a ‘principal place of residence’ exemption provided under s 13A.
Part III of the Act deals with ‘Returns by Taxpayers, Valuations and Assessments’. Under s 14, for the ‘purposes of the assessment and levy of taxation’, a taxpayer is required to furnish to the Commissioner ‘returns setting forth a full and complete statement of his land with such other particulars as are prescribed.’ Thus, the process by which the assessment is made commences with the taxpayer providing to the Commissioner information in relation to the assessment that is to take place. Section 15(1) provides that ‘every taxpayer shall be liable for the making of returns of land and for the payment of the whole amount of tax (if any) assessed thereon’. Section 16 permits the Commissioner to use valuations made by a rating authority (within the meaning of the Valuation of Land Act 1960 (Vic)) or by the Valuer-General or his nominee for the purposes of the assessment and levy of taxation.
Section 17 provides for assessments to be made by the Commissioner, as follows:
The Commissioner shall from the returns and from any other information in his possession or from one of those sources and whether any return has been furnished or not cause an assessment to be made of the taxable value of the land owned by any taxpayer and of the land tax payable thereon.
Under s 18, the Commissioner also has power to make default assessments.
Section 19 permits the Commissioner to amend assessments. The power is conferred in the following terms:
The Commissioner may from time to time amend an assessment by making such alterations or additions to it as he thinks necessary to ensure its completeness and accuracy, and shall notify to the taxpayer affected every alteration or addition which has the effect of imposing any fresh liability or increasing any existing liability and unless made with the consent of the taxpayer every such alteration or addition shall be subject to objection in the same manner and to the same extent as the original assessment but the validity of an assessment shall not be affected by reason only that any of the provisions of this Act have not been complied with.
This power is of central relevance to the plaintiff’s claim for mandamus. The plaintiff points to the fact that the power conferred is one that may be exercised by the Commissioner ‘from time to time’ as may be necessary to ‘ensure the completeness and accuracy’ of assessments.[16]
[16]I note that s 45 of the Interpretation of Legislation Act 1984 (Vic) (construction of ‘may’ and ‘shall’) cannot apply to s 19 of the LTA 1958 (assuming it otherwise could) as s 19 was enacted before the commencement of the Interpretation of Legislation Act 1984: see ss 45(1) and (3).
Section 20 contains evidentiary provisions, similar to those that apply under the federal income tax regime. Section 20 provides:
(1) The production of an assessment or of a document under the hand of the Commissioner purporting to be a copy of an assessment shall─
(a) be conclusive evidence of the due making of the assessment; and
(b) be conclusive evidence that the amount and all the particulars of the assessment are correct, except in proceedings on review or appeal against the assessment, when it shall be prima facie evidence only.
(2) The production of any document under the hand of the Commissioner purporting to be an extract from any return or assessment shall in relation to any matter other than a matter referred to in subsection (1) be prima facie evidence of the matter therein set forth.
Once an assessment is made, the Commissioner is required to serve ‘notice in writing of the assessment’ on the taxpayer: s 21(1). The omission to serve a notice does not, however, invalidate the assessment: s 21(2).
Section 24A(1) provides for persons dissatisfied with an assessment to ‘give to the Commissioner within 60 days after service of the notice of assessment an objection in writing’ stating fully the grounds of objection. The Commissioner is required to consider every such written objection and ‘may make such inquiries thereon or relating thereto as he thinks fit’: s 24A(2). If the Commissioner considers that any objection should be allowed, in whole or in part, he may ‘alter or amend the assessment accordingly’: s 24A(3). Section 24A(4) requires the Commissioner to give the taxpayer written notice of his decision on the objection.
Under s 25, a taxpayer who is dissatisfied with a decision of the Commissioner on an objection may request the Commissioner to either refer the decision to the Victorian Civil and Administrative Tribunal for review or to treat the objection as an appeal and have it heard by the Supreme Court. Under s 26(1), upon any such review or appeal, unless the Court or the Tribunal otherwise orders, the taxpayer: (a) ‘shall be limited to the grounds stated in his objection and the Commissioner shall be limited to the grounds upon which he has disallowed the objection’; and (b) bears ‘the burden of proving that the assessment is excessive’.
Section 38(1) makes clear that the fact that an objection or appeal is pending in respect of any assessment does not ‘interfere with or affect the assessment’ and in the meantime ‘tax may be made, levied and recovered on the assessment in like manner as if no objection had been received and no appeal or case stated were pending.’ In the event that an assessment is altered on objection or case stated or appeal, s 38(2) provides that a ‘due adjustment shall be made, for which purpose amounts paid in excess shall be refunded, and amounts short-paid shall be recoverable as arrears.’
If an assessment is amended, s 58A provides for additional tax to be payable from the due date of the original assessment to the date of payment of the amended assessment. However, the Commissioner has power, under s 58A(4), to remit the whole or any part of additional tax in a particular case.
Land tax, once assessed and payable, is a debt due to the Crown. Section 39 provides that ‘[e]very sum payable for tax shall when the same falls due be deemed a debt due to Her Majesty by the owner of any land who shall forthwith pay the same to the Commissioner.’ Under s 57, land tax for each year ‘shall be due and payable on a date stated in the notice of assessment to be the due date’, which date is not to be less than 14 days after service of the notice. If any tax remains unpaid 14 days after the due date, s 58 deems additional tax (of 20 per centum per annum from the due date to the date of payment) to be added and be payable accordingly. Section 59 provides for the recovery of tax by the Commissioner on behalf of the Crown by proceeding issued in his own name in the County Court or the Magistrates’ Court. Section 60 outlines what is sufficient for the Commissioner to disclose a cause of action in a proceeding for recovery of tax. Section 67 provides that ‘[n]o statute of limitations now or hereafter in force shall bar or affect any action or remedy for recovery of tax.’ Section 68 confirms that nothing in the LTA 1958 shall be construed to limit or affect the operation of the Crown Proceedings Act 1958 (Vic).
Part VI of the LTA 1958, headed ‘General’, contains a host of provisions dealing with matters such as service of documents, ‘Penalties’, and ‘Miscellaneous Provisions’. The latter category includes provisions dealing with the recovery of penalties (s 87), the refunding of tax (s 90AA, s 90A), the limitation of the jurisdiction of the Supreme Court (s 92A), the making of regulations (s 93) and the power to extend time for doing anything under the Act (s 94).
Relevantly, s 90AA, which is relied upon by the Commissioner as barring the plaintiff from bringing the current proceedings, provides for the refunding of tax where it has been overpaid. Section 90AA was inserted by s 22 of the State Taxation (Further Amendment) Act 1993 (Vic). The legislative history is of some importance in the context of the present case and both parties made extensive reference to it in their submissions. It is useful to set out the legislative history briefly.
In summary, the position is that s 90 of the LTA 1958, in the original form of the Act as introduced in 1958, provided for a three year time limit on refunds, in the following terms:
(1) Where after any tax has been paid it is discovered that too little in amount has been paid the taxpayer liable for the tax shall forthwith pay the deficiency.
(2) Where after any tax has been paid it is discovered that too much in amount has been paid whether by reason of duplicate taxation or otherwise the Commissioner upon being satisfied thereof shall order the excess to be returned to the taxpayer entitled thereto and give a certificate accordingly.
(3) No application for a refund of an overpayment shall be entertained by the Commissioner unless made within three years after such overpayment was made, or if there has been an objection then within three months after the date of the decision on such objection.
(4) Every certificate for a refund of moneys paid as tax moneys pursuant to any provision of this Act shall state the person to whom such refund is to be made and the amount of every such refund certificate shall be paid by the Treasurer out of the Consolidated Revenue.
The Commissioner’s power to entertain an application for a refund was expressed to be limited to those applications made within a three year period or within three months of a decision on an objection. Under s 90, the power to refund was enlivened by the ‘discovery’ that too much tax had been paid. If an application was made within three years of the overpayment, and the Commissioner was satisfied thereof, he was required to order that the excess be returned to the taxpayer. The refund was to be made by the Commissioner giving a refund certificate to the taxpayer to be paid by the Treasurer out of the Consolidated Revenue.[17] In that way, the Act provided expressly for the appropriation of the Consolidated Revenue in order to make payment of the refund.
[17]See s 90(4).
In 1974, sub-sections 90(2), (3) and (4) were substituted and replaced with a new s 90(2). Under the new provision, no relevant time limit was imposed, and the Commissioner’s power to refund was framed using the facultative term ‘may’, as follows:
(2) Where the Commissioner finds in any case that tax has been overpaid he may refund to the taxpayer who paid the tax the amount of tax found to be overpaid.[18]
[18]Land Tax (Amendment) Act 1974 (Vic), s 2.
In 1992, however, the position reverted. Following the decision of the Full Court of the Supreme Court of Victoria in Royal Insurance Australia Ltd v Comptroller of Stamps (Vic),[19] and by way of legislative response to it, s 90(2) was substituted and replaced with the following provision which re-inserted a three year time limit and effectively required that the Commissioner ‘must refund’ or give credit for the amount of the overpayment. The new s 90(2) provided:
[19](1992) 23 ATR 528. In his second reading speech for the State Taxation (Amendment) Bill, the then Treasurer explained the background to the amendments proposed by the Bill, and the reason for their introduction as a compendium measure, as follows:
(2) If the Commissioner―
(a) receives an application for a refund of overpaid tax not more than 3 years after the overpayment; and
(b) finds that the tax has been overpaid by the applicant―
the Commissioner must―
(c) refund the amount of overpaid tax; or
(d) apply the amount of the overpaid tax against any liability of the applicant to the Crown, being a liability arising under, or by virtue of, an Act of which the Commissioner has the general administration, and refund any part of the amount that is not so applied.
A new provision, s 90A headed ‘Refunds to be paid to person entitled’, was also inserted at the same time to provide that in the situation where a taxpayer had ‘passed on’ the overpaid tax to a third party, the taxpayer was obliged to forward any refund to that third party.
It is common ground that the provisions introduced in 1992 have no application in the present case.[20] They were relied upon, however, as part of the historical legislative framework that informed the content of the provisions under consideration, which were introduced in 1993 by the State Taxation (Further Amendment) Act 1993 (Vic).[21]
[20]The counterpart provision to s 90(2), which was inserted at the same time in the Stamps Act 1958 (Vic) as s 32(7A), was considered by Ashley J in Common Equity Housing Ltd v The Commissioner of State Revenue (Vic) (1996) 33 ATR 77. His Honour found that s 32(7A) excluded the operation of the general law of restitution outside the three year period referred to in that section.
[21]See State Taxation (Further Amendment) Act 1993, ss 20-26. The amendments came into operation on 15 October 1993: s 2(5). These amendments to the LTA 1958 were made at the same time as similar amendments were made to other revenue Acts and also to the Limitation Act.
Relevantly, by that amending Act, s 90(2) was repealed and the current form of s 90AA, headed ‘Refund of tax’, was inserted,[22] as follows:
[22]State Taxation (Further Amendment) Act 1993, s 22.
(1) Proceedings for the refund or recovery of tax paid under, or purportedly paid under, this Act, whether before or after the commencement of section 22 of the State Taxation (Further Amendment) Act 1993, must not be brought, whether against the Commissioner or otherwise, except as provided in this section.
(2) If a person claims to be entitled to receive a refund of or to recover tax paid under, or purportedly paid under, this Act, the person must lodge with the Commissioner within 3 years after the payment was made an application in the prescribed form for the refund of the payment.
(3) If ─
(a) a person has lodged an application for the refund of an amount in accordance with sub-section (2); and
(b) the Commissioner has not, within the period of 3 months after the application was lodged ─
(i) refunded the amount; or
(ii) applied the amount in accordance with sub-section (6)(d); or
(iii) refunded part of the amount and applied the remainder in accordance with sub-section (6)(d) ─
or has, in writing given to the person within that period, refused to make a refund, the person may, within 3 months after the end of that period or after that refusal, whichever first occurs, bring proceedings for the recovery of the amount, or, if the Commissioner has refunded or applied part, the remainder of the amount.
(4) Sub-section (3) applies whether or not the period for bringing proceedings for the refund or recovery of the amount prescribed by section 20A(1) of the Limitation of Actions Act 1958 has expired.
(5) Sub-sections (1) and (2) do not apply to a person if the person claims to be entitled to receive a refund or to recover tax paid under, or purportedly paid under, this Act by reason of the invalidity of a provision of this Act.
(6) If ─
(a) an application for a refund is lodged with the Commissioner in accordance with sub-section (2); and
(b) the Commissioner finds that an amount has been overpaid by the applicant ─
the Commissioner ─
(c) must refund the overpaid amount; or
(d) must ─
(i) apply the overpaid amount against any liability of the applicant to the State, being a liability arising under, or by reason of, an Act of which the Commissioner has the general administration; and
(ii) refund any part of that overpayment that is not so applied.
(7) If, under this section, the Commissioner determines to refund an amount, the amount is payable from the Consolidated Fund which is to the necessary extent appropriated accordingly.
(8) In this section, “proceedings” includes ─
(a) seeking the grant of any relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction; or
(b) seeking any order under the Administrative Law Act 1978.
It will be noted that, save for the case where a person claims to be entitled to receive a refund or to recover tax paid, or purportedly paid, under the LTA 1958 by reason of the invalidity of a provision of that Act, these provisions established what was intended by the legislature to be the exclusive means for a person to seek a refund or recovery of tax paid, or purportedly paid, under the LTA 1958. The language used in s 90AA(1) is emphatic that proceedings (including proceedings seeking the grant of any relief or remedy in the nature or mandamus etc. or the grant of a declaration of right or an injunction) ‘must not be brought, whether against the Commissioner or otherwise, except as provided in [that] section.’ That position is reinforced by s 92A, which makes clear that the intention of s 90AA is to oust the jurisdiction of the Supreme Court under s 85 of the Constitution Act1975 (Vic) to entertain proceedings of a kind to which s 90AA(1) applies, except as provided by that section.[23]
[23]State Taxation (Further Amendment) Act 1993, s 25, inserting s 92A into the LTA 1958. A transitional provision confirmed that s 90 as in force before the Amending Act would continue to apply to certain proceedings for the recovery of tax (where proceedings had begun before commencement): see State Taxation (Further Amendment) Act 1993, s 26.
In his second reading speech for the State Taxation (Further Amendment) Bill, the then Treasurer explained the background to the amendments and the reason for their introduction, including those provisions limiting the jurisdiction of the Court, as follows:
The Bill amends the refund provisions of various State revenue Acts. On 15 August 1992 the previous government announced a new scheme for the refund of overpaid State taxes and duties which provided for refunds of amounts dating back up to three years from the date of the application for the refund, provided that the taxpayer did not obtain a windfall gain at the expense of any other person and provided that any refund due was first offset against any other Victorian tax liability. Legislation giving effect to this scheme was passed by the Parliament in spring 1992. The three-year limitation was designed to provide certainty and finality to Victoria’s revenue collections.
Some members of the legal community have recently claimed taxpayers can take action outside the statutory refund scheme to recover unpaid taxes dating back more than three years, under the common law. If this argument were accepted by the courts the intention of the 1992 legislation would be frustrated.
Doubts have also arisen about the interrelationship between the new scheme and a provision in the Limitation of Actions Act which provides for a one-year limit on the commencement of legal proceedings for the repayment of State taxes and charges.
The Bill amends … the Land Tax Act, … to provide that except in the case of a claim for a refund based on an argument that a provision of the relevant Act is invalid, proceedings for a refund cannot be brought unless an application for the refund has first been made to the Commissioner of State Revenue within three years of the payment concerned.
The amendments apply to proceedings which seek to use administrative law procedures to require things to be done which may result in a refund, as well as to proceedings which seek a refund directly.
I wish to make a statement under section 85(5) of the Constitution Act 1975 of the reasons for altering or varying that section by this Bill. Clauses …, 25, … provide that it is the intention of those clauses to alter or vary section 85 of the Constitution Act. These provisions preclude the Supreme Court from entertaining proceedings of a kind to which the new sections … 90AA of the Land Tax Act, … apply, except as provided in those sections.
The reasons for limiting the jurisdiction of the Supreme Court are these: refunds of overpaid … land tax, … – other than refunds claimed on the grounds of invalidity of provisions in the relevant taxing Acts – are only to be made where the person seeking the refund has lodged an application for the refund with the Commissioner of State Revenue within three years of the date of the overpayment. The purposes of clause … 22,[24] … of the Bill would not be achieved if the Supreme Court could entertain an action seeking such a refund notwithstanding that no application for a refund had been lodged with the commissioner within three years of the overpayment.
In conjunction with this Bill, the government is also introducing amendments to the Limitation of Actions Act to make clear that the one-year limitation period for the commencement of proceedings seeking a refund of a tax payment, which has existed for many years, continues to apply unless another Act specifically provides for a longer period within which proceedings may be commenced.
The provisions will apply from 15 October 1993, the date the government announced it would make the amendments. However, the amendments will not affect the rights of persons who, prior to that date, had lodged written claims for refunds with the State Revenue Office which are still current or who had commenced legal proceedings seeking a refund.[25]
[24]Inserting a new s 90AA.
[25]Victoria, Parliamentary Debates, Legislative Assembly, 21 October 1993, 1254-1255 (Alan Stockdale, Treasurer). The decision of the High Court in Commissioner of State Revenue v Royal Insurance Australia Ltd (1994) 182 CLR 51 (‘Royal Insurance’) was delivered on 7 December 1994, after the 1993 amendments had been introduced.
Limitation of Actions Act 1958
When the Limitation Act was enacted in 1958 there was no provision dealing specifically with recovery of overpaid taxes, fees or other imposts. It is likely that if any limitation period did apply to such a restitutionary claim, it would have been the general provision in s 5(1), which imposed a six year period in respect of actions founded on simple contract (including contract implied in law) or tort. In the present case, the Commissioner pleads, and continues to rely upon, the standard provision in s 5(1)(a) as a bar to the plaintiff’s claim. Relevantly, s 5(1)(a) provides:
5 Contracts and torts
(1)The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—
(a)Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law) or actions founded on tort including actions for damages for breach of a statutory duty;
…
A specific provision relating to the period within which actions may be brought to recover from the Crown moneys paid as taxes, fees charges or other imposts was first introduced into the Limitation Act in December 1961 by the Limitation of Actions (Recovery of Imposts) Act 1961 (Vic). That Act inserted a new section, s 20A, headed ‘Actions to Recover Imposts’, as follows:[26]
[26]This is the limitation provision that was construed by the High Court in the Royal Insurance case.
20A.
(1)
No action shall be brought to recover, from the Crown or the State of Victoria or any Minister of the Crown, or from any corporation officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount of any tax, fee, charge or other impost paid under the authority or purported authority of any Act, after the expiration of twelve months after the date of payment.
(2)
Sub-section (1) of this section shall not apply to any action or proceeding brought pursuant to any specific provision of any Act providing for the mode of challenging the validity, or for the recovery of the whole or any part, of any tax, fee, charge or other impost actually paid.
Subsection (2) makes clear, however, that s 20A(1) would not apply where, for example, another Act made specific provision for recovering such an overpayment.
In November 1993, contemporaneously with the amendments that were made to s 90AA of the LTA 1958 following the decision of the Full Court of the Supreme Court in the Royal Insurance case, s 20A was also substituted by a new s 20A, which was introduced by the Limitation of Actions (Amendment) Act 1993 (Vic). In each case, the newly introduced provisions took effect from the same date, namely 15 October 1993.
Section 1 of the amendment Act described the purpose of the Act as being ‘to alter the limitations on the recovery of money paid to the State.’ The new s 20A re-enacted the 12 month limitation on proceedings for recovery of money paid by way of tax but in so doing it also made express reference to the money having been paid ‘under a mistake (either of law or of fact)’, as follows:
20A. Limitation on proceeding for recovery of tax
(1)Subject to sub-section (2), a proceeding for the recovery of money paid by way of tax or purported tax under a mistake (either of law or fact) must be commenced-
(a) within 12 months of the date of payment; or
(b) in the case of a proceeding in accordance with another Act that provides for the refund or recovery of the money within a longer period, within that longer period.
(2)Despite anything to the contrary in any other Act, if money paid by way of tax or purported tax is recoverable because of the invalidity of an Act or provision of an Act, a proceeding for the recovery of that money must (whether the payment was made voluntarily or under compulsion) be commenced within 12 months after the date of payment.
The new s 20A also defined the concepts of ‘proceeding’ and ‘tax’ for the purposes of the new provision, as follows:
(5)In this section –
“proceeding” includes ─
(a) seeking the grant of any relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction; or
(b) seeking any order under the Administrative Law Act 1978.
“tax” includes fee, charge or other impost.
(The definition of ‘proceeding’ is in the same terms as those set out in the newly introduced s 90AA).
A new section, s 36, was also inserted to make clear that the amending Act was intended to alter or vary s 85 of the Constitution Act1975 to the extent necessary to prevent ‘the Supreme Court entertaining a proceeding to which section 20A (as in force after the commencement of the Limitation of Actions (Amendment) Act 1993) applies that is brought after the expiration of the period referred to in that section, or making an Order of a kind referred to in sub-section (4) of that section’.[27]
[27]Limitation of Actions (Amendment) Act 1993, s 5.
The express reference to the situation where the moneys sought to be recovered were paid under a mistake of law or a mistake of fact and the confirmation that the provision would apply to proceedings seeking administrative law remedies such as mandamus was, as the second reading speech makes clear, a legislative response to the decision of the Full Court in Royal Insurance.[28] In his second reading speech, the Treasurer stated that the purpose of the Bill was to amend s 20A ‘to ensure that section 20A operates in the way that it was originally intended to operate.’[29] He then proceeded to describe the intended operation, as follows:
For a number of years, the current section 20A has provided that actions to recover overpaid taxes must be commenced within 12 months of the date of the overpayment. This Bill does not change that limitation period.
However, the Bill makes it clear that the provisions of section 20A(1) apply to payments made either under a mistake of law or under a mistake of fact. The Bill also makes it clear that, except in cases where a payment is recoverable because of the invalidity of an Act or a provision in an Act, the 12-month limitation period can be extended by provisions in another Act which allow for the refund or recovery of the money within a longer period.
In conjunction with this Bill, the government is introducing amendments to the refund provisions of the payroll tax, land tax, stamps, financial institutions duty and business franchise Acts which provide that, except in the case of a claim for a refund based on an argument that a provision in a relevant Act is invalid, proceedings for a refund of an amount overpaid under any of these Acts can be brought if an application for the refund has first been made to the Commissioner of State Revenue within three years of the date of the payment in question.
…
The Bill makes it clear that section 20A applies to proceedings seeking administrative law remedies such as mandamus. This is necessary because of the recent decision of the Full Court of the Supreme Court of Victoria in Royal Insurance Australia Ltd v Comptroller of Stamps, which held that section 20A of the Act does not apply to mandamus proceedings. …
The provisions of the Bill apply from 15 October 1993, the date the government announced that it would make amendments to the Limitation of Actions Act and to the refund provision of the various taxation Acts.[30]
[28]Royal Insurance Australia Ltd v Comptroller of Stamps (Vic) (1992) 23 ATR 528.
[29]Victoria, Parliamentary Debates, Legislative Assembly, 21 October 1993, 1207 (Alan Stockdale, Treasurer).
[30]Ibid.
The Treasurer also made a statement under s 85(5) of the Constitution Act 1975 setting out the reasons for the Bill altering or varying that section, as follows:
Clause 5 provides that it is the intention of that clause to alter or vary section 85 of the Constitution Act to the extent necessary to prevent the Supreme Court entertaining a proceeding to which the new section 20A applies that is brought after the expiration of the period referred to in that section, or making an order referred to in subsection (4) of that section.
The reasons for limiting the jurisdiction of the Supreme Court are as follows: it has become necessary to amend section 20A to ensure that the section operates as it was originally intended to operate. The Bill makes provision for certain periods within which proceedings must be commenced to recover overpaid taxes. The purpose of the Bill would not be achieved if the Supreme Court could entertain proceedings to which the new section 20A applies that are brought after the expiration of the periods referred to in that section, or if the Supreme Court could make an order enabling or permitting a proceeding to which subsection (2) of the new section 20A applies to be commenced after the expiration of the period referred to in that subsection.[31]
[31]Ibid.
Section 20A was further amended in 2004 by the Limitation of Actions (Amendment) Act2004 (Vic), to ensure that -
· section 20A operates in proceedings between parties of any kind (i.e., proceedings between private parties, wholesalers and retailers as well as proceedings against revenue-collecting authorities);
· a payment made under colour of authority is covered by s 20A(1), so that claimants would not be able to avoid the operation of s 20A by technical forms of pleading; and
· s 20A(2) operates in relation to all mechanisms by which a tax is exacted, including subordinate legislation (such as regulations) as well as other instruments which are applied as a law of Victoria or are enforceable under such applied law.
The amending Act also introduced a new provision, as s 20B, dealing with the recovery of tax or amounts attributable to tax that have been ‘passed on’ that would otherwise result in a windfall gain to the claimant. Once again, the intention of the amending Act was stated to be to specifically limit the jurisdiction of the Supreme Court.
The introduction of language addressing amounts attributable to the payment of tax, and proceedings for the recovery of amounts that represent tax or purported tax, was directed to ensuring that the new provision would apply to all types of proceedings. That is, because proceedings between private parties are generally for the recovery of amounts that are attributable to a tax or purported tax,[32] rather than the recovery of a payment of tax or purported tax itself, words were added into subs (1) to make clear that that the provision applies to an action brought in respect of ‘an amount that is attributable to tax or purported tax’. Subsection 20AA(1) of the Limitation Act, as amended in 2004, provided that:
[32]See Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516.
20A. Limitation of proceeding for recovery of tax
(1)Subject to sub-section (2), a proceeding for the recovery of money paid by way of tax or purported tax or by way of an amount that is attributable to tax or purported tax under a mistake (either of law or fact) or under colour of authority must be commenced—
(a)within 12 months of the date of payment; or
(b)in the case of a proceeding in accordance with another Act that provides for the refund or recovery of the money within a longer period, within that longer period.
(amendments underlined)
The second reading speech of the Attorney-General on the Limitation of Actions (Amendment) Bill referred to a number of decisions of the High Court and courts in other states which have ‘highlighted some shortcomings and uncertainty in the laws related to the recovery of imposts’ and the desirability ‘that Victorian legislation be brought into line with that which applies in many other states.’[33] The Attorney-General said that in clarifying the operation of s 20A the opportunity had also been taken to make two technical amendments to the section, to ensure by subs (1) that ‘a demand made under the colour of authority is covered’ and by subs (2) that s 20A ‘operates in relation to taxes imposed or purported to be imposed under all legislation by substituting the current reference to an “act” with the expression a “law”’.[34] In dealing with ‘colour of authority’ the Attorney-General said:
The extension of section 20A(1) has been made because proceedings under this section, traditionally described as ‘actions for money had and received’, are often brought under several grounds. In addition to ‘mistake’, which is currently covered by the section, a further ground is that a taxation amount has been demanded ‘under the appearance or colour of authority’. This amendment seeks to ensure that the provisions apply equally to all cases in which recovery of taxes is sought whether a proceeding be brought under one name or another. Claimants should not be able to avoid the operation of this section by the technical way in which they plead their case.[35]
[33]Victoria, Parliamentary Debates, Legislative Assembly, 4 March 2004, 298 (Robert Hulls, Attorney-General).
[34]Ibid, 299.
[35]Ibid.
The amendments made by the amending Act were expressed to apply to and in relation to money paid before, on, or after 4 March 2004[36] but not to apply to a proceeding commenced before that date. Accordingly, these amended provisions are applicable to each of the sums sought to be recovered by the plaintiff in this case.
[36]The day on which the Bill received its second reading.
In the present case, irrespective of which limitation provision operates, the plaintiff also relies on s 27 of the Limitation Act to postpone the commencement of the limitation period. Section 27 provides, as follows:
27 Postponement of limitation periods in case of fraud or mistake
Where, in the case of any action for which a period of limitation is prescribed by this Act—
…
(c) the action is for relief from the consequences of a mistake—
the period of limitation shall not begin to run until the plaintiff has discovered the … mistake … or could with reasonable diligence have discovered it:
…
Issues for determination
The arguments advanced by the parties give rise to the following issues for determination:
(1) Where a taxpayer contends it has ‘overpaid’ land tax assessed under the LTA 1958, is it open for the taxpayer not to avail itself of the objection process and instead sue at common law to recover the alleged ‘overpayment’ amount as money had and received?
(2) Is the plaintiff’s action in restitution for relief from the consequences of a mistake barred by a limitation provision – be it one or more of s 90AA of the LTA 1958, s 20A(1) of the Limitation Act or s 5(1) of the Limitation Act, as extended by s 27 as the case may be?
(3) Is an order for mandamus (or other order on judicial review) available to direct the Commissioner to exercise the discretion conferred by s 19 of the LTA 1958 and issue amended assessments to the plaintiff for each of the 1990 to 2002 land tax years?
(4) Is the plaintiff’s action for mandamus (or other order on judicial review) barred by any limitation provision?
(5) If the plaintiff establishes that it is entitled to a refund of, or to recover, the alleged ‘overpayment’ amount, is compound interest recoverable as part of the restitutionary relief or is the plaintiff limited to recovering simple interest, in the Court’s equitable jurisdiction or alternatively pursuant to ss 58 or 60 of the Supreme Court Act 1958 (Vic)?
(1) Where a taxpayer contends it has ‘overpaid’ land tax assessed under the LTA 1958, is it open for the taxpayer not to avail itself of the objection process and instead sue at common law to recover the alleged ‘overpayment’ amount as money had and received?
The plaintiff maintains that a claim in restitution lies against the Commissioner for the overpaid moneys because the Commissioner was, and continues to be, unjustly enriched at the expense of the plaintiff. It says that the Commissioner demanded payment of moneys pursuant to the land tax assessments issued for the 1990 to 2002 years, which sums the plaintiff paid in the mistaken belief that they were properly due and payable to the Commissioner under the LTA 1958 and that it was legally obliged to make those payments. The plaintiff now contends that the assessments for those years, like those for the years 2003 to 2007, were wrong in that each assessment incorrectly included an amount referable to a duplicate property, being 65 Albany Rd, with the result that the Commissioner sought and received payment of land tax from the plaintiff on a demonstrably erroneous basis. Accordingly, the plaintiff says it is entitled to bring a claim in restitution seeking recovery of the amount overpaid on account of land tax for the 1990 to 2002 years, particularly in circumstances where the Commissioner is unable to produce the relevant assessments and the plaintiff is not confronted by reliance upon the conclusive evidence provision in s 20 of the LTA 1958.
The plaintiff points to the High Court’s decision in the Royal Insurance case[37] as confirming the availability of restitutionary relief in circumstances such as exist here, where a taxpayer has paid amounts to the Commissioner mistakenly believing that they were lawfully payable. Relying upon observations made by Mason CJ[38] and also by Brennan J[39] (with whom Toohey and McHugh JJ agreed) in that case, the plaintiff contends that the circumstances of the present case are such that a claim in restitution lies against the Commissioner and the only proper response for the Commissioner is to amend the assessments and act on them by returning the amount it overpaid.
[37](1994) 182 CLR 51.
[38]Ibid, 67-68.
[39]Ibid, 89 (lines 7-12).
In response, the Commissioner contends that the objection procedure established under the LTA 1958 is the only means by which a taxpayer can establish that an assessment made under the Act is excessive. The Commissioner says that the plaintiff, not having utilised the objection procedure, is unable to establish that the assessments it paid are excessive, with the result that the plaintiff cannot establish the ‘overpayments’ necessary for it to make out its case in restitution. Accordingly, the plaintiff’s restitution claim must fail.
The starting point for the Commissioner’s argument is the scheme of the Act. The Commissioner says the Act creates both the obligation to pay, and a mandatory remedy, namely, the objection process. The process established under the LTA 1958 is analogous to that which applies in the federal context under Part IVC of the Taxation Administration Act1953 (Cth), where the courts have held that that challenges to assessments are confined to the statutory objection, review and appeal processes: see for e.g., Commissioner of Taxation v Futuris Corporation Ltd;[40] Deputy Commissioner of Taxation v Richard Walter Pty Ltd[41] and Hoare Bros Pty Ltd v Federal Commissioner of Taxation.[42]The Commissioner says these authorities, which concern the exclusiveness of the objection procedure in the Taxation Administration Act1953, apply, mutatis mutandis, to the objection procedure in the LTA 1958, there being no material distinction in the legislation. Further, the Commissioner points to the position that applies with other state tax regimes such as stamp duty[43] and payroll tax[44] where similar constructions have been placed on counterpart provisions.
[40](2008) 237 CLR 146, 154-157, [16]-[24], 161-162, [45] and 166, [62] (‘Futuris’).
[41](1995) 183 CLR 168, 187 (Mason CJ), 199 (Brennan J) and 240 (McHugh J) (‘Richard Walter’).
[42](1996) 62 FCR 302, 311 (Black CJ, Einfeld and Sackville JJ) (‘Hoare Bros’). The decision was followed by the High Court in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473.
[43]The objection and appeal regime in the Stamp Act 1921 (WA) is the sole means by which a taxpayer assessed to stamp duty under the Act may challenge the correctness of the assessment: see Commissioner of State Taxation (WA) v Bayswater Hire Cars Pty Ltd (1989) 20 ATR 1606, 1608 (Malcolm CJ, Kennedy J agreeing), 1610 (Wallace J). Similarly, the appeal regime established under the Stamp Act1894-1982 (Qld) is the exclusive avenue for challenging an assessment of stamp duty: see O’Sullivan v Commissioner of Stamp Duties [1984] 1 Qd R 212, 213-216 (Matthews J, Kelly J agreeing), 222, 225-227 (G N Williams J). Likewise under the Stamp Duties Act1923 (SA): see Corfu Clothing Co Pty Ltd v Commissioner of Stamps (1988) 48 SASR 105, 113 (Legoe J).
[44]For e.g., in Phibbs v Dale (Unreported, Supreme Court of Victoria, Menhennitt J, 8 June 1978) Menhennitt J was of the view that under the Payroll Tax Act 1971 (Vic) the objection procedure is the only manner by which the correctness of assessments made under that Act can be put in issue. His Honour said (at 30) that the procedure established by the Act ‘involved objection and appeal as prescribed by the Act’ and neither course having been pursued, ‘it is not, therefore, open to the defendant to challenge the correctness of those assessments in the way he has sought to do by affidavit in these proceedings.’
Thus, the gist of the Commissioner’s primary response is to say that if the taxpayer is to obtain a refund of taxes it contends were overpaid, it must first avail itself of the objection procedure, and if it fails to do so, its common law claim cannot succeed.
In the present case, the alleged overpayment is said to arise from the fact that, as a result of the duplicate landholding, the Commissioner wrongfully demanded payments of land tax that were not authorised by, or payable under, the LTA 1958. The plaintiff contends that the amounts it overpaid referable to the duplicate property for the years 1990 to 2002 inclusive were not relevantly ‘land tax’ and thus there was never any lawful authority under the LTA 1958 for the Commissioner to exact or retain those moneys.[45]
[45]In its proceeding commenced by Writ, seeking restitutionary relief, the plaintiff pleads that:
21. The defendant, by its notices of assessment for the 1990-2002 land tax years inclusive, demanded payment of amounts of land tax which were not authorised by, or payable under, the LTA 1958.
22. As required by those notices of assessment, the plaintiff paid land tax totalling $603,452 for the 1990-2002 years inclusive, of which $363,680, or some other amount, has been overpaid as a result of the duplicated land landholding (“the overpayments”).
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23. The plaintiff made these overpayments in the mistaken belief that the land tax liability as assessed by the defendant in the assessments for the 1990-2002 years was properly due and payable to the defendant under the LTA 1958, and that it was legally obliged to make those payments.
The Commissioner responded by way of defence by admitting that the plaintiff ‘paid land tax totalling $603,452 as assessed for the 1990-2002 years’ but otherwise denied those allegations. Further, the Commissioner says that, as no objection was lodged by the plaintiff within the 60 day period prescribed, the assessment in respect of each year must be taken in this proceeding to be ‘valid’, ‘duly made and ‘correct’ within the meaning of ss 19 and 20 of the LTA 1958. In addition, the Commissioner says that, under the Act, the land tax so assessed was a debt due to the Crown, that each of the payments made by the plaintiff constituted a payment made to discharge a lawful obligation, and in the premises, the payments were not made by the plaintiff by reason of any ‘mistaken belief’ that it was legally obliged to pay the land tax liability as assessed. Accordingly, on the pleadings, there is no admission by the Commissioner that any amount was overpaid for the 1990 to 2002 land tax years, and the Commissioner contends that all of the amounts so paid were ‘land tax’ that was due and owing.
The Commissioner has not been able to locate amongst the SRO’s records a copy of the notices of assessment issued to the plaintiff for the 1990 to 2005 land tax years.[46] In April 2012, however, the SRO located and provided to the plaintiff a suite of ‘Assessment Reports’, which apparently contain all of the relevant information used by the Commissioner in raising the land tax assessments for the 1983-2001 land tax years. Shortly before the hearing, Ms Cockburn swore an affidavit on behalf of the Commissioner to which she exhibited print-outs of documents she had located that were contained in the Commissioner’s computer system, recording the relevant details of the assessments made for 1990 to 2005. She confirmed that for all but one year the original notice of assessment is not available, and she summarised in a table format those documents that have been located and made available for the relevant tax year and where they may be found in the materials filed by the parties.
[46]The plaintiff located a copy of the 2002 assessment amongst its records.
The amounts that were assessed and paid in each land tax year are common ground. The evidence adduced on behalf of the plaintiff is to the effect that the plaintiff has paid to the Commissioner all of the amounts of land tax referred to in the land tax assessment notices and the SRO Assessment Reports for the 1990 to 2007 years inclusive. Using the SRO Assessment Reports for the 1990 to 2001 years and the land tax assessments for the 2002 to 2007 years, the plaintiff has estimated the amount of land tax which it alleges has been overpaid for the 1990 to 2002 years as a result of its ‘mistaken belief’ that it was legally obliged to pay the land tax liability as assessed, as being the sum of $363,680, calculated as follows:
Year
Original Land Tax Assessment
Estimated Land Tax Assessment
(excl. 65 Albany Rd‘Overpaid’
Land Tax1990
$17,730
$10,074
$7,656
1991
$20,250
$11,469
$8,781
1992
$19,263
$10,938
$8,325
1993
$20,248
$11,498
$8,750
1994
$24,298
$13,666
$10,632
1995
$28,347
$15,967
$12,380
1996
$28,347
$15,915
$12,432
1997
$30,372
$16,988
$13,384
1998
$52,121
$17,310
$34,811
1999
$62,561
$20,979
$41,582
2000
$85,904
$28,407
$57,497
2001
$102,130
$32,380
$69,750
2002
$111,880
$34,180
$77,700
TOTAL
$603,451[47]
$239,771
$363,680
[47]Note that the sum of $603,452 is referred to in both the Amended Statement of Claim ([22]) and the Defence ([22]), as being the total amount of land tax assessed for the 1990 to 2002 years and paid by the plaintiff.
The first question the Commissioner poses is whether it was open for the taxpayer under the regime established under LTA 1958 not to avail itself of the objection process and instead to sue at common law to recover the alleged ‘overpayment’ amount as money had and received. One of the features of the present case is that, because the Commissioner is unable to produce the assessments that issued for the 1990 to 2001 years, he cannot deploy s 20(1) and rely on the assessments as ‘conclusive evidence’ of the due making of the assessments or that the amount and all the particulars of the assessment are correct. Nor, however, it seems can the plaintiff rely on those assessments to establish the alleged overpayments.
The starting point for any consideration of the competing arguments involves the construction of the relevant statutory provisions. As the High Court emphasised in Thiess v Collector of Customs, ‘[s]tatutory construction involves attribution of meaning to statutory text’.[48] Their Honours reiterated and endorsed the observations the High Court made in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd[49] about the task of statutory construction, as follows:
‘This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text.’ So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text.[50]
[48](2014) 250 CLR 664, 671 [22] (French CJ, Hayne, Kiefel, Gageler and Keane JJ) (‘Thiess’).
[49](2012) 250 CLR 503, 519 [39].
[50](2014) 250 CLR 664, 671 [22].
Further, the Court said:
Objective discernment of statutory purpose is integral to contextual construction. The requirement of s 15AA of the Acts Interpretation Act1901 (Cth) that ’the interpretation that would best achieve the purpose of [an] Act (whether or not that purpose or object is expressly stated …) is to be preferred to each other interpretation’ is in that respect a particular statutory reflection of a general systemic principle.[51]
[51]Ibid, 672 [23]. The Victorian counterpart to s 15AA is s 35(a) of the Interpretation of Legislation Act 1984.
Thiess was a case where the plaintiff made an ‘overpayment’ of customs duty and goods and services tax (‘GST’) because his agent was under a mistaken belief about the gross weight of a yacht which he had imported into Australia. If the correct weight had been submitted the yacht would have been duty free, but the duty payable on a yacht of the weight submitted by the agent to customs was $494,472 plus GST of $49,447. The plaintiff did not discover the overpayment until the prescribed period for recovery had passed. He then brought proceedings against the Collector of Customs and the Commonwealth to recover the total sum paid, being $543,918.92, contending that it was paid to the Collector erroneously because his agent was under a mistaken belief as to the weight of the yacht. The plaintiff claimed the recovery of the overpayment as money had and received or by way of restitution in equity or by way of equitable compensation for unjust enrichment or alternatively an order that those defendants account to him for that sum. The Court held that s 167(4)[52] of the Customs Act1901 (Cth) barred the recovery of any sum paid by mistake as duty payable in respect of goods unless the payment was made under protest, as required by s 167(1), and the action was commenced within the specified time periods, or the right to recovery arose under s 163 and the requirements of that section for the making of a refund had been complied with.
[52]Section 167(4) provided:
(4)No action shall lie for the recovery of any sum paid to the Customs as the duty payable in respect of any goods, unless the payment is made under protest in pursuance of this section and the action is commenced within the following times:
(a)In case the sum is paid as the duty payable under any Customs Tariff, within 6 months after the date of payment; or
(b)In case the sum is paid as the duty payable under a Customs Tariff or Customs Tariff alteration proposed in the Parliament, within 6 months after the Act, by which the Customs Tariff or Customs Tariff alteration proposed in the Parliament is made law, is assented to.
The plaintiff relied on the decision of the House of Lords in Sempra Metals Ltd v Inland Revenue Commissioners[211] as the foundation for its contention that it is entitled to be awarded interest on a compound basis as part of the restitutionary relief granted. The Sempra case involved an action brought by non-United Kingdom resident parent companies to recover advance corporate tax which was payable quarterly on dividends paid to them by a United Kingdom resident subsidiary. The legislation provided that where a parent and subsidiary were each resident in the United Kingdom, they could make a group income election, such that the subsidiary would not be required to account for advance corporate tax on dividends paid to its parent. The European Communities’ Court of Justice determined that payments made under a tax regime of this kind, providing differential outcomes for resident and non-resident parent companies was invalid on the basis that it restricted the freedom of establishment protected under the Treaty Establishing the European Community.[212] The Court of Justice ordered that those companies ordered to pay advance corporate tax contrary to Community law should be entitled to an effective remedy to obtain reimbursement or reparation of the financial loss sustained, the nature and basis of the remedy to be determined by the national court. As a result, claims were made by a group of multi-national companies for restitution in respect of interest accruing on sums of advance corporate tax paid prematurely during the period between making the payments and the date on which mainstream corporations tax became payable. That is, the principal sum claimed by each of them was for the time value of the money paid over prematurely, by which the defendant was enriched.
[211][2008] 1 AC 561 (‘Sempra’).
[212]Ibid, 592-593 [56].
The Sempra case proceeded as a test claim under a group litigation order. In terms of structure, it was very similar to the present case, in the sense that the taxpayer was pursuing the recovery of the amount paid by way of advance corporate tax including compound interest and the Inland Revenue Commissioners sought to rely on limitation provisions to deny the taxpayer restitution, as well as previous decisions which denied the award of compound interest arising from restitution.[213] The trial judge held that the taxpayer company was entitled to be fully compensated and restored to the position it would have been in had it not been required to make the advance payments of tax. He ordered that the award of damages be quantified on the basis of compound, not simple, interest at a rate derived from prevailing levels of interest rates in the market generally and to be the same for all claimants. The Court of Appeal dismissed the Inland Revenue Commissioners’ appeal, and ordered that interest should be computed by compounding at the same periodic rests as those by which the applicable rate of interest was fixed. The House of Lords dismissed the Inland Revenue Commissioners’ appeal. In so doing, it overturned the earlier decisions in London Chatham and Dover Railway Co v South Eastern Railway Co[214] and President of India v La Pintada Cia Navigacion SA[215] and recognised that the courts have a common law jurisdiction to award interest, simple and compound, as damages on claims for non-payment of debts as well as on other claims for breach of contract and tort.
[213]In particular, Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (‘Westdeutsche’).
[214][1893] AC 429.
[215][1985] AC 104.
The House of Lords held that a court has jurisdiction to award compound interest where a claimant is seeking restitution of money paid under mistake, but their Lordships were divided as to whether such an award should be made in the exercise of the court’s common law restitutionary jurisdiction (Lord Hope, Lord Nicholls and Lord Scott were of that view) or in the exercise of the Court’s equitable jurisdiction (Lord Walker and Lord Manse). This represented a departure from the earlier decision of the House of Lords in Westdeutsche[216] where their Lordships had declined to supplement the statutory right allowing for simple interest, by the making of an award of compound interest. In Sempra, the majority (Lord Hope, Lord Nicholls and Lord Walker) determined that, in circumstances where the assumption that the government had derived some benefit from the premature payment of the tax was not displaced, compound interest should be awarded to the taxpayer, calculated at the rate at which the Government would be able to borrow money in the market during the relevant period.
[216][1996] AC 669.
The plaintiff contends that the position reached in the Sempra case, recognising a free-standing right to be awarded compound interest within the framework of a restitutionary cause of action, has similarly been recognised or accepted in Australia, by Courts of Appeal in New South Wales[217] and in South Australia[218] and that, unless and until the High Court determines to the contrary, this Court should follow them, in accordance with the decision in Australian Securities Commission v Marlborough Gold Mines Ltd.[219] In this regard, the plaintiff refers to the decision of the Court of Appeal in Victoria, in Peet Ltd v Richmond,[220] where Nettle JA acknowledged that, at least in the case of a restitutionary claim for moneys had and received, ‘it may be that this court is bound to follow those decisions.’[221]
[217]Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600, 603-606 [12]-[16] (Mason P). See also Lahood v Lahood [2010] NSWSC 1297, [143]-[149] (Ward J).
[218]Chow v Yang [2010] SASC 96, [33]-[36].
[219](1993) 177 CLR 485, 492; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, 151 [135].
[220](2011) 33 VR 465 (‘Peet’).
[221]Ibid, 491, [126].
In Peet, the trial judge had rejected the property developer’s claim for compound interest made on a quantum meruit basis in a restitutionary action for work and labour done. The Court of Appeal dismissed the appeal. Nettle JA (with whom Neave JA and Judd AJA agreed) noted that the property developer’s claim ‘faces difficulties at several levels’[222] and his Honour then proceeded to outline several reasons why the claim should be rejected. First, he said it ‘is not clear that the High Court would follow’ the decision in Sempra, noting that in Commonwealth v SCI Operations Pty Ltd[223] McHugh and Gummow JJ had referred to the earlier decision of the House of Lords in Westdeutsche ‘in terms which appear to me to cast doubt on the existence of’ such a ‘free-standing’ right to recovery of pre-litigation interest.[224] Secondly, his Honour said that despite the recognition that right has received in courts in other States, and even though this Court may be bound to follow them, it ‘is not clear that the same reasoning applies to restitutionary claims for work and labour done’, their raison d’être being different.[225] Thirdly, his Honour pointed out that ‘interest under the “free-standing right” to interest on a plaintiff’s claim for money had and received does not begin to run until and unless retention by the defendant of the plaintiff’s money becomes unjust’.[226] In the circumstances of the case, where the plaintiff had repeatedly repudiated any entitlement to a quantum meruit, his Honour found that the trial judge’s reasoning sufficiently explained why it was not unjust for the defendant not to pay until it was provided with particulars, and he accepted that it was not unjust for the defendant not to pay a quantum meruit until its obligations had been established in the proceeding.
[222]Ibid, 490, [125].
[223](1998) 192 CLR 285, 316-317 [72]-[76] (‘SCI Operations’).
[224](2011) 33 VR 465, 490 [125].
[225]Ibid, 491 [126].
[226]Ibid, 491 [127] (citations omitted).
The plaintiff contends that, in Peet, Nettle JA attributed a slightly stronger suggestion to the decision in SCI Operations, and in particular to the views expressed by McHugh and Gummow JJ, than is warranted. SCI Operations was a customs case where tariffs were paid on certain goods pursuant to the Customs Act 1901. At a later date, a commercial tariff concession order (‘CTCO’) was made, lowering the rate of duty for one period and making them duty free for another, and it was deemed to come into effect from a date several years earlier. The importers who had sought the concession order did not apply for refunds under the regulations but rather brought proceedings seeking refunds of duty plus interest from the date on which the order was stated to have effect. The Commonwealth, on the day the proceedings were brought, paid amounts to the importers as refunds plus interest but for only part of the period during which the duty had been paid. The importers did not discontinue their claim, however, and pursued interest dating back to 1987 when the first customs duty payments were made. They relied on s 51A of the Federal Court of Australia Act 1976 (Cth). They also pursued the claim on an alternative basis that interest was available on ‘restitutionary principles’.[227]
[227]SCI Operations (1998) 192 CLR 285, 298 [19].
The importers’ claims for interest were heard together in the Federal Court. The trial judge, Wilcox J, dismissed the proceeding, but the Full Court by majority (Beaumont and Einfeld JJ, Sackville J dissenting) allowed their appeals and remitted the matter to a single judge. Before the remittal could proceed, however, special leave to appeal was granted.
The High Court allowed the appeal and dismissed the importers’ claims for interest. Their Honours held first, that the importers had no entitlement to interest under s 51A of the Federal Court of Australia Act 1976. In essence, this was because on the very day that the concession order was made, the Comptroller refunded the duties that had been paid, so there was no period of time when the Comptroller was holding moneys to which he was not entitled.[228] In their joint judgment, McHugh and Gummow JJ said:
[T]he duty was refunded on the day on which the CTCO was made. There was no period in which debts in respect of the refunds were due and owing but unpaid. Therefore, there is no foundation for any application in the actions commenced on 3 June 1994, upon their remitter to the Federal Court, of s 51A of the Federal Court Act.[229]
[228]See for e.g., (1998) 192 CLR 285, 306 [43]-[44] (Gaudron J) and 314 [68] (McHugh and Gummow JJ).
[229]Ibid, 314 [68].
Secondly, referring to Westdeutsche, the Court held that a restitutionary right to the recovery of interest could not succeed because the entitlement to refunds was derived from the Customs Act 1901, which provided for the payment of refunds without interest. In addressing the appellants’ asserted ‘free-standing’ right to recover interest, McHugh and Gummow JJ said that ‘[t]he existing state of authority does not favour acceptance of such a broad proposition.’[230] Their Honours added that ‘even if it be accepted, despite the present state of authority, that there be a principle of the width advanced by SCI and ACI, it could not apply in the present case.’[231] In their view, this was because the collection of duty in question was required by statute, such entitlements as the importers enjoyed were the product of statute, and restitutionary considerations cannot override the legislature’s clear intention as expressed in the statute.
[230]Ibid, 316 [72].
[231]Ibid, 317 [76].
Gaudron J expressed a similar view, stating:
The right conferred by the refund provisions is a statutory right which has no counterpart in the general law. Being a right based wholly in statute, it can neither be cut down nor enlarged by resort to the general law or to restitutionary principles. More precisely, those principles cannot convert a statutory right to obtain a refund of money into a right to obtain a refund with interest. There is, thus, no substance in the claim that SCI and ACI were entitled to a judgment for interest by reason of restitutionary principles.[232]
[232]Ibid, 306 [44].
Kirby J likewise reached the conclusion that the statutory scheme, upon its true construction, excluded the payment of interest.[233] Further, he said ‘[g]eneral statutory provisions or common law principles could not expand the importer’s rights.’[234] Brennan J found that no interest was payable under s 51A, and did not consider the restitution argument.
[233]Ibid, 324 ff, esp. 327 [98]-[99].
[234]Ibid, 328 [101].
A few years later, the appeal in Heydon v NRMA Ltd (No 2)[235] was heard and decided by the New South Wales Court of Appeal. Relevantly, Mason P expressed a different view to that expressed by McHugh and Gummow JJ in SCI Operations about whether interest was recoverable as part of the restitutionary relief available on a claim for unjust enrichment. His Honour said that as their discussion on this point did not form part of the reasoning of the other members of the Court, he considered himself ‘at liberty respectfully to maintain’ the position he had arrived at in National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd[236] a few years earlier.[237] He referred to and set out his reasoning in that earlier decision, where he stated ‘interest at common law has been awarded for money had and received, where the facts would have supported an equitable claim for account’ and cited numerous cases in support.[238] He noted that:
[235](2001) 53 NSWLR 600 (‘Heydon’).
[236]Unreported, New South Wales Court of Appeal, Mason P, 23 April 1997.
[237](2001) 53 NSWLR 600, 606 [16].
[238]Ibid, 604 [15].
In all of these cases, interest was awarded at common law and computed from the date of receipt of moneys ordered to be repaid, even where (in cases unlike the present) the restitutionary cause of action leading to the obligation to repay the ‘principal’ may have arisen later.[239]
His Honour summarised the relevant principle as being:
when A retains money owed by or owing to B over a period of time, A derives a benefit (at B’s expense) usually measurable by what A would have had to pay in the market to borrow that sum for that period. Since this benefit is derived without justification and at the expense of the person to whom the principal sum was due, we should now recognise it as an unjust enrichment. It stands independently of, but appurtenant upon the obligation to pay, the ‘principal’ sum. The independent nature of the restitutionary entitlement to interest is evidenced by historical recognition of a distinct indebitatus count for interest.[240]
[239]Ibid, 605 [15].
[240]Ibid.
Some nine years after the decision in Heydon, and two years after that in Sempra, the case of Lahoud v Lahoud[241] was decided by Ward J in the New South Wales Supreme Court. In Lahoud, the ‘Victor Lahoud’ parties claimed interest on a restitutionary basis on moneys paid to Joseph Lahoud in February 2001 that were retained by him for his own benefit. At an earlier trial, Joseph Lahoud had apparently accepted that those moneys had been deposited by him and that he had had the use of them. It was also accepted that as there was no contractual right to recovery of any money until after the outcome of the audit, there was no right to interest under s 100 of the Civil Procedure Act 2005 (NSW). The Victor Lahoud parties submitted, however, that equity may award interest on moneys where another party has had the use of them over time and may do so by way of a ‘free-standing’ award, relying in large part upon passages in the judgments in Sempra.[242]
[241][2010] NSWSC 1297 (‘Lahoud’).
[242]Sempra, [2008] 1 AC 561, esp. 584 [25] (Lord Hope) and 627 [179] (Lord Walker).
Ward J considered the claim made for a ‘free-standing’ award of interest, against the background of the recent decisions in Sempra, Heydon, Chow v Yang and the cautionary note expressed in SCI Operations. Her Honour concluded that ‘there is certainly authority which supports a claim in restitution of the kind which has been brought by the Victor Lahoud interests.’[243] She said that had she ‘otherwise been satisfied as to the factual foundation for the restitutionary claim made for interest’[244] she would have followed the reasoning of Mason P in Heydon and that of Lord Walker in Sempra and allowed the claim for interest at the commercial rates claimed. But it was not necessary for her Honour to make any such finding as she was not satisfied that ‘the retention of the funds by Joseph Lahoud over the period from February 2001 at least up to a reasonable time for payment from the time of the audit in August 2010 amounts to an “unjust” enrichment (though it clearly has been an enrichment)’.[245] Her Honour noted that, because the right to interest arising from restitutionary principles was based on the law of unjust enrichment, ‘[m]ore is required than proof of a retention of a benefit, that is there must be some additional factor rendering retention of the benefit “unjust” in the relevant sense’.[246] In that case, because the parties’ contract contemplated that a party may hold money that it was not entitled to, her Honour found that interest, if available, could not begin to accrue until after the date of the outcome of the audit.[247]
[243][2010] NSWSC 1297, [148].
[244]Ibid, [149].
[245]Ibid. Her Honour remained of that view ([183]) notwithstanding that supplementary submissions were made by the parties.
[246]Ibid, [151].
[247]Ibid [158].
In South Australia, a similar position to that adopted in New South Wales applies. In Chow v Yang[248] an unjust enrichment claim arose out of a failure of consideration in the sale and purchase of a business. As part of the sale, the plaintiff paid $473,400 in cash to the defendant, who at the time of the decision of the Full Court of the South Australian Supreme Court still retained the money. The Full Court (Nyland, Gray and Vanstone JJ) agreed with the trial judge that this amount was to be set off against amounts of depleted stock and unpaid supplier invoices, resulting in a judgment sum of $91,025.64 payable to the plaintiff. Despite the lesser final sum resulting from the set off, the Full Court found that 5% interest (a rate agreed between the parties) applied to the whole of the $473,400 held by the defendant until the date of judgment from the trial judge. Statutory interest applied from that date thereafter.
[248][2010] SASC 96.
In allowing the claim for interest, the Court observed:
We have reached the conclusion that the Judge erred in declining to award interest in favour of Mr Chow. Mr Yang has had the benefit and use of the moneys that should have been repaid. Interest should be paid on that amount from the date of payment of the moneys until the date of judgment. Otherwise Mr Yang will have received a windfall, an unjustified betterment.[249]
The Court was not required to determine anything further, however, as both counsel agreed that in the event that interest was payable, an appropriate rate over the entire period was five per cent and that it would be appropriate in the circumstances for the Full Court to fix a lump sum.
[249]Ibid, [35].
While this case reflects the same general principle as that adopted in New South Wales as to the availability of interest for restitutionary claims based on an action for money had and received, its relevance to the present circumstances is limited for two main reasons. First, similar to Heydon, compound interest was not in issue and it was not considered by the Full Court.[250] Secondly, although the parties were in dispute as to whether interest was payable, they were agreed on the appropriate rate of interest to apply.
[250]Ibid, [36].
In the present case, the plaintiff submits that if the Court finds that the moneys retained by the Commissioner ought never to have been exacted, the Court should apply a commercial rate of interest, and award interest on the overpaid amount at a compound rate. In this regard, it relies upon the compound interest calculations performed by Mr Davis in his affidavit.
The plaintiff also calls in aid the notion that courts of equity regularly award compound interest against defaulting fiduciaries.[251] It was submitted on behalf of the plaintiff that if the right to interest were to be regarded as an equitable right, and equity could come to the assistance of the common law, as some of their Lordships in Sempra thought, then compound interest could be awarded in the situation where moneys are wrongfully detained by a wrongdoer.
[251]See Southern Cross Commodities Pty Ltd (in liq) v Ewing (1988) 91 FLR 271, 284-285 (White J), 298 (Legoe J) and 307 (von Doussa J).
Finally, the plaintiff’s ‘fallback position’ is to say the statutory rates of interest apply to determine the applicable interest rate. It points to the fact that the moneys that were refunded for the 2008 land tax years onwards attracted interest at ‘commercial’ rates under the Taxation Administration Act 1997. That Act is the successor to the Taxation (Interest on Overpayments) Act 1986 relied upon by the Commissioner.
Section 116 of the Taxation Administration Act 1997, which deals with payments to be made following a successful objection, provides :
In addition to an amount refunded under this Part, the Commissioner is required to pay interest on the amount calculated at the market rate referred to in section 25(a) on a daily basis from—
(a) the date of payment of the amount overpaid that is refunded; or
(b)the date on which the Commissioner made the assessment to which the objection and review or appeal relates—
whichever is the later, until the date of the refund.
Thus, where there is a successful objection, the Commissioner is under an obligation to pay interest on any money that becomes payable to the taxpayer with interest at market rates. The plaintiff submits that accordingly, the award of a commercial rate of interest would not be inconsistent with the position that applies on a successful objection.
As noted earlier, the Commissioner contends that the Taxation (Interest on Overpayments) Act 1986 prescribes the interest (i.e., simple interest) payable in respect of successful objections lodged under the LTA 1958. He also points to the anomalous outcomes that would result if a taxpayer like the plaintiff, who has not pursued the objection route to recovery, were entitled to be awarded compound interest whereas one who lodges and successfully pursues an objection were entitled to be awarded only simple interest on the moneys refunded (as prescribed by the Taxation (Interest on Overpayments) Act 1986).[252]
[252]See Qantas Airways Ltd v Commissioner of Taxation (2001) 115 FCR 288, 304-305 [78]-[82] (Emmett J).
While the position in England and in some Australian jurisdictions has changed since SCI Operations was decided, so that the law does now recognise that the courts have a common law jurisdiction to award interest, both simple and compound, the decision in any particular case will nevertheless be affected by its particular circumstances. In this regard, I note that none of the more recent Australian cases have considered the award of interest in circumstances where the common law claim for restitution was brought concerning moneys paid under a statutory regime like the present one. It is not necessary for me to reach a view on this issue, but I observe that, as the decision in SCI Operations demonstrates, the particular features of the statutory regime may well affect the final outcome, both in terms of whether compound interest may be awarded and if so, the applicable rate.
Conclusion
It follows, in my opinion, that the plaintiff’s proceeding seeking restitutionary relief and its proceeding for mandamus or other relief by way of judicial review, should in each case be dismissed. I will hear the parties on the appropriate form of orders.
The Commissioner’s discretion was exercised to allow late objection to the 2006 and 2007 assessments. Therefore interest will be allowed in respect of the overpayment arising from the amendment of these assessments.
As no objection was lodged against the 2008 assessment 51698393 no interest is payable in respect of the overpayment arising from its withdrawal.
Various refund provisions in Acts administered by the commissioner allow the commissioner to refund tax or duty where he finds tax or duty has been overpaid. However, those provisions and their interstate counterparts have been interpreted by the revenue authorities of this State and other States as not requiring or even allowing a refund if the overpayment is made as a result of a mistake of law. The Full Court of the Supreme Court of Victoria has recently decided that a refund provision in the Stamps Act places an obligation on the commissioner to refund overpaid duty in all circumstances. The commissioner is seeking special leave to appeal the decision to the High Court. …
The government considers that taxpayers who have overpaid tax or duty are entitled to a refund of that tax or duty. However, there must be a point in time in which taxation matters are finalised. The amendments proposed by the Bill ensure that taxpayers are entitled to refunds of tax or duty overpaid up to three years before the date the application for a refund is lodged with the State Revenue Office. …
See Victoria, Parliamentary Debates, Legislative Assembly, 6 November 1992, 566 (Alan Stockdale, Treasurer).
If an Act or subordinate instrument confers power to make, issue or grant an instrument (not being a subordinate instrument) the power shall, unless the contrary intention appears, be construed as including a power, exercisable in the same manner and subject to the same conditions or limitations (if any), to repeal, revoke, rescind, amend, alter or vary an instrument made in the exercise of that power.
(A similar provision appears in the Acts Interpretation Act 1901 (Cth): see s 33(3)).
Section 41A was not available when the LTA 1958 was enacted but it was inserted into the Act in 1985. If a land tax assessment were capable of being regarded as an ‘instrument’ for the purposes of the Interpretation of Legislation Act 1984 (Vic), then in the absence of the express power in s 19, s 41A would also, at least nowadays, appear to give the Commissioner the ability to repeal, revoke, rescind, amend, alter or vary the assessment.
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