Commissioner of State Revenue v Royal Insurance Australia Limited

[1993] HCATrans 349

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M74 of 1992

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Appellant

and

ROYAL INSURANCE AUSTRALIA

LIMITED

Respondent

MASON CJ
BRENNAN J
DAWSON J
TOOHEY J

MCHUGH J

Revenue(2) 1 16/11/93

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 16 NOVEMBER 1993, AT 10.17 AM

Copyright in the High Court of Australia

MR D. GRAHAM, OC, Solicitor-General for Victoria: May it

please the Court, I appear with my learned friend,

DR C. HOWARD, for the appellant. (instructed by

T.D. Weerappah, Solicitor to the Commissioner of

State Revenue)

MR J.D. MERRALLS. QC:  May it please the Court, I appear

with my learned friend, MR J.F. STYRING, for the

respondent. (instructed by Mallesons Stephen

Jaques)

MASON CJ: Yes, Mr Solicitor.

MR GRAHAM:	May I hand to the Court an outline of our argument, together with a relatively small folder
of additional material mostly consisting of
statutory extracts.

If I may very briefly outline the facts in a

few minutes. Throughout the 1980s the respondent

carried on an insurance business in Victoria. It

was registered under section 96 of the Victorian

Stamps Act and as such was obliged to lodge monthly

returns of premiums received by it with the

Comptroller of Stamps in accordance with the

provisions of Part II, Division 3, Subdivision (11)

of the Stamps Act.

In accordance with those provisions, it was

required to pay stamp duty each month upon the

monthly returns. Those provisions applied in relation to all classes of insurance business carried on by the respondent, subject to exceptions

in the case of life business and one or two other

classes of business.

One class of insurance business which the

respondent carried on was employers' liability

business. With the introduction in Victoria in

1985 of the Work Care Scheme, in place of the

former Workers' Compensation Scheme, the Victorian Parliament introduced an exemption from stamp duty

in relation to workers' compensation insurance

policies issued or renewed after 30 June 1985, that

being the day before the new Work Care Scheme came

into operation.

The relevant statutory provisions are to be found in the folder of additional materials handed

to the Court. If I could invite the Court's

attention to the documents under tab C, which

comprise in the first instance an extract from the

Accident Compensation Act 1985. The first page,

the page which contains section 276, whereby a

series of consequential amendments to other Acts

set out in schedule two were made. If one turns

Revenue(2) 16/11/93

the page one comes to an extract from the

schedule two of the Accident Compensation Act,

commencing at page - using the numbers at the

bottom of the page - 431 of the Accident

Compensation Act amendments to the Stamps Act 1958.

By the amendment, section 95 of the Stamps Act was amended to introduce a definition of workers'

compensation insurance and that was done so as to

create an exemption in the case of workers'

compensation insurance business from the general operation of Subdivision (11) of the Stamps Act.

Over on page 432 there were amendments

introduced into section 99 of the Stamps Act which

contain the exemptions to which I have referred.

It will be necessary to look a little more closely

at those provisions later on. Perhaps just at this

stage it is convenient going over to page 433,

about point 6, one sees a new section 99(7) which

read:

Where an application is made in accordance

with sub-sections (5) and (6), the Comptroller of Stamps shall make a refund to the applicant accordingly.

Very soon afterwards those provisions were

amended by an Act known as the Stamps and Business

Franchise (Tobacco) (Amendment) Act 1985, which is

the next extract under tab c. It, by section 11,

which is on the second page of the extract,

(5) and (6) and subsection (2) introduced a new section 99(7).

introduced new subsections into section 99 of the subsections

I pause to draw the Court's attention to the

new section 99(7) which provided that:

Where an application is made in accordance

with subsection (5) -

amount of the rebate shall be deducted from	(a) if the application is for a rebate, the
the amount payable as stamp duty on a return
lodged with the Comptroller of Stamps under
section 97(2) or, if the amount of the rebate
exceeds that amount of stamp duty, from the amount so payable on two or more returns; and
(b) if the application is for a refund, the the applicant accordingly.
Following those amendments, in 1987 it was

realized that the exemption granted in 1985 did not

cover stamp duty payable in relation to a

particular category of premium income, namely,

Revenue(2) 3 16/11/93

premiums received by insurers after 30 June 1985

when the Work Care Scheme came into operation, in

respect of what was known in the industry by

various names, and what has been called in these

proceedings, cost plus policies. Another name for

such policies in common use was burning cost

policies or burners. The nature of those policies

appears from the judgments in the appeal division,

and if I can just state briefly, this is an unusual

type of insurance policy whereby the annual premium

is recalculated after the close of the relevant

period of insurance, so that the insurer, in
effect, is reimbursed in respect of the whole of
the costs of claims made and paid during the

antecedent period.

So, it was realized that premiums received

after the amendment came into operation in respect
of the period before Work Care began were outside

the exemption which had been provided by the

amendments to the Stamps Act to which I have drawn

attention. So an appropriate amendment was made,

and that is to be found in the folder as the next

document under tab C, the Act being the

Taxation Acts Amendment Act 1987. Section 8 of

that Act amended section 99(3) of the Stamps

Act 1958 by inserting words:

or received after that time in respect of

liabilities incurred before 1 October 1985.

If the Court would be good enough to turn back a

page, section 2 made that amendment retrospective.

Section 2(4) provided:

Section 8 shall be deemed to have come into

operation on 30 June 1985.

BRENNAN J:	Can we take it that the effect of those pieces of legislation is accurately set out in the
judgment of Justice Hedigan at pages 135 to 140?
MR GRAHAM:	I believe so, Your Honour, but perhaps I should check before responding, but that is certainly my
belief. Yes, Your Honour is correct.

In the result, section 99(3) with the

retrospective amendment came to read:

For the purposes of section 97, premiums

for workers compensation insurance in respect

of the issue, renewal or taking out of

policies that take effect at or after four

o'clock in the afternoon on 30 June 1985 or

the extension of which takes effect from that

time or received after that time in respect of

Revenue(2) 16/11/93

liabilities incurred before 1 October 1985 are

not chargeable with stamp duty.

As the very existence of these proceedings

indicates, the respondent remained unaware of the
1985 amendments for some years, and also unaware of
the 1987 amendment for about two years. It
continued to include in its monthly returns the
amounts of premiums which it received in respect of

workers compensation insurance policies issued or

renewed after 30 June 1985 and paid stamp duty on

that part of the premiums included in the returns.

It only seems to be as a result of advice given by the Comptroller of Stamps in 1989 to the

respondent that this practice of making those

payments ceased. In consequence, the respondent

made a demand for repayment of the amounts paid,

that demand being made on 19 September 1990, and

when no refund was forthcoming the present

proceedings were commenced by originating motion on

17 October 1990. I give the Court these dates

because they, of course, do have a relevance in
relation to the second point in the case.

The proceedings that were instituted were based upon section 111 of the Stamps Act 1958.

Perhaps it is convenient to look at the form of the

relief which was actually sought by the respondent;

that is to be found at page 2 of the appeal book.

The respondent, by its originating motion, sought

firstly:

1. An order that the defendant refund to the

plaintiff in accordance with s.111(1) of the

Stamps Act 1958 ("The Act") the sum of

$1,907,908.10 -

which I will refer to hereafter as $1.9 million, if

I may -

being an amount of stamp duty found by the

defendant to have been overpaid by the

plaintiff.

2. Alternatively to 1, an order that the

defendant as required by s.111(1) of the Act

forthwith -

(a) make a finding whether or not the

plaintiff has overpaid the sum of
$1,907,908.10 or some other sum in respect of
premiums for workers' compensation insurance

received after 30 June 1985 in respect of

liabilities incurred before 1 October 1985;

and

Revenue(2) 16/11/93

(b) refund to the plaintiff any such sum found

to have been overpaid.

And a declaration was sought, but my understanding is that that relief, by way of declaration, was not

pursued.

If I can take the Court then to section 111(1)

of the Stamps Act 1958 - - -

DAWSON J: That is an application for mandamus, is it not?

MR GRAHAM:  Yes, it is, Your Honour. It has been treated as

such. The form of the relief sought reflects the changes to the Supreme Court Rules of 1986, as we would understand it. Specifically mandamus is not

mentioned, but I think, I may say, it is common

ground that that was the nature of the relief that

was being sought throughout.

DAWSON J:  You do not get an order nisi any longer,

you - - -

MR GRAHAM:  No. We have a motion returnable - seeking the

relief in the first instance. Section 111(1) is

central to this case, if I may read it:

Where the Comptroller finds in any case that duty has been over-paid, whether before or after the commencement of the Stamps Act 1978 he may refund to the company, person or firm of persons which or who paid the duty the

amount of duty found to be overpaid.

The Court will have perceived in the terms of the originating motion that, as an alternative form

of relief which the respondent sought, a

finding - - -

BRENNAN J: Where does one find this text of section 111(1).
MR GRAHAM:	One should find it on page 90 of the grey covered reprint.
MASON CJ:	No 6375.
TOOHEY J:	we should ignore the later reprint,

reprint No 11.

MR GRAHAM:  I think the section has been amended. The

section as in force as at the relevant time is in

the grey reprint, in reprint No 10.	I believe
Your Honours have that reprint.	We made some

inquiries to be sure that Your Honours did have it.

MASON CJ: Yes, we have.

Revenue(2) 6 16/11/93

MR GRAHAM:  I think Your Honours were also given the green

coloured reprint, No 11.

MASON CJ: Yes, we have that as well.

MR GRAHAM:  I shall be referring exclusively to

reprint No 10, the grey covered one.

McHUGH J:  My brother Dawson points out to me that

section 111 has been amended to do what you assert

it did not do in the past.

MR GRAHAM:  Yes, Your Honour, as an abundance of caution

perhaps. As I have indicated, one of the forms of

relief sought by the respondent in the first

instance was an order in substance compelling the

Comptroller to make a finding that there had been an overpayment as well as an order compelling the

making of a refund. As matters unfolded, the

Comptroller made a finding that there had been an overpayment.

He made that finding for the purposes of

section 111(1). That finding was made on

19 October 1990. It is recorded in the judgment of

Mr Justice Hedigan at page 140. I am subject to

correction on this, but I apprehend that there was

some dispute as to when and how the finding by the

Comptroller of an overpayment had been made when

the parties entered into an agreement which is set
out on page 140 as to the facts of the matter.

Now, the total amount which the respondent sought to recover by way of overpaid duty comprises

amounts which fall into three categories and,

within the first of those categories, there are,
what may be called, two sub-categories. Those

categories are explained by Mr Justice Hedigan in

his judgment at pages 138 to 139 - - -

McHUGH J: Excuse me, Mr Solicitor, but the reference in the

judgment at page 140 to the affidavit sworn

23 October 1990, is that the same affidavit that is

referred to as No 4 in the - - -

MR GRAHAM:  Yes, my learned friend, Mr Merralls, has just

informed me, Your Honour, there is a mistake in the

date that was attributed to that affidavit. It was

in fact, I think, sworn on - the correct date is 23

November 1990.

McHUGH J: So, that is the reference to the affidavit at

page 23 - - -

MR GRAHAM: That is correct, Your Honour.

MCHUGH J: Yes.

Revenue(2)	16/11/93
MR GRAHAM:	As I indicated, Mr Justice Hedigan formulated

those categories of overpayment at pages 138 to

139.       We thought it might be of assistance to the

Court if we spelt out those categories and the

basis upon which the categorization proceeds in a

separate document, which is included in the folder

as the document immediately under the index. If I

might just take a moment to go through that

document, as it does tend to assist in clarifying a

number of aspects of the case. It does not have

its own tab. It is headed "Categories of Overpaid

Duty". If I can just take the Court through it:

The overpaid duty in contention in this

proceeding falls into the following three

categories.

1. A total amount of $1,674,301.94 which

divides into two sub-categories, l(a) and

l(b). All of the total amount was paid as

duty on premiums received by the respondent

after 4 pm on 30 June 1985 in respect of

liabilities incurred before 1 October 1985.

All of the total amount comprised duty on premiums received by the respondent for

so-called "cost plus" policies. The

difference between sub-categories l(a) and

l(b) is as follows:

l(a) Approximately $1,370,000 is duty on

premiums received by the respondent during the
period from 30 June 1985 to 12 November 1987,
being the commencement date of the 1987

legislative amendment which retrospectively

removed the liability to pay duty in respect

of that period.

l(b) Approximately $300,000 is duty on

premiums received by the respondent from

12 November 1987 to 21 August 1989 in

ignorance of the 1987 repeal of the duty on

cost plus premiums.

And the references are given.

2.       An amount of $95,426.95 overpaid by the

respondent by reason of its own over-estimates

of premium income (from cost plus policies)
received by it before 1 July 1985 in respect

of liabilities incurred before 1 October 1985.

3. An amount of $131,179.21 being duty paid on

premiums received by the respondent for

extensions after 4 p.m. on 30 June 1985 of

policies (other than cost plus policies) taken

out before that date.

Revenue(2) 16/11/93

Those were the ordinary employers' liability

policies not subject to the cost-plus method of

premium assessment.

Those, in short term, being the facts may I

take the Court to the submissions on behalf of the

appellant and go first to our outline under the

heading Construction of section 111 of Stamps Act

1958. As we say in paragraph 1, section 111

confers a power upon the Commissioner to make a

refund where a finding of overpayment of duty has

been made.	Such a finding was made in the present
case.	The power to make a refund is conferred by

the use of the word "may".

If I may, at this stage, take the Court to a

short passage in the judgment of

Sir Victor Windeyer in Finance Facilities v Federal

Commissioner of Taxation. I shall assume, if I may
take the liberty, that the Court will be familiar

with the issue in that case and I will not take the

Court to the circumstances giving rise to

Mr Justice Windeyer's observations. The Court,

speaking broadly, was concerned with section 46(3)

of the Income Tax Assessment Act conferring a power

upon the Commissioner to allow a further rebate.

His Honour at page 134 at about point 3 said:

The Act is filled with provisions about

allowable deductions which are mandatory.	The
contrast in language in section 79B(1A)

between what is allowable and what a taxpayer

is "entitled to" is significant. The

question, which comes back to the words "may

allow", is not to be solved by concentrating

on the word "may" apart from its context.

Still less is the question answered by saying

that "may" here means "shall". While

Parliament uses the English language the word

"may" in a statute means may.	Used of a
person having an official position, it is a

word of permission, an authority to do

something which otherwise he could not

lawfully do.

In a case such as this, it is our submission

that the starting point in the construction of

provisions such as section 111 is a prima facie

presumption that permissive or facultative

expressions in statutes operate according to their

natural meaning. For that proposition, our

authority is the joint judgment of this Court in

Ward v Williams, 92 CLR 496, at page 505.

That case was concerned with a provision in

the New South Wales Public Health Act conferring

power upon a magistrate to make an order for the

Revenue(2) 9 16/11/93

abatement of a nuisance; the power being conferred

in terms of "may order". The Court, page 505, made

the following general observation in relation to

problems of the kind which arise in the present

case. At point 5 Their Honours said:

In considering the correctness of this

interpretation it is necessary to bear

steadily in mind that it is the real intention

of the legislature that must be ascertained

and that in ascertaining it you begin with the

prima facie presumption that permissive or

facultative expressions operate according to

their ordinary natural meaning.

Then they quoted from Mr Justice Cussen's judgment

in Re Gleeson:

"The authorities clearly indicate that it lies

on those who assert that the word 'may' has a

compulsory meaning to show, as a matter of construction of the Act, taken as a whole,

that the word was intended to have such a

meaning".

Then there is a quote from Lord Selborne's speech

in Julius v Bishop of Oxford:

"The meaning of such words is the same,

whether there is or is not a duty or

obligation to use the power which they confer.

They are potential, and never (in themselves)

significant of any obligation. The question

whether a Judge, or a public officer, to whom

a power is given by such words, is bound to

use it upon any particular occasion, or in any

particular manner, must be solved aliunde,

and, in general, it is to be solved from the

context, from the particular provisions, or

from the general scope and objects, of the

enactment conferring the power."

MASON CJ: But is not that the difficult here, that even if

one takes the view that it is discretionary it must

be exercised in conformity with the policy and

purpose of the statute, and if that is so, how can

it be exercised otherwise than in favour of the

refund?

MR GRAHAM:  If I could answer Your Honour this way. The

power is there to enable a refund to be made.	The
question is whether the taxpayer is entitled to

insist upon a refund being made or only to insist

upon the discretion being exercised in accordance

with proper principles. If it is the second, then

the only order which the court could have made in

this case was to command the Commissioner or

Revenue(2) 10 16/11/93

Comptroller to exercise the power according to law.

It could not for itself make the order which only

the Commissioner could make.

BRENNAN J:  Can the Commissioner be compelled to make the order that the money be refunded?

MR GRAHAM:  No, Your Honour, with respect. We say that the

Commissioner can only be compelled to exercise the

discretion in accordance with proper and relevant

considerations.

BRENNAN J: But if in accordance with those relevant

considerations there was only one decision that can

lawfully be made, what then?

MR GRAHAM: In those circumstances, Your Honour, the

Commissioner would, we would have to accept, be

acting wrongly if the discretion which the

Commissioner possessed was to exercise it in

another way. But in the end it comes back to a

question of the power of the Commissioner and the

discretion entrusted to the Commissioner which, in

our submission, cannot be taken out of the
Commissioner's hands by a direct order of the

Court.

MASON CJ: But he has a duty to exercise the discretion.

You would not contest that?

MR GRAHAM: Certainly not, Your Honour.

MASON CJ:  If he has a duty to exercise the discretion and

the discretion can, in accordance with law, be

exercised only in one way, is there no remedy

available to the person to whom the duty is owed?

MR GRAHAM: Certainly, Your Honour. If the situation was

such that the Commissioner gave reasons and the

reasons indicated a failure to take into account

would have to be remitted and the Commissioner	relevant considerations and so forth, the matter
required to exercise his discretion in accordance with the views of the Court. But the point that we are making is that it does not lie in the power of the Court itself in substance to take upon itself the power to make the order which only the
Commissioner may make.

That is the short point of distinction,

Your Honour.	My learned friend, however, contends
that it is different from that.	My learned

friend's submission is that this is a case where

not only is there a power to make a finding but, once the finding is made, then, as we understand

him, in any case where the finding is made, the

Commissioner is bound to exercise the discretion

Revenue(2) 11 16/11/93

favourably to the taxpayer.	We say that cannot be
right.	We say there is a discretion in every case,

although a question may then arise once that

discretion is accorded whether the discretion is

properly exercised in declining to make a refund.

TOOHEY J: But if the Court remitted the matter to the

Commissioner to determine according to law and the

judgment of the Court made it clear that there was
only one outcome if the matter were determined

according to law, what is the practical difference

between the Court itself making the order and the

matter going back to the Commissioner?

MR GRAHAM:  The practical effect would be no difference,

Your Honour. I would have to concede that, but the

substance of the order would have to be different

to accommodate the nature of the power that is

conferred which is in the end a discretionary

power.

DAWSON J:	What is the section which gives the right to the refund power, if "right" is the right word?
MR GRAHAM:	The key to the treasury?

DAWSON J: Yes.

MR GRAHAM: Section 166D provides that:

If the Comptroller of Stamps becomes liable to

pay amounts in accordance with the provisions

of this Act, those amounts shall be paid from
the Consolidated Fund which is hereby to the

necessary extent appropriated accordingly.

DAWSON J:	Now, where is the liability created?
MR GRAHAM:	Your Honour, if I may say so, it is a question

that we do not find ourselves able to answer in the

light of the way in which the case has been

conducted to this point. It has been said that the

ability to obtain the payment that the respondent

has derives from section 111 itself.

DAWSON J: But there are other provisions dealing with

refunds, are there not?

MR GRAHAM:  There are other provisions dealing with refunds

in other circumstances.

DAWSON J:	Not refunds in this circumstance?
MR GRAHAM:	There is no provision other than section 111(1) and the sections that I referred to a little while
ago in section 99.

Revenue(2) 12 16/11/93

DAWSON J: Is 99 a source of liability?

MR GRAHAM:  Only in the same sense as I answered Your Honour

before where section 99 commands the Comptroller to

make a refund if certain requirements are

fulfilled.

DAWSON J:  Does section 99 apply here?

MR GRAHAM: It did not, Your Honour, no.

DAWSON J: 

Why not?

MR GRAHAM: 

I do not want to take up too much of the Court's

time, but the reason as we apprehend it is that the
requirements to obtain a refund or a rebate in the

circumstances contemplated by those provisions did

not apply to the circumstances of this case.

DAWSON J: That is the straddle provision?

MR GRAHAM:  Yes, it is the straddle provision where you have

adjustments to be made in accordance with a kind of

formula that is set out in section 99 dealing with,

as it were, the transitional situation.

DAWSON J:  So that the only source of liability is

section 111?

MR GRAHAM:  Yes, it is the only source of liability, I think

in the sense Your Honour uses the word, that has

been relied on in this case. It is not said that

there is an underlying claim to recover money paid

upon a mistake or anything of that kind. It is

simply said that there is a right that arises out

of the duty imposed by section 111.

I think that in response to Your Honour the

Chief Justice's question I have really made the

point that appears in paragraph 3 of our outline,

and if I can move on to paragraph 4. It is our

submission that the legislative history of

section 111 of the Stamps Act supports our

contention that there is thereby conferred a

discretionary power, which is discretionary in

every case where a finding of overpayment has been

made. It is our submission there is nothing in the

legislative history which requires that the section

should receive the interpretation for which our

learned opponents contend.

Mr Justice Hedigan set out the history of

section 111 in his reasons for judgment at

pages 148 to 150, and I do not wish to take the

Court through that history which the Court would

have seen. What that history shows is that in 1978

the legislature, when it enacted section 111 in its

Revenue(2) 13 16/11/93

new form, departed markedly from the language which

had previously been used. Consistently from 1892

until 1978 the legislation had clearly imposed an

obligation upon the Comptroller of Stamps and his
predecessors to make a refund in any case where an
overpayment had occurred under the insurance
premiums provisions - either to make a refund or to
take a step which would enable a refund to be

secured.

In 1978 the new section was enacted which

introduced in terms which, according to the prima

facie presumption to which I have referred, are

permissive or facultative. We would respectfully

submit that Mr Justice Hedigan did not give

sufficient weight to the change in language which

occurred in 1978.

TOOHEY J: Mr Solicitor, it is not clear to me. Are you

saying that before section 111 was introduced in
its present form that there was a series of

provisions providing for mandatory refunds, or that

there was some broad provision as well comparable

to section 111?

MR GRAHAM:	I am saying the former, Your Honour, and His Honour Mr Justice Hedigan sets out those
provisions - - -
TOOHEY J:	It may not be necessary to take us to them, but I

gather then that section 111, in its present form,
was the first occasion on which there was a general

refund provision in the legislation?

MR GRAHAM:  I think that is right, Your Honour. There is a

question whether section 111 is confined to the
insurance premium part of the Act or is general.

That did not trouble the court in the present case

because it is found within the subdivision dealing

with insurance premiums.

touched upon this problem and found it unnecessary, Mr Justice Brooking

of course, to explore it.

TOOHEY J: If I confine the question to insurance premiums;

is it the position that before section 111 was
introduced in its present form, there was no

general provision for a refund in the event of

overpayment?

MR GRAHAM:  I think perhaps I should take Your Honour to the

terms of section lll's predecessor, and perhaps the

most convenient place to look is in the folder of

materials because the predecessor is set out under

tab F. If Your Honour would go to tab F, the first

document under tab Fis Stamps Act 1958. If

Your Honour turns over the first sheet, over to

page 1004, there is set out section 111 as it stood

Revenue(2) 14 16/11/93

in 1958 in the consolidated Act, and Your Honour

will see that, provided:

If after any duty has been paid by any company

person or firm of persons under the provisions

of this subdivision the Comptroller of Stamps,

on application made to him within twelve

months after such payment, is satisfied that

such overpayment has been made shall apply to

the Treasurer of Victoria for a refund to such

company person or firm of persons of the

duties overpaid, and the Treasurer shall

without further or other authority than this

Act refund the amount -

That was the predecessor of section 111 as it now

stands.

DAWSON J:  Mr Solicitor, if, in accordance with the

authorities, you read "may" as simply being

facultative and you find, aliunde, whether the

faculty must be exercised in a particular

situation, where is aliunde in the present

circumstances, because you have only got

section 111.

MR GRAHAM:  Your Honour has a little more than that, as I am

about to indicate; one has the rest of section 111,

apart from subsection (1), and one has the group of

sections which were introduced at the same time as

section 111 was introduced in its present form in

1978 and one can, in our submission, gain some

assistance from those other provisions.

If I could return to that topic straight away,

it is the point we make under paragraph 5 of the

outline. We draw attention to the choice of

language in section 111(2), (3) and (4).

Subsection (2) is concerned with time variation
power.	The Comptroller is given power to vary

times; the power being conferred in terms:

he may by notice in writing vary the time by

which that company person or firm of persons

is required to furnish returns -

(3) The Comptroller may at any time by

notice in writing revoke any notice given

under sub-section (2).

(4) The duty paid on a return under this

subdivision shall be denoted on the return by

a cash register receipt imprint.

So that within section 111 itself, one finds

certainly the word "may" in subsections (2) and (3)

being used in a facultative sense. Where a

Revenue(2) 15 16/11/92

mandatory requirement is created, as in

subsection (4), the word "shall" is used. It
provides some indication that the person drafting
the section was conscious of the difference and was

using words - - -

DAWSON J: But I understand the authorities to say that you

do not get anything from the word "may" other than

it is facultative. You have to look elsewhere in

relation to that particular faculty to see how it

is to be exercised. All you should say is that the

word "may" is used in two other subsections and the
word "shall" in the fourth, but that does not tell

you anything.

MR GRAHAM:  It does not, Your Honour, apart from being a

slight indication that the draftsman was attempting

some consistency. But what Your Honour is saying

is something different, as I apprehend the

question; that one must look for indications of

where the -

DAWSON J:  One would say against you, prima facie, if

something has been overpaid and there is a faculty

to repay it, it ought to be repaid.

MR GRAHAM:  Yes, Your Honour, subject to this, if I can perhaps get a little ahead of myself. One can

formulate a lot of situations where an overpayment

could be found and yet it would be necessary and

logical to concede a discretion to withhold a

refund. It is our submission that the section

means what it says for all purposes. It does not

change its meaning depending upon circumstances.

If there are circumstances where an overpayment has

occurred and the Commissioner would be justified in
withholding a refund, then that points to the

conclusion that there is a discretion in every case

- true it is a discretion to be exercised in

accordance with law, but none the less a

discretion.

McHUGH J:  What sort of considerations do you rely on to

support the exercise of a discretion against the

taxpayer - matters such as time and the justice of

a situation as where a taxpayer has in fact passed

the tax on. Are they the sort of matters that you

rely on?

MR GRAHAM:  Yes, Your Honour, and those matters would be

relevant in this case but it is our submission that

we do not have to confine ourselves, in answering

this question, to the facts of this case. If I

could give Your Honour two or three other examples.

Let us take a case where a refund is made in

respect of an overpayment made in one month and the

Commissioner discerns in a later month there has

Revenue(2) 16 16/11/93

been an underpayment by looking at the returns.

One would say at once:  why should a refund be

compelled? It may be that the taxpayer was late in

lodging his returns and became subject to a

liability under a provision of the Act which I have

not referred the Court to, to a payment of double

duty, as the penalty for late lodgment. In our

submission, the Commissioner would be entitled to

not make a refund in those circumstances.

There might be a case where a claim for a

refund was made and yet the taxpayer had previously and unequivocally indicated that the matter was not

going to be contested and, accordingly, the matter

was treated as between the parties as closed.	I am
not suggesting a formal compromise, merely an
abandonment. That was, I might say, an example

that was given in the Tower Hamlets case to which

my learned friend would be referring, by

Lord Bridge. But other examples would be the ones

that Your Honour has mentioned, that the statute of

limitations, specifically section 20A, the

12 months period had passed, or the taxpayer was in

a position where the tax had been passed on and

either no intention to reimburse those to whom it

had been passed on was indicated, or the

circumstances might be such where it was not

possible for those to whom the tax had been passed

on to be reimbursed.

McHUGH J: At least in, I suppose, many cases where this

section operated and duty had been overpaid by

reason of a mistake of law, at the time when this

legislation was passed the taxpayer will have no

right to the refund unless you can get it out of

the words "duty has been overpaid".

MR GRAHAM:  Yes. That must be right, Your Honour. 1978 was

long before David's case. But certainly there are, as Your Honour indicates, and as I have endeavoured

to expand upon, cases where the Commissioner ought

be accorded a discretion to withhold a refund and

if the discretion exists then the question, in our

submission, comes down to one of whether the

discretion is properly exercised in this case or

has been shown not to have been properly exercised

in this case. But my learned friend, as we have

understood the way in which the case has been put

below, goes further and says that on the proper

construction of section 111, once an overpayment

has been found there arises a duty upon the

Comptroller to make a refund. He cannot get relief

in the form that he seeks with compelling the

refund unless that duty to make a refund actually

arises from the terms of the statute itself.

Revenue(2) 17 16/11/93

McHUGH J: His argument had never been that although the

section confers a discretion, the circumstances

require the discretion to be exercised in a

particular way as a matter of law.

MR GRAHAM: That is as we have understood it, and that seems

to be the way in which the argument is recorded and

has been understood in the appeal division.

MASON CJ:  I thought Mr Merralls hinted at a different way

of putting the argument at page 7 of the transcript

of the special leave application when he responded

to a question by Justice Brennan about 10 or 12

lines down by saying:

No, Your Honour. Our case is not a

"shall/may" case, if I can put it that way.

We say that the word "may" is an enabling word

which enables the Commissioner to make

payments without having to make a requisition

to Treasury.

MR GRAHAM:  Yes, Your Honour, but at an earlier point I

think that he said - I do not know if it was to

this Court, but he certainly said to the appeal

division - that his court was a Tower Hamlets case,

not a Woolwich case. By that we took him to mean

that it was a case where there was a power which

had to be exercised in his client's favour.

BRENNAN J: What do you say about a case that really is both

a Tower Hamlets and a Woolwich case? In other

words, where there is a discretion but the money is

owing to the taxpayer in restitution, what possible

consideration might legitimately be taken into

account when refusing a refund?

MR GRAHAM: Concentrating on the circumstances of the

particular case, as I follow Your Honour's

question, not the more general matters that I

discussed with His Honour.

DAWSON J:  I intended the question to the general to this

extent: that in any case, where the money is due

in restitution to the taxpayer, is there any
legitimate consideration which can justify the

exercise of an adverse discretion?

MR GRAHAM:  In the present case, Your Honour, we would say

yes, by reason of the lapse of time, the presence

of section 20A as a bar to an action, and the fact

that the result of ordering the repayment would be

simply to achieve a windfall in the hands of the

claimant because there was no prospect of the

moneys being passed back to those from whom they

had been obtained, namely, the policy holders.

Revenue(2) 18 16/11/93

BRENNAN J: Well, those reasons seem to me to fall into two

categories. The first category is that which

denies that the money is due and payable in

restitution, either because it was statute barred

or because of a consideration of delay that may be

in some way a bar to the action for restitution.

The second is another consideration for the third

party is really entitled.

MR GRAHAM:  Yes, it would be an equitable consideration

where it would be not just for the court to award

restitution, and there are, as Your Honour is well

aware, references in the authorities to

countervailing considerations which may operate as

a bar to the grant of restitution.

BRENNAN J: Well, if it is a case where there is no

countervailing bar - I am leaving aside the third
of your considerations, namely, the windfall -
leaving that aside, is there any consideration

which can justify a case of refusal of a refund

where the money is due?

MR GRAHAM: In the present case?

BRENNAN J: Yes.

MR GRAHAM:  We would have to concede not, Your Honour. I

think the matter has been fully ventilated in the

courts below, and the possible reasons have been

advanced there, and we do not wish to suggest any

others.

BRENNAN J: Then, in this case the real argument comes down

to the question of whether the money is due, in

restitution, and whether the windfall argument

prevails, or is a relevant consideration?

MR GRAHAM:  I would think, yes, Your Honour, we would accept of the expression "the real argument". It is - - - that. Although I am troubled by Your Honour's use

BRENNAN J: Well, in the sense that if none of those

considerations were legitimate considerations to

take into account, then the remedy would either be

sending it back to make the decision according to

law, so that if you did not make it by way of

refund it would come back again, and again, and

again; or, alternatively, sending it back to

exercise a discretion according to law, meaning

thereby to decide to refund.

MR GRAHAM:  Yes, I would accept that, Your Honour. If no

further relevant considerations were advanced, and

we do not seek to advance any, that is the outcome.

Revenue(2) 19 16/11/93

BRENNAN J:  Then it really is, at least in those first two

considerations, a Tower Hamlets, Woolwich case?

MR GRAHAM:  Something, perhaps I should, with respect add a

qualification in respect of each of those cases.

So far as Tower Hamlets is concerned, of course, it

must be regarded, as this case must be regarded, as

one which turns, at least in part, upon the terms

of the relevant statutory provision, and so far as

Woolwich is concerned, a very important, perhaps

decisive, consideration in that case was that the

moneys there paid were exacted under demand and

which was subsequently held to be unlawful. Now,

there is no question of an unlawful demand in this

case. The payments were truly voluntary because of

the self-assessment procedure by way of monthly

returns.

BRENNAN J: Then, Tower Hamlets, Woolwich plus

David Securities?

MR GRAHAM:	Yes, Your Honour.
McHUGH J:	You seem to be getting yourself boxed in a bit

here, Mr Solicitor. Is there any evidence in the
case which indicates the precise grounds upon which

the refusal was made?

MR GRAHAM: There was no evidence as such, Your Honour,

emanating from the Comptroller or her officers.

There was no letter - - -

McHUGH J: That being so, why is not the Commissioner's

discretion confined only by the scope and purpose

of the Act?

MR GRAHAM:	In this case, Your Honour, yes, but I have to qualify my answer to Your Honour by saying that
reasons were advanced in the course of argument in this case both before Mr Justice Beach and in the
appeal division suggesting possible reasons, and
these were the ones that emerged from that
exercise.  One could quite conveniently say there
is no evidence on the point, so that the matter
would have to go back.  But I think I am compelled
to say, boxed in as I may be, that there does not
seem much purpose in that.
If I can just continue actually from where I was a little while back, looking to the context in
which section 111(1) appears in the Act. I had
taken the Court to the terms of section 111 itself.
If I might just take a moment to put section 111 in
its present form in its wider context. Under the
system which existed in Victoria until 1978, the
scheme for collection of stamp duty on insurance
premiums was one whereby an insurer carrying on

Revenue(2) 20 16/11/93

insurance business required an annual licence. The

stamp duty was payable at the time of the licence renewal by reference to the total of the premiums received in the preceding year. That was replaced

in 1978 by the present scheme which provided for

monthly returns, no doubt thereby accelerating the

receipt of the revenue into the hands of the State.

Those provisions as they previously stood are

to be found under tab B. That is the first

document in the folder. I do not need to take the

Court to them but they are there if the Court

desires to have reference to them. The replacement

provisions are also found under tab B which

contains the text of the 1978 Act which introduced

the present system, and it has largely remained

unchanged to the present time.

The only point that needs to be made about

those new provisions is that again there were
provisions which conferred discretionary powers and

there were provisions which imposed obligations in clear terms. Aside from those indications such as

they are - and I can only agree with Your Honour
Justice Dawson that they do not take one very far - there is nothing in the actual context that gives

one any real assistance.

BRENNAN J:	Why does one not take the context to be that the Parliament has voted a particular source of revenue
and no more to the Crown?
MR GRAHAM:	What Your Honour is indicating is that: and no

more therefore is payable and anything overpaid is

refundable?

BRENNAN J: Yes.

MR GRAHAM:  Your Honour, one can take that view, but it is

important to add a qualification. In relation to

what we have called in this case "the first subcategory of the first category", that is not a	situation where Parliament did not vote or leave
payable the duty that fell within that category.
At the time when it was actually paid, it was
payable. There is no argument about that. The
liability was removed subsequently. So it cannot
be said that the money was paid either under a
compulsion or a mistake, so far as that $1.3-odd
million is concerned. So that does fall into a
category different from the other moneys which were paid under a misapprehension of the liability.

BRENNAN J: Well then, the context of that may be

section 2(4), may it not?

Revenue(2) 21 16/11/93

MR GRAHAM:  Depending on what that truly means, Your Honour,

yes, it might well be. It is perhaps worth noting

something that I should have emphasized when I took

the Court to the amending legislation of 1985 and

1987 under tab C, that when provisions were

introduced specifically relating to refunds and

what has been called the straddle, or transitional

situation, the obligation was cast upon the

Comptroller of Stamps, in clear and unequivocal

terms, to make the refund, and when it came to

recasting those provisions later in 1985, as I
indicated, that technique of drafting was repeated.

For the sake of completeness I should say to

the Court that under the Victorian Interpretation
of Legislation Act 1984, section 45, there is a
provision which is common enough in legislation of

other jurisdictions and was surprisingly late in arriving in Victorian legislation. I think that

provision has been in the New South Wales Acts

since the turn of the century, but the point is

that it came into operation in 1984 and, of course,

postdates section 111. So one gains no assistance

from it, but it is desirable, perhaps, that I

should refer the Court to the existence of the

provision.

Could I then just return to the matter that I

had dealt with in response to Your Honour

Justice McHugh a moment ago, which appears at paragraph 7 of our outline of argument. It is our submission that according to the respondent's argument, section 111 must be construed as

requiring the Commissioner to make a refund in

every case where an overpayment of duty is found to

have occurred. In other words, on that argument,

there cannot be cases where the Commissioner has a

discretion to refuse a refund and other cases where

there is no discretion.

I was going to give the Court at this point

the examples that I gave to the Court a moment ago.
I shall not repeat them, but we formulated five

examples which I have already given to the Court

which, in our submission, would be clear cases
where the Court would accord the Commissioner a

discretion to grant or withhold a refund and it

would be perfectly proper for the Commissioner not

to make a refund.

If I can just say one further thing concerning

the topic of what has been called "windfall gains"

in this litigation. As I said, it is, in our

submission, a relevant consideration that the

requirement to make a repayment or, indeed, the

allowance of restitution, would be inappropriate

where the taxpayer has passed the tax on and cannot

Revenue(2) 22 16/11/93

or would not intend to reimburse those from whom it

had itself recouped the tax.

McHUGH J:  Mr Solicitor, the argument is put against you

that this is an unattractive argument for you to be

putting forward, since you were the one who has

obtained the windfall.	What is your answer to
that?

MR GRAHAM:  My answer to that, Your Honour, is, in

substance, perhaps slightly more attractive: that

neither party to this litigation is in a strong

position in relation to that topic because either

the Revenue has the windfall or Royal Insurance has

the windfall, as it were, in pari delicto.

DAWSON J: But you would say that if restitution resulted in

the unjust enrichment to the person to whom

restitution was made, then there is no basis for

it, which is what you say would happen here, is it

not?

MR GRAHAM:  Yes, that is right, Your Honour. There is no

unjust enrichment in that sense and that the result

of ordering restitution would be unjust enrichment

of Royal Insurance.

DAWSON J:  So that they cancel out, as it were?

MR GRAHAM:  Cancel out. I am concerned that perhaps that is

not a very attractive argument either but it is, in

our submission, the necessary corollary of the

unattractive argument in its first branch.

BRENNAN J:  So that the relationship between a payer and a

third party determines entitlement as between a

payer and payee in restitution?

MR GRAHAM:  In our submission it can determine it,

Your Honour, yes, but not that it must.

BRENNAN J: It seems a very wide-ranging proposition.
MR GRAHAM:	I endeavoured to confine it, Your Honour,

because if it was put as broadly as Your Honour put

it to me, it would, indeed, be wide ranging. But,

in our submission, an award of restitution in

accordance with the principles which we apprehend

underlie that remedy, does involve a discretionary
consideration of whether the restitution would be

granted.

DAWSON J: But, you can put it higher than that, can you

not? You can say that it certainly is not

unconscionable for the money to be retained for

public purposes when a private party has no moral

claim to it in the circumstances?

Revenue(2) 23 16/11/93

MR GRAHAM:  We are content to put it that way, certainly,

Your Honour.

McHUGH J: There are numerous American cases which have held

that it is not a breach of the new process
provisions of the US Constitution for legislation

to prevent taxpayers recovering money wrongly paid

when it would result in a windfall to them and,

indeed, we have under reserve judgment the Mutual

Pools legislation, or the consequence of the

decision in Mutual Pools.

MR GRAHAM:  Yes. I was going to give the Court a reference

to that Act in a slightly different connection, but
it is part of our argument that where the

legislature revenue matters turns its mind to the

windfall problem, it makes a provision such as the

Court is considering in the Mutual Pools (2) case.

The legislation is in our book under tab D, the

relevant section of it, Swimming Pools Tax Refund

Act 1992. Obviously one need not venture into the area of validity for purposes of this argument, but

it is our submission that it is not uncommon, and
it would not be regarded as unconscionable, for the

legislature to take measures which differentiate

between those cases in which a windfall is to

accrue, and those cases where it will not.

A much older and much less controversial

provision is also in our book, under tab D, it is

the Sales Tax Assessment Act No. 1 of 1930,

section 26, which contains another of these

provisions which - - -

McHUGH J:  Was that the legislation dealt with in Werrin's

case?

MR GRAHAM:  Yes, Your Honour. I am sorry, Your Honour, yes

and no, but the real answer is yes, and passing on

the refund was made a condition of achieving it,

and other examples can be found, some have been

recently enacted in Victoria in the tobacco

franchise legislation, which the Court may have
noticed in the course of hearing the Capital

Duplicator's case. It is our submission that there is nothing remarkable and, in our submission,

nothing unconscionable in the notion that the
revenue should retain the money where the original

taxpayer intends simply to keep it, and not to pass

it back to where they obtained it from. But, that

is really the argument, Your Honour, I can take it

no further than that.

We would add one final point in relation to

this part of the case. It is the point we make at

paragraph 8 of the outline. If my learned friend's

argument as to the construction of section 111 and

Revenue(2) 16/11/93

its operation in circumstances such as this, the

important provisions of sections 32 and 33,

relating to the objection and appeals procedures

which are set out in sections 33(a) and 33(b) and

the time limits which are provided for could, in

our submission, quite readily be bypassed. That

may be a defect in the legislation but we add it as

a point to be borne in mind, with respect.

MASON CJ: Before you move to the next point, could I just

raise one point with you in connection with

finances? Your submission to us was that, prima

facie, "may" means "may". Now, does not finance facilities indicate that if a power expressed in

facultative terms is predicated on a condition
precedent, that prima facie presumption is

displaced?

MR GRAHAM:  We would submit, Your Honour, with respect, that

the case does not stand for that general

proposition. We would accept that the existence

and fulfilment of conditions precedent to the

exercise of the power is an indication. It may in

some of the provisions be a strong indication.

MASON CJ: It certainly weakens it.

MR GRAHAM:  It certainly helps to displace the presumption,

Your Honour, but I would resist the proposition

that the presumption is thereby displaced by the

mere presence of such conditions and their

fulfilment, but they assist in displacing the

presumption.

MASON CJ: Because the existence of the condition precedent

in that case was instrumental in the conclusion

being reached that "may" was not facultative at

all. It had to be exercised a particular way once

the condition precedent was satisfied. But that

may turn on the particular circumstances and

context of that statutory provision.

MR GRAHAM:  And there was the presence, Your Honour, also, I

think it was, paragraph (c) of the subsection which

was - - -

MASON CJ: Particular paragraph (c); there was another one

as well.

MR GRAHAM:  Yes. would, respectfully, not go to the full extent of There were other indications as well but I

Your Honour the Chief Justice's question.

MASON CJ:  No, but I was merely seeking to secure your

assent to the proposition that you had not

mentioned the factor which tended to put some

pressure on the strength of the presumptions.

Revenue(2) 25 16/11/93

MR GRAHAM:  I would have to accept that, Your Honour, but

this provision, section 111, is cast in rather more

general terms when it speaks of finding an

overpayment which can cover such an enormous

multiplicity of circumstances, some of which I

mentioned in my examples. So that, in other words,

there are overpayments and overpayments, whereas in

section 46(3) there were quite distinct sets of

circumstances.

MASON CJ: Yes, I would not seek to draw a parallel between

the two at all, Mr Solicitor.

McHUGH J:  Do you say 111 should be read as though it read,

"The Comptroller may refund if he finds the duty

has been overpaid"?

MR GRAHAM: Yes, Your Honour. With respect, I do not

believe we would be doing violence to the language

to turn it around that way, although I am putting

an "if" instead of "where".	We submit that it does
not make any difference.

BRENNAN J:  Mr Solicitor, I do not know whether this

anticipates the next part because, if it does,

disregard the question, but I do not understand you

thus far to have been putting a proposition in

these terms, that the discretion which is available

to the Comptroller is one which he or she is
entitled to exercise having regard inter alia to
the provisions of section 20A of the Limitation of

Actions Act.

MR GRAHAM:  I believed I had, Your Honour, in putting

examples in response to Justice McHugh.

MASON CJ:	I had understood you to put it that way.
MR GRAHAM:	I think perhaps because in answering him I had

taken my argument slightly off its path, that I did

not really emphasize in the fashion that I should.

But we do say that a relevant consideration is that

if sued, the Comptroller could have relied upon

section 20A and further, that section 20A does

provide a relevant consideration by its mere

presence as a provision available.

McHUGH J: But does it matter in this case, Mr Solicitor, if

you box yourself into the windfall argument?

MR GRAHAM:  Does it matter, Your Honour?

MCHUGH J: Yes.

MR GRAHAM:  No, it does not, Your Honour; I can rely on

either.

Revenue(2) 26 16/11/93

McHUGH J: That was one of the reasons I had at the back of

my mind when I asked you about boxing yourself in,

because you seem to have confined yourself to the

windfall argument and let the time argument slip

away.

MR GRAHAM:  I am grateful for Your Honour raising the

matter.	I have certainly not intended that the box
should be as small as that.	I thought that I had

put it on the basis that in this case the

discernible relevant considerations or bases for

refusing a refund seemed to be - and I gave a

number. I certainly did not confine myself to the

windfall point in - - -

MASON CJ: Solicitors-General never box themselves in.

MR GRAHAM: I certainly would not wish in this present

company to dissent from that.

BRENNAN J:  Mr Solicitor, you could limit your argument,

could you not, in relation to the discretion by

saying that the manner of the exercise of the

discretion is such that if there is an obligation

to exercise it, to refund where a liability is

enforceable, there is none where the liability is

not enforceable?

MR GRAHAM:	Yes, Your Honour, although it was concerned about whether that is an appropriate way to express
the proposition because section 20A is a provision which the defendant may elect not to rely on, so
that it may not be quite correct to say that moneys
are not recoverable.  So I was inclined to express
the matter in the way I did, although I could express it that way as well, but I wished to
accommodate a possible response where the Commissioner might say, "Well, this is a case where
I would be justified in not relying on section 20A
for some reason". It is hard to imagine, but there
may be such cases.

I wanted to spend a moment, if I may,

referring to a few short passages in the judgments

of the members of the Court of Appeal with which we

would respectfully take issue. There are not many

of them. If I can start by indicating that

Mr Justice Brooking at page 119 of the appeal book

expressed his agreement with the reasons of

Mr Justice Hedigan. So that in substance, the

primary judgment of the court is that of

Mr Justice Hedigan. At page 151 line 2, His Honour said, speaking of the terms of section 111:

In that context, the conferring of the power

arguably creates the obligation.

Revenue(2) 27 16/11/93

There are therefore strong reasons to

think that Parliament intended that the power

had to be exercised to return duty when it had

been overpaid.

Now, as we understand what His Honour is saying

there, His Honour is saying that in all cases upon

a finding of overpayment there is an obligation to

exercise the power to make a refund. The power had

to be exercised to return duty when it had been

overpaid. In our submission, that is going much

too far, given our arguments as to the necessity
that a discretion be accorded to the Commissioner

in some cases.

Also we would criticize that passage because,

in our submission, it puts the matter the wrong way

round, having regard to what we say is the prima

facie position or presumption. So we take issue

with that passage and, indeed, to put it that way

does seem to beg the question because one is

looking for the strong reasons. Later on page 151

at line 25, His Honour said:

Furthermore, as I would think, once it is

accepted that duty has been overpaid, that is,
it was not chargeable in the relevant respect

at all, the commencing point of construction

might readily be that the legislature intended

that it be refunded.

Again, we would submit, in that passage

His Honour looked at the matter in a directly

opposite fashion from that which this Court has

laid down in Ward v Williams. The next passage to

which we would respectfully take exception is at

page 155, His Honour at line 8 said:

The important point, in my judgment, is that where a power is conferred on a public

officer in aid of a private right there is a

strong inference that it must be exercised.

As a general proposition there is indeed

support in the authorities for that sentence, but

the point that we would make is that what is the

private right to which His Honour is referring? If

it is a private right to receive a refund then the

question has been answered. If it is a private

right simply to have the discretion conferred duly

exercised, then the position is different and one

really has not advanced anywhere by putting the

matter in that way.

There is something we also want to say about

the reasons of Mr Justice Marks who concurred in

the judgment of his - - -

Revenue(2) 28 16/11/93

McHUGH J: Just before you leave Mr Justice Hedigan's

reasons, there is a passage at page 158 where he is

dealing with section 24(3) at line 6, and then he

says:

the position is no different in respect of

section 111(1) -

Is he using a different reason there to sustain the

claim?

MR GRAHAM:  Would Your Honour just bear with me while I turn

to section 24?

McHUGH J: Yes.

MR GRAHAM:  The only answer I can give Your Honours is I do

not know. It is certainly possible to suggest that

section 24(3) is just in a different category.

McHUGH J: But he says that it was not - that "may" became

"shall" in that section. Then he refers to

indefensible caprice and says the position is no

different in relation to 111.

MR GRAHAM:	If I may say so with respect to His Honour, one does not gain much assistance looking through this
Act, which is such a patchwork of provisions that
has grown up over the 150-odd years, from one
provision buried in another subdivision, which is
why I was inclined to take the Court just to the 1978 Act which introduced section 111 to see if one
could gain any clues from what might be regarded as a single, concise and coherent context.

If I could just take the Court to

Mr Justice Marks' reasons at page 125. At line 23,

His Honour said this:

It is apt then to enquire in the present case

what fact or matter or circumstance,

consistent with the object and purposes of the

Act, might properly persuade the Comptroller

not to make the refund notwithstanding the

finding.

Now, the way in which the case, as we understood

it, was put, did not require the inquiry to be thus confined. It was necessary to look to see what the

proper construction of section 111 was in its
application to any likely set of circumstances

meaning, in our submission, that the section does

not change to meet the case.

Finally, in His Honour's judgment at page 129, His Honour said at line 16 - this is section 111:

Revenue(2) 29 16/11/93

It proceeds on the assumption that a person or

body has a legal right to the return of money

erroneously or otherwise wrongly or mistakenly
paid.

That really is the heart of His Honour's reasoning and we say that is not the correct construction of

section 111; it does not proceed on that assumption

at all and I have given the Court reasons why we

say that that is so.

If the Court pleases, that is what we want to

say about the first part of the case. May I turn to the second part, section 20A of the Limitation

of Actions Act. If I can go to paragraph 1 of our

outline where we identify the reasons why the

appeal division rejected the Commissioner's

argument that the section provided a bar to the

proceedings which were before the supreme court,

Mr Justice Beach, and the appeal division. The

first reason was that section 20A was designed to

protect the State from claims for repayment of

moneys paid pursuant to State fiscal laws, which

was subsequently held to be invalid on

constitutional grounds. The present case, said

Mr Justice Hegigan, did not involve such a claim.

Now, that was said by His Honour

Mr Justice Hedigan, twice: firstly at page 161 and

secondly at page 163. If I can just read two

sentences, one from each page. His Honour, at

page 161, line 7, said:

It is clear on reading Hansard -

and references are given -

that the purpose of the introduction of

section 20A was to protect the State of

Victoria from the obligation to repay moneys

that might become payable as a consequence of

constitutional attacks on the validity of

State fiscal laws, attacks which in this

general period were having some measure of
success -

and His Honour went on to indicate the two classes

of case where some measure of success was

perceived.	On page 163, at line 7, His Honour
said:

Section 20A was intended to relate only to

legislation that was constitutionally invalid.

Now, it is quite true that section 20A was

introduced at a time soon after the decision of

this Court in Dennis Hotels, and - I have not

checked this, but I believe it was soon after,

Revenue(2) 30 16/11/93

also, the decision of the Privy Council in that

case. It was certainly after the decision of this

Court in the Road Transport cases, culminating in

Hughes & Vale No ( 1) and Hughes & Vale No ( 2).

The second reason that was given for denying

the reliance upon section 20A was this: the 1987

amendment to section 99(3) removed the taxpayer's

liability to pay stamp duty in respect of certain

premiums received during the period from

1 July 1985 and 12 November 1987. Parliament

intended such duty to be repaid and to give effect

to that intention it is necessary to conclude that
the 1987 amendment modified the operation of

section 20A. His Honour said that at page 162 of

the appeal book; the lines beginning at line 17,

where His Honour said:

Accordingly, I would conclude that the 1987

amendment at least modified the operation of

s.20A in relation to the payments of duty

properly made at the time but deemed not to be
payable.

Then Mr Justice Hedigan held as a third reason, the payments of stamp duties, sought to be recovered,

were not paid either under the authority or under

the "purported authority" of the Stamps Act within

the meaning of section 20A(l). And the Court would

recall from the text which is set out in the

judgments that those terms are used in

section 20A( 1):

amount ..... paid under the authority or

purported authority of any Act.

His Honour Mr Justice Hedigan expressed that

conclusion at pages 162 to 163, and again at

pages 163 to 164. I do not think it is necessary

to read the passage. Finally, Mr Justice Hedigan

held: 

that a claim for mandamus is not an action

brought to recover an amount of tax within the

meaning of s.20A.

Section 20A(l) begins:

No action shall be brought to recover, from the Crown ..... the amount of any part of the

amount of any tax ..... under the authority or

purported authority of any Act, after the

expiration of twelve months after the date of

payment.

His Honour held that this application by motion for

mandamus was not an action brought to recover an

Revenue(2) 31 16/11/93

amount of tax. His Honour Mr Justice Hedigan

reached that conclusion at pages 164 and the

reasons extend over to page 165. Just to read a

sentence from page 164 line 15 - I am told by my

learned friend that he does not seek to maintain

the judgment on the basis of this part of

Mr Justice Hedigan's reasoning, which is

interesting because it was the only part of these

reasons that Mr Justice Marks joined in. But I can

put that to one side.

If I can turn to the first of

Mr Justice Hedigan's reasons, he commenced his consideration of section 20A by referring to the parliamentary debates as the passages that I read

from his judgment a moment ago indicated. That was

page 161. I will not read it again, but the Court

has in the book of materials extracts from the

parliamentary debates to which His Honour referred

and they are to be found in the book under Tab E.

It is no part of our case to refer to those

extracts, they include not only the second reading

speech of Mr Rylah, the then Attorney-General,

introducing the relevant Bill into the Legislative

Assembly but also contain speeches from other

members of the House as well, other parties.

It is our respectful submission that this is

not the correct approach. The starting point, in

our submission, should have been the consideration
of the terms of section 20A itself. It is

apparent, in our submission, when one reads

section 20A that it is not limited to taxes and

other imposts which are invalid in the sense that

the Act whereby they are imposed is held to be

invalid.

MASON CJ: Are you submitting that recourse should not have

been had to the parliamentary debates?

MR GRAHAM:  In our submission, we submit that there was no

occasion to, the section was not - - -

MASON CJ: In other words, your submission is that there

must be some apparent ambiguity, or lack of
clarity, on the face of the statutory provision

before you have recourse to the extrinsic material?

MR GRAHAM:  Your Honour, I cannot make that submission in

regard to the terms of the Victorian Interpretation

of Legislation -

MASON CJ: What is that? Section 35?

MR GRAHAM:  Yes, because it allows recourse to be had in

circumstances other than lack of clarity or

ambiguity.

Revenue(2) 32 16/11/93

DAWSON J:  In other words you can refer to the extrinsic

source to create the ambiguity, as I read it.

MR GRAHAM:	That is what we say has happened here.
MASON CJ:	You concede that, do you?

MR GRAHAM:  Yes, Your Honour. I cannot say that no recourse

can be had, but we say that no recourse needs to

have been had.

McHUGH J:  Once you concede that it throws up this problem,

does it not, whether you interpret the words as

they would be reasonably understood by the reader,

or whether you interpret them by reference to what

the authors of the section had in mind as concrete

illustrations of the operation of the section.

MR GRAHAM: 

Your Honour, I am content with either for the

present purposes, as long as one takes them as
concrete illustrations and not an exhaustive
statement of the illustrations.

McHUGH J: 

I must say I would have to restate that, that you

confine its meaning to what the authors had in

mind.

MR GRAHAM:  Your Honour, we certainly would not accept the

latter, but one would say the starting point for

any court construing a legislative provision is to

look at the words and see what they mean, and if

there is some occasion to find that there is doubt

about what they mean, then one will have recourse

to extrinsic materials. But one does not start

from the other end, and we submit that that is

exactly what Mr Justice Hedigan did. Instead of going to the terms of the section he went to the

debates. We say there is no occasion to go to the

terms of the debates because the section is

perfectly clear on its face.	It does not contain
some implicit limitation of the kind which

Mr Justice Hedigan found. It does not state such a

limitation. It applies in any case where there has

been a payment of a tax under the authority or

purported authority of an Act.

DAWSON J: That is a peculiar expression, is it not? You do

not tend to say the tax that you pay is authorized

by the taxing Act, do you?

MR GRAHAM:  No, but we say that the section clearly applies

to an amount of tax that has been overpaid under an
Act held to be constitutionally invalid, such as a

purported excise or a road charge or something of that nature. But the section is not so confined,

and that can be ascertained simply by looking at

the terms of subsection (1) alone. It does not

Revenue(2) 33 16/11/93

talk about invalidly imposed taxes or anything of
that nature. It simply says to recover an amount

of any tax paid under the authority of any Act;

totally general.

What we would submit next is that in support

of our proposition that subsection (1) is not so
confined is that subsection (2) makes it perfectly

clear that the section is not so confined. If I

can take the Court to subsection (2), it says: 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.

So there is an exception made in subsection (2) in

relation to two types of legislative provision -

an action or proceeding brought pursuant to
any specific provision of any Act providing

for the mode of challenging the validity -

of any tax or impost, or -

any action or proceeding brought pursuant to
any specific provision of any Act providing -

for the recovery of any tax. It is our submission

that actions or proceedings of those two kinds that are dealt with by subsection (2) are not actions or

proceedings which would be brought in the case only

of taxes which were held to be constitutionally

invalid. Subsection (2) is taking out of the scope

of subsection (1) any kind of provision which

provides either for a mode of challenge or for a

mode of recovery regardless of the basis upon which

the challenge is made.

When one looks at subsection (2), it is clear

that the draftsman of subsection (2) had in mind

that there were many types of claims for recovery

which might fall within the scope of

subsection (1), and the step was taken to ensure
that specific provisions were not denied an

operation.

If we may take the Court to some examples -

and there are only a few of them - they tend to

illustrate the point we wish to make in this

connection. At the time when section 20A was

enacted in 1960, there were a number of provisions

in force in Victoria which, in our submission,

would have fallen within the description of

Revenue(2) 16/11/93

section 20A(2).	We have collected them together
under tab Fin the book of materials.	These are

provisions providing in some cases for modes of

challenge, some cases for modes of recovery, and

providing in some cases for certain time limits.

The first example is to be found under tab F,

Stamps Act 1958. We there set out section 33 as it

then stood which provided the procedure to be

followed at that time to challenge an assessment of

stamp duty by the Comptroller. It introduced a 21

day time limit and it provided a procedure and it

provided for repayment in subsection (4) if the

court, upon a case being stated and determined by

the supreme court, found in favour of the taxpayer.

A further example is to be found in section 111 over the page, to which I have already directed attention.

Yet another example, and perhaps a very clear

example for the purposes of this part of the

argument, is to be found in section 149 of the

Stamps Act 1958. The marginal note is quite

misleading. It refers to allowance for spoiled

stamps. In fact it deals with recovery of stamp

duty which has been paid in a multitude of

situations. If I could just ask the Court to turn

over a couple of pages from the beginning of

section 149 to page 1024 of the consolidated Act.

On page 1024 there is a lengthy proviso to

section 149. Just to read a few words from it:

(a) in the case of an executed instrument -

and these are conditions for the securing of a

refund -

(i) the instrument is given up to be

cancelled;

two years after the date of the instrument or,	(ii) the application for relief is made within
if it is not dated, within two years after the execution thereof -

So here we had a provision which introduced a two year time limit rather than a 12 months' time

limit to recover stamp duty in certain

circumstances. The next example is to be found in

the Administration and Probate Act, which is under
the same tab. If I could invite the Court's
attention to sections 125 and 126, if I may read
those sections. This is, I might say, dealing with

probate duty, as the Court might expect, under the

1958 provisions:

Revenue(2) 35 16/11/93

If after any duty has been paid under

this Part it is found that too much duty has

been paid in consequence of debts of the

testator or intestate being discovered which

were not included in the statement the

Commissioner shall upon being satisfied of the

existence of such debts by examination of the
parties or otherwise as he thinks fit order
that the amount overpaid shall be returned to

the person entitled to receive the same, and

upon any such order the Governor in Council

shall issue his warrant ..... and the Treasurer

shall pay the same out of the Consolidated

Revenue.

Section 126:

No order shall be made by the

Commissioner under the last preceding section for the return of any amount overpaid as duty unless application for repayment of the amount

so overpaid is made to the Commissioner within six years after the date when such overpayment

was made.

There is an example of a similar provision two

pages further over in the Land Tax Act,

section 90(2) which provides for repayment of

overpaid land tax:

Where after any tax has been paid it is

discovered that too much in amount has been

paid whether by reasons 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.

And, then a time limit for an application for

repayment of three years was imposed.

Finally, as a very humble example, from the

Motor Car Act 1958, section 14 provided for a

requirement that a person who is entitled to obtain

a refund of registration fees in the event that

registration was suspended or cancelled.

So, in our submission, there are many examples

to be found in the statute book as at 1960 where

there were provisions providing for a mode of
challenge, or for recovery, which had no connection

with constitutionally invalid taxes, and that was

an indication, in our submission, a strong

indication that subsection (1) of section 20A was

not confined in the fashion that Mr Justice Hedigan

held it to be confined.

Revenue(2) 36 16/11/93

Now, if I can turn to Mr Justice Hegigan's second reason, which was concerned with the

interaction of the 1987 amendment to the Stamps Act

in order to reconcile the two provisions, it was necessary to conclude that the 1987 amendment, I presume by implication, modified the operation of

and the provisions of section 20A of the

section 20A. Now, our response to that is this:

we would submit, with respect, it is not necessary,

in order to reconcile section 20A with the 1987

amendment, to treat the latter as operating to

modify the former. The effect of the 1987

amendment was to remove a substantive liability to

pay stamp duty retrospectively, whilst leaving the

procedural provisions in section 111 untouched.

Here we would compare the provisions of

section 99(3) as amended, with the provisions of

9 9 ( 4) , ( 5) , ( 6) , ( 7) and ( 8) , to contain a

mechanism whereby the taxpayer was entitled to

secure a refund. All that was available to secure

a refund in the circumstances which the 1987

amendment brought about, all that existed was

section 111.

Now, of course, the provisions of section 20A

of the Limitation of Actions Act are also
procedural rather than substantive, and they
continued, in our submission, to impose an obstacle

to the recovery of duty if the Commissioner elected

to rely upon them. We submit it is a very large

step to conclude that the alteration of the

substantive liability, which came about in 1987,
involved an amendment by implication of provisions

which related to procedure, so as to accommodate

the very special case of the premiums properly

paid, but retrospectively made non-payable on the

cost-plus policies. On the other hand, there is no

difficulty about reconciling section 20A and the

amendment, if we treat section 111 as conferring a

discretionary power.

Then there is the third reason that

Mr Justice Hedigan relied upon and that turns upon

the words "paid under the authority" or "purported authority of any Act". There are numbers of cases

which can be postulated which, in our submission,

would be clearly covered by those words.

Obviously, a payment of a tax, an excise or a road
charge, subsequently held to be invalid on

constitutional grounds, would be said to be made

under the purported or apparent authority of the

relevant Act, subsequently held to be invalid.

We would submit that a payment made upon a

view of the meaning or operation of the relevant

Act later held to be erroneous as a matter of law

Revenue(2) 37 16/11/93

could be said to be made under the authority or

purported authority of that Act. We would say that

a payment made of tax upon a mistaken view of the

facts by the taxpayer or the Commissioner, or both,

as to the liability to pay would be a payment made under, at least, a purported authority of the Act,

if not the authority of the Act and we would say

that a payment made upon a mistaken view as to

quantification of the amount of tax actually

payable can properly be said to have been made

under the authority or purported authority of the

relevant Act.

Now, if we turn to the facts of this case, it

is clear, in our respectful submission, that the $1.3 million forming the first part of the first

category of overpayment clearly was paid under the

authority of the Act because at the time when the

payments were made there was no exemption

applicable in respect of the premiums in respect of

which those payments of duty were made.

As to the other payments, that is to say, the

second sub-category in the first category and the

other two categories, it is our submission that it

is a proper use of language that they were paid
either under the authority or the purported
authority of the Stamps Act. For those reasons, we

submit that the reasons advanced by the members of

the Full Court rejecting the Commissioner's

reliance upon section 20A were, respectfully, we

would say, incorrect, and this Court should so

hold.

Now, if I can turn to the last part of the

outline of argument. If the Court pleases, we are

in some doubt about the status of this part of the

argument in this Court, having regard to what

happened in this Court when special leave was being

sought. Before I embark upon it, perhaps I could

draw Your Honours' attention to something that

Your Honour the Chief Justice said at page 10 of

the transcript. At about point 6, Your Honour

asked my learned friend, Mr Forsyth, then appearing

for the Commissioner:

Now, Mr Forsyth, we will not trouble you as

far as section 111 and section 20A are

concerned, but what about the third point, the

availability of mandamus?

My learned friend, Mr Forsyth, said:

Your Honour, we would not wish to argue about

the forms of action unless my learned friend

is trying to wriggle out of section 20A by

saying, "Yes, every other way of getting the

Revenue(2) 38 16/11/93

money would be barred by section 20A but

mandamus is not". Now, if my learned friend

wants to argue that then we would wish to say,
well, if it comes to the point, mandamus will

not let you get the money. But it is only if

that happened that we would want to quibble

about the reach of what is no longer a very
exciting branch of the law, the limit of the

prerogative writs.

For my part and my learned junior's parts, we are

not quite certain where that left the position;

whether Your Honours were disposed not to include

that topic -

MASON CJ:	We did not restrict the grant of special leave.
MR GRAHAM:	Your Honours did not but I had wondered whether

that was to be treated as some kind of disclaimer

by my learned predecessor of the point.

MASON CJ: Yes, Mr Merralls?

MR MERRALLS: If I may interrupt, Your Honours. That is

certainly how we treated it at the time and

continued to treat it. That is why I made it clear

during my learned friend's address that we do not

seek to rely upon the last ground upon which the

appeal division held that section 20A did not
apply; that is, we satisfied, as we understood it,

Mr Forsyth's condition.

MASON CJ:  I can only say, Mr Merralls - and what I am about

to say, I think, accords with the recollection at least of Justice Brennan, and I do not know about

Justice McHugh because I have not had an

opportunity of mentioning it to him - but my view

was that it was not intended to confine the grounds

that could be taken on an appeal.

MR MERRALLS:  It was not done formally, but we understood

that my learned friend was no longer maintaining,

for the purposes of appeal, his mandamus argument.

We have to this point treated it in that way. My

learned friend and I have had discussions about

this and he is under no - - -

MASON CJ:	You are not taken by surprise then?
MR MERRALLS:	Yes, we are.
MASON CJ:	Even though you have had discussions with him?

MR MERRALLS: Yes, we had discussions, but I understood that

he was not going to present the argument.	I do not
wish to embarrass him, but that was my

Revenue(2) 39 16/11/93

understanding of our conversation. Certainly we

have not fine tuned that argument, not at all.

MASON CJ:  To what extent are you prejudiced by this,

Mr Merralls?

MR MERRALLS:  May I put it this way, Your Honour: these

proceedings began as statutory mandamus at a time

when the Comptroller had not stated her position.

So the primary relief that was sought when the

proceedings were commenced was an order which would

compel her to do her duty to make a decision, and

indeed to make a decision about the overpayment.

We were then informed that the Comptroller had made

that decision, but the form of the proceedings was not changed and the proceedings proceeded upon the

footing that, although they had been commenced as

mandamus to compel her to make the primary

decision, they would suffice for a decision upon

the secondary matter, the second stage.

BRENNAN J:  What was the proceeding on the second stage?

What was the nature of the proceeding on the second stage?

MR MERRALLS:  That she should decide to return the amount

that she had found to have been overpaid.

BRENNAN J:	By way of mandamus?
MR MERRALLS:	Yes, an order should be made against her by

way of mandamus, but presumably because an order

might have been sought in more direct proceedings.

But the procedural nature of the matter was not

changed after it was learnt that a decision had

been made upon the overpayment.

BRENNAN J:  was there in issue the question of whether an

order could be made against her in the nature of a

mandamus compelling the payment?

MR MERRALLS:  At first instance?

BRENNAN J: Yes.

MR MERRALLS:  I do not know, I did not appear at first

instance. The point was argued in the appeal

division, but it was argued mainly in relation to

the statute of limitations.

MASON CJ:  I think we ought to hear what the Solicitor has

to say. You can respond and if you need any

further time or accommodation then we can give

consideration to it, Mr Merralls.

MR GRAHAM:  I certainly should apologize if I have misled my

learned friend, but having regard to that passage,

Revenue(2) 40 16/11/93

I have been in doubt myself as to the status of

this part of the case. I will be mercifully short,

if that is any assistance to my learned friend.

If I could take the Court to the appeal book

again, this time at page 171. Perhaps I should

start at page 170, it sets out the order of the

Full Court and in announcing judgment in lieu of the judgment pronounced by Mr Justice Beach, the

appeal division having granted an extension of time

for bringing proceedings for mandamus went on at

page 171 in the following terms. There is an

evident mistype in this authenticated order, it

reads:

Adjudge that Defendant do and Defendant is

hereby commenced -

It must be intended to have said "commanded" rather

than "commenced" in order to make sense of what

appears in that part of the order.

Adjudge that Defendant do and Defendant is

here commanded on or before 20 August 1992 to

perform her duty under Section 111(1) of the

Stamps Act 1958 by refunding to Plaintiff the amount of $1,907,908.10 being the amount of

stamp duty found by Defendant on

19 October 1990 to have been overpaid by the

Plaintiff.

So there is an order against the defendant for

payment of an amount of money. If I can go to

paragraph 2 of the outline, mandamus is a remedy

which historically issued in the name of the Crown.

There is abundant authority in all the textbooks

and I would not have expected this to be a matter

of -

MASON CJ: Is that so, according to the procedure now

current in Victoria?

MR GRAHAM:	I think the first and obvious answer is no, because an order is made in the nature of mandamus,
but it is a procedure which owes its origins and
its limitations, in our submission, historically to
the writ of mandamus. Our submission is that the
change in procedure for obtaining the remedy does
not alter the limitations upon the remedy.

MASON CJ: But it is no longer a remedy which issues in the

name of the Crown.

MR GRAHAM:  I have to accept that, Your Honour; it does not

go - a command by the Queen in the writ -

Revenue(2) 41 16/11/93

MASON CJ:  Was not that the foundation of this proposition for which you now contend?

MR GRAHAM: It is, Your Honour. If that is wrong, then that

part of this proposition fails but the next point

is not dependent on it.

MASON CJ: Well, is that so? Is the Commissioner the Crown

or a servant of the Crown? The Commissioner is the

statutory officer.

MR GRAHAM:  If I can answer the first question first and I

will come to the second one in a moment. Certainly
the form of procedure is no longer the issue of a
writ of mandamus which is issued as a command by
the sovereign, and if that part of the argument

fails then the point that it cannot be granted

against a servant of the Crown, acting merely as a

servant, fails.

As to whether the Comptroller is to be

regarded as a servant of the Crown or as, to use

the language of the cases here, a person acting as

personae designatae, depends upon what part of the
function the Comptroller is performing. If the

Comptroller is performing the function of finding whether or not there has been an overpayment, she

is acting, in our submission, or was acting as

personae designatae, not merely as a mere servant

of the Crown. But when it comes to the stage of

her making a refund, then, in our submission, all

she is doing is acting as a mere servant whereby

access is secured to the consolidated revenue under

section 166D. So, when it comes to making the

payment, she is not acting in her own capacity; she

is acting as a mere servant of the Crown.

McHUGH J: But why do you say that? Is not the effect of

section 166D merely to appropriate the amount of

money that she is liable to pay?

MR GRAHAM:  Your Honour, we would submit it goes further.

It contains within it, in our submission, an

indication that the Comptroller is merely going to

be a conduit for the making of the payment from the

Revenue to the applicant for a refund. And that is how the step is to be accomplished. But,

Your Honour, if that is wrong, and she is to be

regarded as a person acting as personae designatae,

then that part of the argument could not succeed.

I will not take the Court through the

authorities for the proposition in paragraph 2 of
the outline; the references are there. There is an
interesting discussion by Mr Justice Zelling in the

South Australian case and a helpful discussion in the second edition of Hogg.

Revenue(2) 42 16/11/93

The fourth point in the outline is a separate point and it would not founder on the point raised

with me by His Honour the Chief Justice. There is

authority for the proposition that mandamus will

not be granted where another remedy is available
and we give the Court the authorities for that

proposition.

MASON CJ: Well now, just before you go to that, can I ask

you this question? If there was an express

specific provision in the statute directing the

Commissioner to refund overpayments, could you

maintain this argument then?

MR GRAHAM:  I think I would have to say we could,

Your Honour.

MASON CJ: But I think there is authority against you on it.

de Smith, at page 555 says:

Thus, the income tax commissioners have been

ordered to repay overpaid income tax and to

grant tax allowances to which an applicant was

entitled by statute - - -

MR GRAHAM:	Yes, but I looked at that passage, Your Honour - I think it is the same passage, I may have looked
at an earlier edition - I think the authority given
for that proposition or one of them is Reg v the
Commissioners for Special Purposes of Income Tax,
21 QBD.

MASON CJ: That is right, yes.

MR GRAHAM:	A close reading of that case suggests that the case does not quite decide that, and it has been
said in the - - -

MASON CJ: de Smith says in the footnote of that case that:

(where Lindley L.J. observed (at 322) that the

award of a mandamus against the commissioners

was not the same as the enforcement of a

payment of money by the Crown) -

MR GRAHAM:  Yes, but the terms of the provision relied upon

in that case seem to be such as to justify the

decision that was made and the remedy that was

granted. But it may be a case that is not of

general application. That is why we have said in

the outline, compare that case with the one that

goes before, Nathan's case, where there are clear

statements by the Master of the Rolls and

Lord Justice Bowen, to the effect that you cannot have a mandamus when you can recover the moneys by

another means; in that case and at that time a

petition of right.

Revenue(2) 16/11/93

So we simply say that the remedy here would

appropriately have been an action for money he had

not received. It might have been met by a plea

under section 20A, but that was an available remedy

and it was not relied upon. We would simply

conclude by saying that the taxpayer's right, in

its claim, can rely upon mandamus, section 20 can

be circumvented and the constraints of the

objection and appeal provisions can be circumvented as well.

If the Court pleases, those are the

submissions that we seek to make. Could I indicate

to the Court the orders that we would seek in the

event that the appeal was successful. They are not

quite the same as those claimed by the notice of

appeal. We would ask for, firstly, an order that

the appeal be allowed with costs and, secondly, an

order that the order of the Appeal Division of the

Supreme Court of Victoria, made on 6 August 1992,

be set aside and, in lieu thereof, there be an

order that the appeal by the plaintiff against the

order of the Honourable Mr Justice Beach, made on

11 February 1991, be dismissed with costs.

Now, there is one other matter which I just

desire to touch on at this stage. It is the fact

that the $1.9 million has been paid by the
appellant to the respondent in response to the
order of the Full Court and a question arises, if

the appeal is successful, of what one does to get a

refund of the refund. There may be no problem. On

the other hand, if my learned friend does not

indicate there is no problem, we would ask that the

matter be remitted to the Supreme Court of Victoria the sum of $1.9 million to be dealt with.
generally, perhaps without even indicating the
purpose of it, or to be remitted to the Supreme

BRENNAN J: That is assuming that there is a jurisdiction in

the pending proceedings to make such an order.

MR GRAHAM:  Yes, that is a problem that struck us as well,

Your Honour. We are troubled by the thought that

there should be yet another action by the Crown

seeking to recover this money from the taxpayer.

It may be that my learned friend will indicate

there is not a problem and the matter need not be

pursued further. But we do seek an order in those

terms if my learned friend does not disclaim

a - - -

BRENNAN J: What jurisdiction would this Court have to make

such an order of remittal?

Revenue(2) 44 16/11/93

MR GRAHAM:  Only the general powers that it has under the

Judiciary Act, which I have not got in Court with

me - I think it is section 38 - to make orders

dealing with all aspects of an appeal, in

substance. Perhaps I could look at that again over

the luncheon adjournment. I have looked at it

briefly and it seemed that the order which we were

seeking was within this Court's jurisdiction,

although it would not be possible to go any further

than that. If the Court pleases, those are our

submissions on behalf of the appellant.

MASON CJ:  Thank you, Mr Solicitor. Mr Merralls.

MR MERRALLS:  If it please the Court, may I hand up an

outline of our submissions. I see that in

paragraph 25(e) a comma has been included instead

of a full stop after the first sentence. There should be a full stop after the word "express".

If it please the Court, it can be seen that we

have addressed the question by a number of

submissions which are, as it were, successive.

First of all contending that of section 111(1) is a

facultative provision which enables the Comptroller

to do the thing which the word "may" allows her to

do, that is, to refund duty. In the absence of
such a power the Comptroller would have no means or
ability to pay anything not having the key, as it

were, to consolidated revenue, but the Act by

making a standing appropriation of consolidated

revenue in giving the Comptroller a power to refund overpaid duty enables her to do something which she

otherwise would not be able to do. That is, a

ministerial function when the condition prescribed

by section 111 is satisfied, namely, that she has
found that duty has been overpaid.

So, our first proposition is that simple one which does not depend upon reading "may" as "shall"

or "may" as anything other than may, but by

confining the ability that is conferred by the

section to the ability to make the refund. We say

that section 111(1) should also be construed as

conferring a duty upon the Comptroller to

investigate in an appropriate case whether an

amount which it is contended has been overpaid has,

in fact, been overpaid; we say that that is

implicit in the section, the Comptroller being a

public officer, and it not being part of the policy

of the law that moneys should be retained which

have not been paid in the correct amount. So that

we would say that, in an appropriate case, if the

Comptroller refused to make a finding where duty

had been overpaid, in fact, she is under a duty and

can be compelled to make that finding. That was

Revenue(2) 45 16/11/93

the state of affairs when these proceedings

commenced.

As far as the taxpayer was concerned, it was

not known whether the Comptroller had made a

finding or not. It was assumed that she had not

and the proceedings were commenced in order to

compel her to do so, her officers having informed
the taxpayer not only that duty had been overpaid,

but having kindly calculated the amount of the

overpayment. But if section 111(1) does not impose

a duty to investigate, we say that it does not
confer on the Comptroller a discretionary power to

refuse to refund any amount of duty actually found

to have been overpaid. This is a subproposition,

as it were, of the first, again treating the words

"may refund" as being facultative and relating to

the act of refunding with the word "may" in that

phrase.

We too rely upon history in making these

submissions and, in our respectful submission,

those interpretations are both consistent with and derive support from the legislative history of the

refund provisions which is traced by

Mr Justice Hedigan at the pages we refer to in the

appeal book.

In our submission, it should not be assumed

that Parliament intended to change the character of

the Comptroller's duty to a discretionary power,

when it adopted what we call the payroll tax

formula for the refunding of overpaid tax in 1978.

We call it the Payroll Tax Act formula because
those words, that is the words of section 111(1),
mutatis mutandis, came into the Victorian statutory
lexicon in 1971 when the States took over the

imposition of payroll tax from the Commonwealth,

and at that time virtually re-enacted the

Commonwealth Payroll Tax Act. That was the

statutory formula for the repayment of payroll tax;

it found its way into the Payroll Tax Act 1971.

That was the first time that that formula was in

Victorian statutory law, and it has since been used

by the Victorian draftsmen in many other taxing

statutes, particularly - and I am not sure whether

I am correct in saying exclusively, but certainly

mainly - those which depend upon a system of

self-assessment.

BRENNAN J: What is the logical step which takes us from the

language that was there before to the language that

is there now and equates them?

MR MERRALLS:  The step is that two changes were made in

1978. Those changes were the omission of a time

limit for applications for repayment and the

Revenue(2) 46 16/11/93

simplification of the procedure for making

repayment where the facultative words, enabling the

Comptroller herself to make the refund, were

substituted for a two-stage procedure, which had

its origins in United Kingdom procedure in the last

century, of the Comptroller or revenue officer
issuing a certificate to the appropriate officer of

the treasury, and the treasury officer, either the

treasurer or the special commissioner - I have

forgotten the name of the commissioners; they were
not the special commissioners, but they were the

other ones in the United Kingdom - then making the

actual repayment.

So what happened in 1978, in our submission,

is that a decision was made to streamline the

procedure and to eliminate this two-stage

requirement. To do that, it was appropriate to

adopt the payroll tax formula which gave the

Comptroller a power to do something that otherwise

she would not have had.

BRENNAN J:	Why does that lead to anything other than giving the Comptroller the power which is expressed there
in discretionary terms?

MR MERRALLS: Again that begs the question, Your Honour, as

to whether it is in discretionary terms or whether

it is in facultative terms.

BRENNAN J:  I thought you were praying in aid the history in

order to indicate that the term is not

discretionary.

MR MERRALLS:  No, that was intended to introduce a

facultative procedure granting the ability and

power to the Comptroller to make a repayment.

BRENNAN J: There is no dispute about that, is there? The

question is the manner of the exercise of the

power.

MR MERRALLS:	Yes.
BRENNAN J:	What is there in the history which indicates

anything about the manner of the exercise of the

present power?

MR MERRALLS:  The history is that previously when a finding

was made of an overpayment, there was clear duty to

repay, but the duty involved a two-leg procedure.

The substitution of a single stage procedure

required the empowering of the Comptroller to do

something that, as a mere statutory officer, she

would not have power to do.	So that involved
enabling - - -

Revenue(2)	16/11/93
BRENNAN J:	I understand that. If the word "shall" was used

before, why would they not use the word "shall"

again?

MR MERRALLS:  The only answer I can give Your Honour is that

the draftsman adopted a formula from another

statute.

BRENNAN J:  I can understand that too, but why does it not

mean that the meaning has to be derived anew?

MR MERRALLS:  The second point that I would make is that at

the time of the amendment to the Act, the

explanatory memorandum drew attention to the two

changes that I have referred to as being made, but

did not state that a radical change was being made

to the function or duty of the Comptroller when a

finding was made. The explanatory memorandum is

not amongst the documents before the Court, but

that fact appears from the judgment of

Mr Justice Hedigan at page 150 of the appeal book.

DAWSON J:  Why do you not say, "The draftsman must have been

thinking in terms of power rather than obligation

when he used the word 'may', and that means if one

is to find the obligation one has to look

elsewhere?" Is that the way you put it? The
obligation may be found in the nature of the

subject-matter with which the section deals, but

you have to look elsewhere, do you not?

MR MERRALLS:  Yes, I think Your Honour has skipped ahead to

one of my later submissions.

DAWSON J: Well, leave it for the moment.

McHUGH J: But your argument leads to the conclusion that if

there had been an overpayment 20 years before, the

Comptroller was under an obligation to repay the

money whether the payee was dead or bankrupt or, in

the case of a company, in liquidation.

MR MERRALS:  Yes, I think that would be so. I do not know

about the company in liquidation, it could not be.

The company would be dissolved probably. It would

be bona vacantia, so there would not be any

repayment.

McHUGH J:  I do not know whether it would affect your

general argument, but the contrast between the old

111 and the new seems striking because under the

old 111, once the Commissioner was satisfied there

was an overpayment, an application was made within

12 months, then he had a duty to repay the money,

but under 111, he could go back - certainly before

the commencement of the 1978 Act - how far back he

Revenue(2) 48 16/11/93

could go I do not know - but after that he had

power to refund.

MR MERRALS:  Yes, that might be so. The amendment to

section 111 in 1978 was, of course, accompanied by

a new regime for the payment of tax under this

subdivision. Whether payments made under the

previous subdivision would be subject to the

unamended section 111 would be a difficult question

which would depend upon the effect of the
provisions of the Acts Interpretation Act or later
the Interpretation of Legislation Act dealing with

the repeal or amendment of an Act which conferred a

right, and conditioned the right. So, the answer

is probably not, Your Honour, that the power would

not go back beyond the amendment in 1978.

MASON CJ:  Mr Merrals, we might adjourn now. We will resume

at 2.15.

12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.19 PM:

MASON CJ: Yes, Mr Merralls.

MR MERRALLS:  If the Court pleases, I had reached ..... I

refer to point 10, I should mention a misprint in

paragraph 18, where the names of the parties quite

obviously have been - or that their statuses have

been reversed. The payments were not made by the
appellant, but by the respondent, and so

corrections should be made in the introductory

words of - - -

DAWSON J: Which paragraph, Mr Merralls?

MR MERRALLS: Paragraph 18, in subparagraphs (a) and (b).

Now we come to paragraph 10 which, Justice Brennan

may be pleased to hear, ignores the legislative

history of section 111 and this submission depends

upon matters such as were adverted by Your Honour

Justice Dawson this morning, that is, the nature of

the power and it is submitted that this power is of

such a nature that it ought to be exercised when

the factual conditions mentioned in the subsection

are satisfied - - -

DAWSON J:  Why; because people should not obtain money to

which they are not entitled?

Revenue(2)	49	16/11/93
MR MERRALLS:	No.	They should be entitled to the repayment

of money that they have overpaid. Yes.	I am
sorry, I - - -

DAWSON J: That is just the other way round.

MR MERRALLS:	Yes.
DAWSON J:	Why should you not say that as between two people

who are unmeritorious claimants, the Revenue should

be the one that is to retain it?

MR MERRALLS:  But there is no such thing as an unmeritorious claimant who has paid a tax.

DAWSON J: It is said there is here, because here the

claimant has extracted the tax on the premiums

which were paid to it.

MR MERRALLS:  No, but we will come to that presently,

Your Honour. At the moment we are considering the

nature of the power and -

DAWSON J: 

The nature of the power covers that situation, that is what is put against you.

MR MERRALLS: 

It might, yes, and we simply advance the

propositions which are based upon the two well
known passages in Lord Cairns' judgment in Julius v

Bishop of Oxford and, surprisingly,

Mr Justice Windeyer's judgment in Finance
Facilities, which my learned friend contended

favoured him.  To the part of the passage that my

learned friend read, we would refer Your Honours to

the foot of page 134 as well.  My learned friend

stopped reading in the middle of the page. We urge

upon the Court the passage beginning at point 5: But the discretion must be exercised bona

fide, having regard to the policy and purpose

of the statute conferring the authority and

the duties of the officer to whom it was

given: it may not be exercised for the

promotion of some end foreign to that policy

and purpose or those duties.

MASON CJ: That is the point that members of the Court were

putting to the Solicitor-General during the course

of his argument.

MR MERRALLS:  Indeed. Chief Justice Jervis in Macdougall v Paterson at Then there is a quotation from

the foot of the page:

"The word 'may' is merely used to confer the

authority: and the authority must be

Revenue(2) 50 16/11/93

exercised, if the circumstances are such as to

call for its exercise".

Our primary submission from this part of the case

is that the only condition that section 111

has been overpaid. It is submitted that the
payer's right depends only upon that finding. requires to be satisfied is a finding that the duty the power.

BRENNAN J:	How do you define the legal right?
MR MERRALLS:	The legal right is found in overpayment; a

finding of overpayment.

BRENNAN J:	What is the legal right?
MR MERRALLS:	To have the overpayment returned.
BRENNAN J:	How is that legal right enforceable?
MR MERRALLS:	By whatever appropriate proceedings are appropriate to compel the person who holds the
power to exercise the power, which was what was done here.
BRENNAN J:	To exercise what power?
MR MERRALLS:	The power to repay.

BRENNAN J:  I see. So there is a legal right which exists

outside section 111, is that right?

MR MERRALLS:  No, this argument depends upon the legal right

being found within section 111. It is found in the

finding of overpayment. We have an alternative

submission which follows which finds the - - -

BRENNAN J:  I understand that you say the finding of

overpayment enlivens the power because it is a

condition precedent to the existence of the power.

Then there comes the question of the exercise of

the power. Now, do you contend that you have a

legal right to the exercise of a power by way of

making a refund?

MR MERRALLS:	Yes.
BRENNAN J:	Now, what gives you that right?
MR MERRALLS:	It is implicit in the condition; that is this

submission, that it is implicit in the condition.

BRENNAN J: Derived from what; construction of section 111?

Revenue(2) 51 16/11/93

MR MERRALLS:  Yes, and the nature of section 111, yes, and

that is why we refer to the words I read from

Mr Justice Windeyer's judgment in Finance

Facilities.

BRENNAN J:  It did not seem to me that took you that far,

but it may.

MR MERRALLS: With respect, we submit it does.

BRENNAN J: Yes.

MR MERRALLS:  But you look at the nature of the - the

circumstances in which the power is stated to be

exercisable.

MASON CJ: But it is not confined to the existence of the

condition precedent, is it? I mean, the condition

precedent assists you to some extent, but more than

that you have got to look to the context in which

you find section 111, the purpose and policy of the

Act.

MR MERRALLS: Certainly, yes.

MASON CJ:  And then, you go on to say, that the discretion

can only be exercised bona fide for those purposes

and for the attainment of that policy and that

leads necessarily to a result in your favour.

MR MERRALLS:  Yes.

McHUGH J: But does not that get you into this difficulty?

If the discretion is undefined, then all a court

can do is to say that this or that particular

consideration is extraneous or outside the scope of
the power and, in this case, we do not know what
was the consideration which caused the exercise of

the discretion.

MR MERRALLS:  No, we do not reach that point yet,

Your Honour; I apologize for having presented the

case in this sequential way, but we do not reach

that point yet. That argument comes later, if it

is considered that it is not implicit in the
condition itself and the matters that Your Honour
the Chief Justice referred to, that is, its

context.

MASON CJ: But it means that you have got to negative the

existence of any consideration that falls within

that framework that could have justified the

exercise of the discretion against you.

MR MERRALLS:  Yes, only if there is found to be a

discretion - - -

Revenue(2) 52 16/11/93

TOOHEY J:  I understood your present argument as to be

extracting any element of discretion.

MR MERRALLS: 

Yes.

McHUGH J: 

I understood that too, but I am just taking you

up on your answer to the Chief Justice who was
jumping ahead, I think.

MR MERRALLS: Well, I did not take His Honour to be jumping

ahead. I took him to be, rather, augmenting my

submission about the nature of the condition

precedent, and I say, you do not find the condition
precedent as a dry pea, it is something which is

found in a statutory context, and the condition

precedent is a finding that duty which has been
paid, or an amount which has been paid, presumably

as duty, was overpaid.

DAWSON J:  And, if I understand you rightly, you say the

purpose of a provision for the repayment of

overpayments can only be the repayment of the

overpayment and there is no room for introducing

any qualification?

MR MERRALLS:  Yes.

DAWSON J: Because overpayment, in itself, is the evil which

the provision is directed at.

MR MERRALLS: Precisely, Your Honour. That is the

submission.

McHUGH J: But you have got to go outside section 111, in

any case, do you not, because if we can determine

whether there has been an overpayment, you have to

examine various provisions in this?

MR MERRALLS:  Yes, you do. You have got to see what

section 111 is talking about, because it talks

about an overpayment of duty. It cannot stand in

isolation and you have to consider the other

provisions of the subdivision to find out how duty

might be overpaid.

McHUGH J: Yes.

MR MERRALLS:  Or what duty - what the duty is that has been

overpaid.

BRENNAN J:  So it is not the finding of the overpayment that

is relevant, but the fact of the overpayment, is

it?

MR MERRALLS: For the purposes of this argument there is a

distinction between the two.	Once the finding is
made we say that the power must be exercised.	We

Revenue(2) 53 16/11/93

would also say that there is a duty to investigate
whether there is an overpayment and to make a

finding one way or the other. That is implicit in

the section too. But in this case we do not have

to bother about that because the finding has been

made.

BRENNAN J:	Am I right in thinking that your argument is this: if there is a finding of overpayment, that
is sufficient both to enliven the power and to
determine the manner of its exercise?
MR MERRALLS:	Yes.
BRENNAN J:	And it matters not that any error may have

affected the making of that finding.

MR MERRALLS:	Any error?
BRENNAN J:	May have affected the making of the finding by

the Comptroller?

MR MERRALLS:  But it is wrong?

BRENNAN J: Yes.

MR MERRALLS:  No, I think I would qualify that absolute

answer by saying that it might be possible for the

Comptroller to revise a finding if it was made in error. There has to be a positive finding at the time the duty to repay occurs. So, if the

Comptroller had made a finding there had been an overpayment and had maintained that finding, we

would say that the duty existed.

McHUGH J: Well, suppose in your favour, Mr Merralls, that

the purpose of the Act does not seem to do much
more than to collect various fees and duties and

enforce the Act and pay the money into consolidated

revenue.	Is there anything more than that in the
Act?

MR MERRALLS:  Purposive of - yes, that is all. To charge

and collect stamp duty upon documents, and I

suppose I would have to add, now, transactions of

particular kinds. It is a traditional Stamps Act

which charges duty upon documents and now

transactions that are described both in the Act

itself and the schedules.

Section 111, of course, is found in the insurance duty subdivision and although its

language is more general than one would expect to

find, in our submission, the power conferred is

confined to duty paid under that subdivision.

MCHUGH J: Yes.

Revenue(2)	16/11/93
MR MERRALLS:	In the appeal division, the acceptance of

arguments 10 and 11 is found perhaps most clearly

in the judgment of Mr Justice Marks at pages 125 to

127, especially at pages 127 and 129. Paragraph 12

introduces a new argument, which is a subordinate

argument in rebuttal of an argument that was

advanced below by the Revenue and, as I understood

it, was presented by my learned friend this morning

and it is simply a textual comparison argument. My

learned friend probably answered the argument

himself by referring to the Interpretation of

Legislation Act, which was passed in Victoria in

1984 and which introduced by section 45 a provision

which was not found in the Acts Interpretation Act

which was in force when the 1978 amendments were

made. So, in our submission, that fact negates an

argument by textual comparison between

section 111(1) and section 99(7)(b).

Paragraph 13 introduces a new argument. That

is that if there is a power, if section 111(1) does

confer a power not to refund overpaid duty -
"confer" is perhaps not an appropriate verb, but

allows the Comptroller not to refund overpaid duty,

the submission is that it is not an absolute

discretionary power but one which must be exercised

upon proper grounds. I understood that my learned

friend accepted that proposition.

Here the Comptroller has maintained throughout

the proceedings, at least until now, that the

subsection conferred an absolute discretion. She

has not sought to justify the refusal to refund any

part of the duty except by maintaining in argument

in the court proceedings through Mr Forsyth that

she could refuse to refund duty because the

respondent might have passed on the duty to its

policyholders but not might pass on the refund.

The first inkling of that came in the course

Mr Justice Beach at the top of the page says that of cross-examination on page 53, where	Mr Forsyth is seeking to elicit from Mr Boyce the
fact that if Royal refused this refund, "that is a clear profit to Royal". His Honour says, "What is
the relevance, Mr Forsyth?" Mr Forsyth agrees. He
says:

Unquestionably, your Honour, that is so. We

say Royal would have a windfall, and as far as

we know that is what it wants, and that is

indeed a material factor.

Then he went on to ask Mr Boyce, and at line 24

says:

Revenue(2) 55 16/11/93

I am not sure that you have really answered my

question, which is that it would involve a

vast amount of administrative work, to work

out who was entitled to how much of any
refund?---I don't believe I can answer that

question.

There may have been one other answer, but I will

have that looked up.

The Comptroller did not, before the

proceedings were commenced, state any ground and

she still has not stated formally any ground for

her refusal to refund any part of the duty. She

simply decided that overpaid duty would not be

refunded.

BRENNAN J:	Was any request made for reasons?
MR MERRALLS:	No, because the proceedings had started before

we discovered that she had made the decision.

BRENNAN J:  She had not made the decision until two days

after the proceedings started, had she?

MR MERRALLS:  The dates appear in the agreed fact, yes. She

made it two days after, on the 19th.

BRENNAN J:  When it was discovered that she had made the decision, no request for reasons was made?

MR MERRALLS:  I am not sure about that, Your Honour. There

was correspondence between the parties after that

and the matter was alluded to in a letter, which is

at page 91 of the appeal book.	The affidavit of
Mr Sanguinetti has not been included.	The letter
is on page 92:

the Comptroller accepts that there was an

overpayment of the amount referred to in the

affidavit of Susan Bayliss ..... the Comptroller

decided not to make a refund of any part of

that amount ..... that decision was not made in

writing.

Nothing else appears. That letter was sent in

reply to a letter which appears at page 90.

BRENNAN J: 

A request for reasons is on page 94, is it not:

please let us know the reasons for the
decision -

MR MERRALLS: 

Yes, I am sorry, yes, that is so, and no reply

was received to that letter. That was the letter I

was looking for, Your Honour. The next point,

perhaps, has been overtaken by events, that it is

Revenue(2) 56 16/11/93

not contended that an absolute discretion is

conferred. But to the passage in Your Honour the

Chief Justice's judgment in the Peko Wallsend case

we would wish to add a reference to a passage in

the judgment of Lord Bridge, a very trenchantly

expressed passage in the Tower Hamlet's case, that

is, Reg v Tower Hamlets Ex Parte Chetnik

Developments, (1988) AC 858, at pages 872 to 873.

On that page Lord Bridge quotes a passage from

Sir William Wade's Administrative Law.

Now, we say that if the payer's right does

depend upon matters other than the Comptroller's

finding that duty has been overpaid, it must be

found in general law principles. Those principles

are now collected under the general rubric of

restitution where a payee has been unjustly

enriched by a payment, and we refer to a passage in

Lord Goff's judgment in the same case, the

Tower Hamlets' case, at page 882. His Lordship

says:

Section 9 confers on rating authorities a

statutory power to refund an amount paid in

respect of rates, which is not recoverable

apart from the section, where it is shown to

their satisfaction that the amount could

properly be refunded on certain specified

grounds. As my noble learned friend has

pointed out, putting aside paragraph (a), the
amount paid would not be recoverable apart

from the section because it was paid under a

mistake of law and, ..... as the law stands at

present (which is much criticized ..... ) money

so paid is generally irrecoverable in English

law. Effectively, therefore, the section

creates a statutory remedy of restitution, in

the circumstances specified by the section, to
prevent the unjust enrichment of the rating

authority at the expense of the ratepayer.

In these circumstances, it should be of

assistance to those considering the exercise

of the discretion, conferred by the section,

to have regard to the general principles of
the law of restitution in their search for

guidance in the exercise of the power, though

always bearing in mind that those principles

may be modified, expressly or impliedly, by

the terms of the state. This approach is, as

I see it, entirely consistent with (though

broader than) the specific examples given by

my noble and learned friend.

BRENNAN J: Well, His Lordship was there prepared to admit a

validity of an exercise of discretion by refusing a

refund where there has been a change of position?

Revenue(2) 57 16/11/93

MR MERRALLS:  I do not know, I think he left that open, and

my memory is that he left it open again in the

Woolwich case - - -

BRENNAN J: Yes, and generally speaking I would have thought

this to have been an appropriate ground for

declining to make a refund.

MR MERRALLS:  Whether there could be a change of position by

the government authority, or whether that is a matter, an answer, defence, or how you care to describe it, of private law.

BRENNAN J:	I am not sure what His Lordship is saying because he i·s speaking of the intention of the
section at the same time.
MR MERRALLS:	So, if one is looking at general law

principles, one must differentiate between the

three categories of payment and see the nature of

the basis of the claim in each case. We do that in

paragraph 18, where we distinguish first the

payments of the first category made up to

12 November 1987, that is the date of the

commencement of the 1987 amendment. Those payments

were lawfully chargeable when made, so that the

respondent's claim depends upon the retrospective

effect of the 1987 amendment.

Paragraph (b) refers to payments of the second

category. That is the adjustment claim where

payments have been made in the belief that the

premium is a particular amount. Subsequent events

established that the premium was a different

amount, a lesser amount, and an adjustment is made

to the premium. So they are changes of fact

occurring after payment.

The third category is payments of the first

category made from 13 November 1987, that is

payments made in ignorance of the introduction of	the third class in section 99 and payments of the
third category, that is payments made in respect of
ordinary workers' compensation premiums, after the
1985 amendments which were made in ignorance of the
1985 amendments. They were not lawfully chargeable
when made but the company in blithe ignorance paid
them.
If I may deal with the first category, category (a), first, it is contended that the legal
right to the refunding of those payments depends upon inferences from the retrospective character of the 1987 amendment. We contend that in the absence of any indication in the amending Act, that
repayment should be subject to passing on
conditions, the right should be regarded as

Revenue(2) 58 16/11/93

absolute. We say that it would be quite

extraordinary to attribute to Parliament any other

intention. What is the purpose of making the

amendment retrospective if payers who have made it

lawfully at the time, between the date to which the

amendment is made retrospective and the date of

commencement of the amending Act, are to be denied

repayment. So it is a simple QED argument.

In paragraph 20 we say that if the right to

the repayment of the paragraph 18(b) and 18(c)

payments depended upon private law principles, the

claims would rest upon mistake, but our first

submission is that they rest not upon private law

principles, but upon the absence of any legitimate basis for the money to be retained by the revenue.

There we are referring to a difference of opinion

between two of the well known academic writers in

this field, the Regius professor, Professor Birks,

on the one hand, whose views we rely upon and

Mr Burrows, on the other, who would equate private

law principles or rather introduce private law

principles into claims for the repayment of

mistaken payments to a public authority, or at

least to the Crown.

But if the relevant public and private law

principles are the same, the legal right to the

refunding of the paragraph 18(b) payments depends

upon their having been made under what, in the

light of subsequent events, was a mistake of fact

about the premiums payable upon certain policies

and - - -

MASON CJ:  Mr Merralls, is the controversy between

Professor Birks and Burrows relevant, having regard to the issue in this case? Does the controversy

have any reality as far as this case is concerned?

MR MERRALLS:  Yes, it may, Your Honour; it is not quite clear whether it would, whether there would be any

claim open in private law.

MASON CJ:	You said you supported Professor Birks, but
MR MERRALLS:	Yes, well Professor Birks is a 1688 man, as

Your Honour is possibly aware; he is a Bill of

Rights man.

MASON CJ:	I thought he was a little more modern than that.
MR MERRALLS:	Oh no. Well, he is very modern; he is a very

modern Regius professor, but his ideas about

restitution in the sphere of public law are very

much derived from events 305 years ago. He

delivered a paper at one of Professor Finn's

jamborees - - -

Revenue(2) 59 16/11/93

MASON CJ: Yes, I am aware of that, but I am only interested

to know whether this dispute is at all relevant to

this case?

MR MERRALLS: Well, I do not know whether the dispute is,

but if Professor Birks' views are accepted, we say

we win, because you find that the Revenue has some

money that it should not have, but should disgorge

it, and that is what Professor Birks says.

Professor Burrows says, oh no, there may be

circumstances in which you do not; you look for extraneous matters for answers. Now, our first submission is that, for the reasons he gives in his

papers, which we refer to in our materials,

Professor Birks is right. I might say that
Professor Birks is a very modern professor; he

appears to belong to the recycling movement as

well, and he is adept at recycling his articles and

indeed, paragraphs of articles in subsequent

articles, so that he proceeds step by step, as it

was -

MASON CJ: But there is development in this recycling, is

there not?

MR MERRALLS:  Incrementally, yes, that is right. The House

of Lords decides the Woolwich case, so another

article is written and it is a revision of the

previous article which has only caught up to the

Court of Appeal. But there are basic arguments in Professor Birks' writings which are consistent and

which in the public law area depend very much upon

rights derived from the constitutional settlement

in 1688.

In paragraph 22 we assume that the relevant public and private principles are the same and we

say that the legal right to the refunding of the

paragraph 18(c) payments - that is the two payments

made under a mistake of law. The evidence, as far	in paragraph 18(c) - depends upon their having been
as there is evidence, is that that mistake was one
in which the payment was made without conscious
adversion to the relevant law. One can assume that
that is correct.

We refer, with respect, to an observation by

Your Honour Justice Brennan in the David Securities

case that those payments are no more voluntary than

payments made under a mistake of fact when the
payer does not have full knowledge of the facts

when the payment is made. There is simply no mind

brought to bear upon the matter at all. There is

no conscious decision to pay or even to take the

risk. So that in that respect, the present

payments differ from those that were made in the

Woolwich case.

Revenue(2) 60 16/11/93

TOOHEY J:  Mr Merralls, in this area of discussion, have we

moved from the "may" means "must" type of argument

to the discretionary approach?

MR MERRALLS:	Yes, Your Honour.
TOOHEY J:	And it is in that area that restitution becomes

important, is it?

MR MERRALLS:  Yes, Your Honour. As I said in opening, these

submissions are made in succession. They are a bit

like the QC's son and the broken window and it is

only if the first three or four submissions are

rejected, that you get to the later ones.

TOOHEY J:  We just seemed to move from administrative law

into another area and put the decision making

behind us, as it were.

MR MERRALLS:	Which decision, Your Honour?
TOOHEY J:	The decision not to refund.

MR MERRALLS:  We are talking about rights here. We are

saying if there is an administrative decision

involved, it is one which must be exercised upon

proper grounds. We say here the proper grounds are

dictated by legal rights. For the purposes of this

argument, legal rights are found in the general
law, or perhaps it is a combination of the general
law and the statute, but for present purposes we

are dealing with the general law. We are saying

that they would be restitutionary rights.	We would
say that for the purposes of exercising the

discretionary power, if that is what it is, the

Comptroller is bound to act as though she would be

if sued. The considerations that would affect her

decision would be those that would determine in

legal proceedings whether or not there was a right
in the overpayer to be repaid.

TOOHEY J:  Do you mean a decision to refund or not to refund

should be made according to the same principles

that would dictate whether money paid under a

mistake of the nature that occurred here is

recoverable or non-recoverable?

MR MERRELLS: Yes, Your Honour, that is the submission. It

depends upon equating the matters which the

Comptroller may take into account in deciding whether or not to repay to the legal rights and

duties in action brought by the overpayer to compel

repayment. We would say, for purposes of this

submission, that the statute of limitations would

be relevant.

BRENNAN J:  Would be - - -?

Revenue(2)	61	16/11/93
MR MERRELLS:	Would be relevant.	The statute of limitations

does not extinguish a right but it affects one's

right to enforce - the ability to enforce it.	So
here we are considering the general law right,
apart from the statute. That is what these
paragraphs are concerned with, Your Honour.

We develop that point in paragraph 23, in the cases of both paragraph 18(b) and (c) payments.

The fact that the payment was caused by a mistake

of any kind is sufficient to give rise to a prima
facie obligation on the part of the appellant to

make restitution, and for that prima facie

liability to be displaced the appellant must point

to circumstances that the law recognizes would make

an order for restitution unjust. We rely upon the

two most recent cases in this Court of mistake and

unjust enrichment.

First, the joint judgment of Your Honour the

Chief Justice, Mr Justice Wilson, Your Honour

Mr Justice Deane, Your Honour Mr Justice Toohey and

Justice Gaudron in the Westpac Banking case at page 673, at about point 7:

It is a common law action for recovery of the value of the unjust enrichment and the fact

that specific money or property received can

no longer be identified in the hands of the

recipient or traced into other specific

property that he holds does not of itself

constitute an answer in a category of

case ..... Before that prima facie liability

will be displaced, there must be circumstances

(e.g., that the payment was made for good consideration such as the discharge of an

existing debt or, arguably, that there has

been some adverse change of position by the

recipient in good faith and in reliance on the

payment) which the law recognizes would make

an order for restitution unjust.

And, in the David Securities case, in the joint

judgment of the majority at page 379, after

referring to a passage from the Westpac Banking

Corporation case and to the judgment of

Justice La Forest, in the Air Canada case, in

saying that:

the two species of mistake ..... should be

"considered as factors which can make an

enrichment at the plaintiff's expense 'unjust'

or 'unjustified'".

The passage proceeds:

Revenue(2) 62 16/11/93

The respondent's submission that the appellants must independently prove

"unjustness" over and above the mistake cannot

therefore be sustained. The fact that the

payment has been caused by a mistake is

sufficient to give rise to a prima facie

obligation on the part of the respondent to

make restitution. Before that prima facie

liability is displaced, the respondent must

point to circumstances which the law

recognizes would make an order for restitution

unjust. There can be no restitution in such

circumstances because the law will not provide
for recovery except when the enrichment is

unjust. It follows that the recipient of a

payment, which is sought to be recovered on

the ground of unjust enrichment, is entitled
to raise by way of answer any matter or

circumstance which shows that his or her

receipt (or retention) of the payment is not

unjust.

I emphasize there that the passage refers to

the receipt or retention of the payment not being

unjust, not the repayment would be unjust. You

proceed by finding that the payment has been made

under a mistake, so there is a prima facie right to

recovery. Then the payee must establish an

affirmative ground for resisting repayment on the

ground that the receipt or retention is not unjust.

In the Tower Hamlets case Lord Bridge at

pages 876 to 877 appears to have thought that there

would be few, if any, cases in which a revenue

authority could raise such a ground.	He says it
appears:

from these authorities that the retention of

moneys known to have been paid under a mistake

at law, although it is a course permitted to

courts as a "high-minded thing" to do, but an ordinary litigant, is not regarded by the	rather as a "shabby thing" or a "dirty trick"
and hence is a course which the court will not
allow one of its own officers, such as a
trustee in bankruptcy, to take.

He refers to the Blackpool case and says, after referring to the Court of Appeal's reasoning:

I in no way dissent from this reasoning,

but I should myself have been content to
derive the same conclusion from the broader
consideration that Parliament must have

intended rating authorities to act in the same

high principled way expected by the court of

its own officers and not to retain rates paid

Revenue(2) 63 16/11/93

under a mistake of law, or ..... upon an
erroneous valuation, unless there were, as

Parliament must have contemplated there might

be in some cases, special circumstances in

which a particular overpayment was made such

as to justify retention of the whole or part

of the amount overpaid.

In paragraph 24, we submit that there are not

any special rules of public law that may preclude

the ordering of restitution on the ground that it

would be unjust and then we go further and refer to

the controversy between Professor Birks and

Mr Burrows, to which can be added a reference to

Professor Birks' paper in the Lloyds' Maritime and

Commercial Law Quarterly of November 1991, entitled

the English Recognition of Unjust Enrichment,

page 473 at pages 500 to 501.

Now, the only justification that has been

raised in these proceedings - and I emphasize in

these proceedings and not by the Comptroller

herself - is passing on. In paragraph 25 we

advance reasons for the rejection of that argument.

The first depends upon the identity of the person

who is under the legal obligation to pay; the

insurer is not made an agent of an insured, as is a
commercial party in some taxing Acts, to collect

duty or a tax from the person upon whom a legal

liability is imposed, so it, the insurer, is liable

to make the payment and legal liability falls and

can fall, only on it.

Hence, as between the insurer and the Revenue, any enrichment is at the expense of the insurer,

and we contend that the injustice of the retention

of an amount, that which the Revenue is enriched,

likewise should be determined between the Revenue and the insurers, and the existence and extent of

third party rights, if any, can be determined in

proceedings for unjust enrichment between other	appropriate proceedings, which would probably be	persons, betweens the third parties and the person
at whose expense the original unjust enrichment
occurred. This is a point that was raised this
morning by Your Honour Justice Brennan.

In addition to that, when one considers the

particular ground of so-called passing on, we say

that there are complex issues involved. It is not

simply a matter of adding (b), a tax, to (a), a

premium, to determine the economic effect of the

taxing of a transaction or document or species of

goods.	I should say "price" not "premium'', in that
case.

Revenue(2) 64 16/11/93

To pass on a loss does not necessarily mean

that the loss is recouped, and we refer to a case

in the European Court in which these matters were

considered in what might be called a constitutional

context, that is the context of the consistency of

domestic laws with European laws, and the question
was whether, in the case of Amministrazione delle

Finanze Della Stato v San Giorgio S.A., the

question in that case was whether an Italian law

which prevented the reimbursement of certain taxes

and charges was consistent with community law.

We refer to that case not for its decision,

which of course is leagues from the present case,

but for the ·examination of ideas by the Advocate

General, Mancini, in an opinion prepared for the

court. We refer, in particular, to passages on

pages 672 to 675. Beginning at the top of the

page:

According to the plaintiff company, those

rules nullify the right to repayment for

reasons deriving from the very nature of the
passing on of the charge: in the great
majority of cases it is impossible for either

the person who paid the charge or the revenue

authority to demonstrate that the financial

loss indisputably suffered in every case by

the person paying the unduly levied charge is

offset by the incorporation of that charge in

the price of the goods in question. Why is it

impossible? Because, says the plaintiff, the

price is subject to innumerable market forces

which can be identified only in very

approximate terms. It is not therefore

permissible to take only one of the factors,

in isolation from the others, and treat it as

the sole cause of a specific portion of the

price. It is never - or almost never -

permissible to state that a given portion of

the price is due solely to the payment of a

charge of the same amount. In those

circumstances, to impose upon the person who

paid the charge the burden of proving that it

has not been passed on and to make the

repayment of unduly paid charges conditional

upon such proof is tantamount to repudiating

the right to repayment.

This criticism is largely well founded.

In the opinion which I delivered -

in the Pauls Agriculture case -

I made a similar criticism, albeit with regard

to the non-contractual liability of the

Community. There I stated: 'When

Revenue(2) 65 16/11/93

undertakings fix prices they do not ... take

into account only their own costs and the

profits which they desire; their behaviour is

determined by the conditions on the market.

if the market situation enables the price to

be set at a certain level without affecting

the volume of sales, the undertaking will fix

upon that level and not on other ... ' The

Commission now takes the same view. At the

hearing, the Commission's representative

stated:  'The passing on of a charge ... is an

economic fact dependent upon numerous

variables ... In order to be certain that

charges were passed on, supply would have to

be elastic and demand would have to be ...

rigid, but -

BRENNAN J: But this deals with the sale of goods. In your

case, I imagine if there was anything, there would

be an account rendered for the premium and so much

per cent for the - - -

MR MERRALLS:	It might occur in that way, Your Honour, but the insured in this case were large commercial
insurers; they are large enterprises. My
instructions are that the premiums are negotiated
in many of the cases.

BRENNAN J: That might be so too but, in this case, if there

is any question of the quantum of the amount that

went into the unjustified charge, the likelihood, I
would have thought, is that it showed on the

premium account.

MR MERRALLS:  It might show on the premium account, but that

would not - - -

BRENNAN J: We do not know. There is no evidence of that.

MR MERRALLS: There is no evidence either but, even if it

did, Your Honour, we would say that you still do
not know.	You would have to go a step further and

discover whether part of it had in fact been

absorbed in the premium.

BRENNAN J:  We are not only leaving the absence of evidence;

we are now entering the realm of absolute

speculation, are we not?

MR MERRALLS:  We are indeed, Your Honour. I refer to these

passages to emphasize that the so-called defence of
passing on involves economic concepts, not simple

legal concepts. For that reason, it should not be

entertained - for no other reason than that,

Your Honour. I do not know that I need to read on

from these passages.

Revenue(2) 66 16/11/93

MASON CJ:  I would have thought not.

MR MERRALLS: It is much the same thing. Likewise, Les Fils

de Jules Bianco in the following volume.

Alternatively to the last submission, we say that

if passing on ever might provide grounds for a public authority to retain an overpayment, the burden should lie upon it to establish that the
payer has not suffered the apparent loss. That is
because a right to repayment for an unjustly

enriched amount depends at the first instance upon

proof of payment, that is that enrichment occurred

at the expense of the claimant. That establishes

the prima facie right. The burden of displacing

the prima facie right then passes to the person who

has been enriched, and that is a sort of answer or

defence that is mentioned in the passage I read

from the joint judgment in the David Securities

case. Even Mr Burrows appears to support that

idea, the passage at page 59 of his article

referred to in point 25(c).

The final part of this submission takes us back to the Act itself and we say that a passing on

conditional defence should not be implied where it

is not express. Parliaments have provided in

various ways for instances of the passing on of
taxes or charges wrongly paid. There are different

formulae found in a number of statutes in various

jurisdictions. We have given some examples here:

the imposition of conditions upon refunding by
allowing an absolute defence or answer to a claim
for restitution or by creating a right in a person
to whom the tax or charge was passed on to recover

it from the person initially recovering from the

Revenue authority. We say that because there are

so many ways in which this might be done by

Parliament, the court should not adopt as a legal

rule any one of them; it should not preclude

payment; it should not impose conditions and it

certainly cannot create a right.

We say that it is a matter of policy where the taxes or charges passed on, but paid to a public

authority without claim of right, should be

reimbursed to the person to whom they were passed

on and if so, by what means reimbursement should be

achieved. Section 111 imposes no condition,

confers no right and no condition was imposed or

right was conferred by the 1987 amendment, and we

compare the 1987 amendment with the subsequent

amendments that were made by Act No 76 of 1992,

which inserted a new section 32A and extensively

amended section 111. Those amendments are found in

the green reprints that Your Honours, I think, have

been provided with; that is reprint 11.

Revenue(2) 67 16/11/93

If the Court pleases, I intend now to pass to the Limitation of Actions Act. Here there are two questions: one is whether any right to the

refunding of a paragraph 18(a), (b) or (c) payment
is potentially subject to section 20A of the
Limitation of Actions Act and if so, whether any of
the payments was made under the authority or
purported authority of any Act within the meaning

of that section.

First we say that the right to the repayment

of paragraph 18(a) is not affected by section 20A. If section 20A were to apply to those payments the

full retrospective effect of the 1987 amendments

would be defeated, and the clear purpose of the

retrospectivity was to entitle insurers who had

paid premiums before the commencement of the 1987

amendment to the repayment of amounts affected by

the amendment which had been paid as duty after

30 June 1985. Hence, in our submission, the

respective amendment operated to modify the

operation of section 20A(l) in relation to payments

of duty that were properly made at the time but

were subsequently deemed not to have been payable,

and not to read section 20A as being modified

pro tanto by the amendment would deny the

retrospective aspect of the amendment its full

effect. We rely upon the reasons of His Honour

Mr Justice Hedigan for rejecting an argument that

section 20A applied to those payments, at pages 161

to 163.

My learned friend, as I understood it,

attempted to avoid this by saying, "Well, there may

be reasons for not making the repayment, there may

be a right of set off," or something like that. If

Your Honours will excuse me, I will check my note

of what he said. Yes, underpayment in a subsequent

month and late returns, they were the things.

In our submission, each obligation should be

treated separately, for the purposes of these

provisions, and one would assume that if Parliament

had intended payments not to be fully repaid it

would have said so.

The next submission deals with the payments

that were made under a mistake and we submit that mistaken payments of duty which, at the time, the

Act neither imposed nor purported to impose are not

within section 20; they are not within the language

of section 20, and we rely upon the judgment of

Mr Justice Hedigan, at page 164 in support of that

submission.

Then we get to the extraneous materials point,

and we raise the argument that was put to my

Revenue(2) 68 16/11/93

learned friend by Your Honour the Chief Justice and

other Justices this morning, and that is that his

argument that recourse to Hansard was not permitted

seems to import into the Interpretation of

Legislation Act conditions or qualifications upon the ability of a court to have regard to extraneous

materials, to the specified extraneous materials,

that are simply not found in the section. My

learned friend rightly said that Victoria was

rather late in adopting extraneous materials

provisions and it can be assumed that it did so

with knowledge of the restrictions, conditions and

qualifications that are found in other statutes.

It chose not to adopt them.

So we can say that it is permissible to refer

to the second reading speech in aid of the

interpretation of section 20A, but when one does

that one understands the phrase "authority or

purported authority". It may be a clumsy

expression but it is clear with the knowledge

provided by the debate that the section was

intended to protect the State against claims in

consequence of cases like the Dennis Hotels case,

had it been decided the other way, and the

transport cases in the 1950s that the phrase

"authority or purported authority" was used. One

can imagine the draftsman seeking a phrase that

would adequately describe a payment which was

apparently lawful when made, but which was found to

be unlawful by a declaration of the invalidity of

the taxing or charging Act.

BRENNAN J:  It is one thing to say that the words "authority

or purported authority", or one or other of them,
extends to that case. It is another thing to say

that those words do not extend to this case.

MR MERRALLS:  Yes, it is one thing to say that and it is

another thing to say the other, Your Honour, but

what we say here is that you have an odd phrase,	you seek its meaning and, in particular, the
meaning of the words "purported authority"; put
authority on one side.

BRENNAN J:  Put authority on one side. The purported

authority, no doubt, would cover the case of the

purported act under which the permit is made, but

why does not authority cover this case?

MR MERRALLS:	Because the payments - excepting the category A payments, they were never chargeable;
there was no authority at all.  We deal with that
in paragraph 30 where we say that the words are not
apt in their natural meaning to apply to payments
made because the payer believed itself to be liable
to pay and purported to pay pursuant to an Act,

Revenue(2) 69 16/11/93

because they are not concerned with the payers

state of mind, but with the authority that the Act

imposed or purported to exert.

BRENNAN J: That it was a payment made to the Comptroller as

for stamp duty and the Comptroller received those

moneys and dealt with them in accordance with the

Act, one assumes.

MR MERRALLS:  Thinking them to be moneys which he had the

authority to receive but which, in fact, were

moneys which he had no authority to receive.

BRENNAN J:  Now, why do you leave authority restricted to a

liability to make the payment, as distinct from

looking to what happened when the payment is made?

MR MERRALLS:  Because he had authority only to receive

payments that were lawfully chargeable.

BRENNAN J: Is that right?

MR MERRALLS:  Yes. He is the creature of statute and he has

the legal power to accept only amounts that are

lawfully charged by the Stamps Act, by the statute.

It is a curious phrase "paid under authority",

because, as I think Your Honour mentioned at the

special leave application or it was implied in a

question that Your Honour asked then, it seems to

look on the one side and on the other side, in the

same phrase but we say, in our submission, it is

not proper to look to the state of mind of the

payer to determine whether a payment is made under

authority or purported authority. And that is

entirely consistent with the debates, with the

second reading speeches of the debate.

I come to the mandamus point and I reiterate

what I said this morning in the course of my

learned friend's address. These proceedings began

before the Comptroller had found the overpayment.

So they were concerned, initially, with getting a

finding, and that is why the statutory form of

mandamus was used. Now, perhaps the most

appropriate course would have been, after it was

learned that a decision had been made, to alter the

form of action, and perhaps begin again. That was

not done, for reasons of convenience, as I

understand it, and the proceeding continued, as it

were, for mandamus, for the second part of the duty

and power under section 111.

Now, as I understand it, the argument against the propriety of that procedure is that mandamus,

for technical reasons, does not lie against the

Comptroller in respect of the exercise of the

second power, and considerable emphasis is placed

Revenue(2) 70 16/11/93

upon the case of Nathan, 12 QBD, which is cited in

answer to the other case of the Commissioners for

Special Purposes of the Income Tax - the

commissioner whose name I could not remember this

morning is just the Lords Commissioner, and they

are the general commissioner and they have the key

to consolidated revenue.

About that we say two things: one is that the

only means of proceeding against the Crown to

recover moneys when Nathan's case and the

Commissioners for Special Purposes case were

decided, was by means of petition of right. That

is, those cases were decided before the Crown

Proceedings Act. So, procedure was important. In

the Commissioners for Special Purposes case, the

statute was rather like the old form of

section 111. If you substitute the Commissioners

for Special Purposes for the Comptroller, that is,
the first step in the process of obtaining the

power to determine whether tax had been overpaid.

repayment of overpaid tax, was made by the

They then made out a certificate or - I have

forgotten the instrument - which was sent to the

Lords Commissioners of the Treasury and they made

the repayment. Now, the mandamus was obtained

against the Commissioners for Special Purposes for the first step, it being assumed by the court that the second step would follow after the certificate

was issued, and it was objected that this was a

roundabout way of avoiding petition of right. That

argument was rejected.

Now, in the present case, the two steps are

combined in one person, so that the Comptroller

exercises the functions of both. But, in Nathan's

case it appears from the judgment of

Lord Justice Bowen that the decision holding the

mandamus was not an appropriate proceeding to order

the repayment of money, was made as much for

grounds of convenience as for high constitutional

principal. At page 478 of his judgment,

Lord Justice Bowen says, at the top of the page:

While on the one side I quite admit that it is

by no means convenient in a free country to

make an executive department masters of the

situation, it is equally inconvenient for

purposes of administration to make a jury

masters of the position. The second

difficulty is this, that the commissioners

have paid the money over to the Crown, and

they may possibly not and probably will not,

have funds in their hands applicable specially

to the claim which is now being made upon

Revenue(2) 71

them. In substance the moneys have been

paid, not to the commissioners, but to the

Crown.

He is speaking of the Special Commissioners there:

I therefore very much doubt whether under any

circumstances, a mandamus could be the right

remedy in this case;	I will not, however,
pronounce upon that right.	But at all events

a mandamus ought not to be granted if there is

any other remedy. To my mind there is a clear

remedy in a petition of right if the applicant

is entitled to any remedy at all. The money

is in the hands of the Crown, and there is an

old constitutional way by which subjects of
the Crown in this country are enabled to
obtain back out of the hands of the Crown,
either land, money or goods, upon which the

Crown has laid its hands, and that is by the proceeding known as a petition of right. If

that is the true view, then the petition of
right would be the proper remedy in this case.

But it being assumed for the purpose of argument that which is possible as a matter of

reasoning, that there may be a double resource

in consequence of the construction of the

particular statute, and that the prosecutor

might be enabled to get back his money from
the Crown by a petition of right, and also to

maintain that a duty lay upon the

commissioners to pay back the money to him, a
duty imposed directly upon them by statute in

addition to the general remedy that he might

have against the Crown - ought a mandamus, in such a case to go? What is the origin of the

right that any man has to ask the Court for a

writ of mandamus? A writ of mandamus, as

everybody knows, is a high prerogative writ,

invented for the purpose of supply defects of

justice. By Magna Charta the Crown is bound

neither to deny justice to anybody, nor to

delay anybody in obtaining justice. If,
therefore, there is no other means of
obtaining justice, the writ of mandamus is

granted to enable justice to be done. The

proceeding, however, by mandamus, is most
cumbrous and most expensive; and from time
immemorial accordingly the Courts have never

granted a writ of mandamus when there was
another more convenient, or feasible remedy
within the reach of the subject. It was not

to his interest that it should be granted, and

the reason for asking for it had ceased. A

petition of right when the Crown is willing to

grant its fiat is as good a means of getting

justice against the Crown as any that could be

Revenue(2) 72

conceived. All the procedure, or almost all

the procedure can be applied to a proceeding

by way of a petition of right that is

available to the subject of an ordinary action

against another subject; and there is no

distinction at all in the case of a debt

claimed against the Crown, so far as facility procedure is concerned, between a petition of

right and an ordinary action by one subject

against another, except his, that the fiat of
the Crown must be obtained before the Crown is

harassed by a suit; but everybody knows that

that fiat is granted as a matter, I will not

say, of right, but as a matter of invariable

grace by the Crown whenever there is a shadow

of claim, nay, more, it is the constitutional

duty of the Attorney-General not to advise a

refusal of the fiat unless the claim is

frivolous. Therefore, in this particular

instance, where there is a bona fide case to
be tried, there was not a shadow of reason for

pretending from the first that there was the

least danger that the fiat would not be

granted.

Then at the foot of the page -

and before us the Attorney-General said in the

clearest and most emphatic way, not merely

that the fiat for a petition of right should

be granted, but that he would do more than

that, do what he was not bound to do, viz,

offer the most favourable terms to the

suppliant in this case, terms which would not

only disengage the litigation between the

prosecutor and the Crown from the long and

cumbrous proceeding of mandamus, and

substitute the more modern and compendious

procedure under the Petitions of Right Act,

1860.

So it appears that that case was based

substantially upon matters of convenience. Here,

we say, the worm has turned. The convenient course in these proceedings was to continue as they began,

and nobody is in any way embarrassed or

disadvantaged by what was done.	If the Court
pleases.

MASON CJ: Thank you, Mr Merralls. Yes, Mr Solicitor.

MR GRAHAM:  May it please the Court, just a very few points

in reply. What I did not do in the course of my

submissions about mandamus was to draw specific

attention to what Sir William Brett said in

re Nathan at page 475. It would seem that there

was perhaps a difference of opinion between

Revenue(2) 73 16/11/93

Lord Justice Bowen and Sir William Brett, as he

then was, in that case as to the precise reason why

the proceedings were dismissed, and it is at

page 475 that Sir William Brett appears to indicate

that the appropriate remedy in that case was that

by way of petition of right and he would not decide

whether mandamus was available at all.

If I can go back to the other two branches of the case, my learned friend at paragraph 11 of his

outline puts his case in what we had understood to

be the principal way in which it had been put
throughout, namely, that once there is a finding of

overpayment there is a legal right which arises

and, in response to Your Honour Justice Brennan, my

learned friend said that that was a right to a

refund, not a right to have a discretionary power

exercised according to law but a right to a refund.

we say that is simply contrary to the proper

construction of the section and, for all the

reasons we gave the Court this morning, that

proposition should be rejected. The proposition

does not take account of the various possibilities

which we canvassed this morning as to when the

Commissioner might properly exercise a discretion

not to make a refund having regard to circumstances

such as were mentioned this morning.

In paragraph 13 my learned friend, as an

alternative submission as we would perceive it,

puts his case in a way which we would accept:

If section 111 does confer a power not to

refund overpaid duty, it is not an absolute

discretionary power but one which must be

exercised upon proper grounds.

It is that point where we reach common ground but, of course, the point of departure between us has

been made evident in the course of the submissions.

My learned friend then moved on, when he got

to paragraph 20, to introduce in a somewhat oblique

way what he described as "private law principles",

but he says in paragraph 20:

But it is submitted that they

that is the private law principles -

rest upon the absence of any legitimate basis

for the money to be retained by the revenue.

And we would say, because there is a duty to

exercise the power to make a refund according to

law. So, having moved into the field of private

Revenue(2) 74 16/11/93

law principles, my learned friend seems to move

back to reliance upon a statutory power and

administrative law principles.

He returns however, in paragraphs 22 and 23,

to those principles, when he indicates that perhaps
the public law or administrative law principles and

private law principles are the same. Now, if that

is correct, and we do not accept that it is

correct, but if it is correct then, the way in
which the majority of this Court expressed itself

in David Securities, in our submission, provides a

sufficient answer to the claim as it is presently

put. In David Securities at pages 378 to 379, the

majority referred firstly to Mr Justice Deane's

judgment in Pavey & Matthews and secondly, to

Mr Justice La Forest's judgment in Air Canada, and

if I can just draw the Court's attention to a

sentence quoted from each of those judgments,

Mr Justice Deane said, starting two lines from the

bottom of page 378:

That is not to deny the importance of the

concept of unjust enrichment in the law of
this country. It constitutes a unifying legal

concept which explains why the law recognizes,

in a variety of distinct categories of case,

an obligation on the part of a defendant to

make fair and just restitution for a benefit

derived at the expense of a plaintiff and

which assists in the determination, by the

ordinary processes of legal reasoning, of the
question whether the law should, in justice,

recognize such an obligation in a new or

developing category of case.

Half-way down page 379, in quoting from the

judgment of Mr Justice La Forest, it was said:

the two species of mistake (ie, fact and law)

should be "considered as factors which can

make an enrichment at the plaintiff's expense

'unjust' or 'unjustified'.

Now, each of those passages refers to an enrichment that has occurred at the plaintiff's expense. If

either directly or by analogy resort is to be had

to the private law principles, then we would simply

say, this is not a case in which there has been a
benefit or an enrichment derived at the expense of

the plaintiff, for the reasons that we have

canvassed this morning, because of the fact that

recoupment has taken place.

The problem about that submission, I suppose,

is the form of the proceedings. We do not have a

claim for money had and received and a defence

Revenue(2) 75 16/11/93

raising matters which would make it, according to the Commissioner, not unjust for the repayment to

be retained. The form of the proceedings was

adopted by the plaintiff and it has caused

attention to be focussed upon the propriety of the

exercise by the Commissioner of what we say was her

undoubted discretion to make or to withhold a

refund.

So, in our submission, the position is, in the present proceedings, that it is for the claimant to

adopt something Your Honour Justice McHugh said, to

demonstrate, by a process of exclusion, that there

was no adequate ground upon which the discretion

could not have been exercised in the claimant's

favour. It is not a case of the onus, as it were, being upon the claimant as it would be in the David

Securities situation.

Just one point concerning my learned friend's

passing-on arguments, paragraph 25 and following.

My learned friend sought to distinguish the cases

where the Revenue is not bound to recoup an

overpayment where the claimant cannot show that the

expense has been passed on by the claimant to a

third party. It is perhaps worth observing that in

all of the sales tax cases, of course the cost of

the sales tax is normally passed on by the taxpayer

to the ultimate purchaser. Of course, there are

cases when it does not happen, as my learned

friend's examples indicate. But, in our

submission, to say that the insured is never under

a legal liability to pay, provides a reason for

rejecting the passing-on argument, overlooks the
circumstances of the sales tax windfall provisions.

If I can just make two comments in relation to the section 20A arguments of my learned friend.

Firstly, I should indicate that in the course of

our submissions this morning, I should have

directed specific attention to one passage in the

second reading speech of Mr Rylah at page 184 of

the extracts from Hansard. That is to be found, I

think I indicated, under tab E.

In the left-hand column at about point 7

Mr Rylah, in describing the purpose of subsection (2) of the new section, in our

submission indicated an awareness of the fact that

subsection (2) was dealing with circumstances that

lay outside the area of taxes held to be invalid on

constitutional grounds, and indeed adverted to

probate duty, land tax and stamp duty as imposts

which were imposed under statutory provisions which

had their own recovery and challenge provisions.

Revenue(2) 76 16/11/93

So in my submission, it is not really correct

to say that Parliament never turned its mind to

cases of imposts that were invalid on grounds other
than constitutional grounds. It is, in our

submission, apparent that Parliament's attention

was drawn to the scope of subsection (2) and

accordingly, in our submission, it cannot be said

that Parliament's attention was confined in

enacting the section to cases of constitutionally

invalid imposts.

Finally, if the Court pleases, on the question my learned friend raises in paragraph 30, the words "under the authority or purported authority of any

Act", what we would say is that upon their proper

construction, those words not only include

"purported authority" as would be the case of an

Act constitutionally invalid which imposed a tax or

purported to impose it, but also under "assumed

authority of an Act", assumed by the payer or the

payee or both. That would, in our submission, be

an appropriate way of construing the words

"authority or purported authority"; they would

embrace such a case as that. Those are the

submissions we desire to meet in reply, if the

Court pleases.

MASON CJ:  Thank you, Mr Solicitor. Mr Merralls.

MR MERRALLS:  Your Honour, I wonder if I might say two

sentences about the passage from Mr Rylah's speech

that my learned friend should have mentioned in his

opening.

MASON CJ: Yes.

MR MERRALLS: In our submission, section 20(2) does not

control the meaning of subsection (1) because it is
quite clearly an exception to it. The fact that

there are many statutes which have special

provisions for the recovery of amounts overpaid

does not indicate that subsection (2) was to apply

to all those sections. It is only an exception,

after all, from subsection (1), so it cannot

control the meaning of subsection (1). In our

submission, Mr Rylah's remarks on page 184 quite

clearly accept that subsection (2) is intended only

to operate in respect of matters which would

otherwise fall within subsection (1).

MASON CJ:  Thank you, Mr Merralls. The Court will consider

its decision in this matter.

AT 4.05 PM THE MATTER WAS ADJOURNED SINE DIE

Revenue(2) 77 16/11/93