Commissioner of State Revenue v Royal Insurance Australia Limited

[1992] HCATrans 337

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M41 of 1992

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Applicant

and

ROYAL INSURANCE AUSTRALIA

LIMITED

Respondent

Application for special leave

to appeal

MASON CJ
BRENNAN J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 13 NOVEMBER 1992, AT 11.08 AM

Copyright in the High Court of Australia

Revenue 1 13/11/92

MR N.H.M. FORSYTH, OC: If the Court pleases, I appear with

my learned friend, DR C. HOWARD, on behalf of the

applicant. (instructed by the Solicitor to the

Commissioner of State Revenue)

MR J.D. MERRALLS, OC:  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:  Mr Merralls, we might give you the inestimable

advantage of addressing us first.

MR MERRALLS:  I am quite happy to do so, Your Honour. It is

submitted that this is not an appropriate case for

special leave to be granted and that none of the

grounds raised satisfy any of the statutory tests

for special leave.

There are two matters that I ought to

emphasize to the Court in case the Court has not
appreciated them from the written material. First of all, these payments were not voluntary payments in the sense accepted by the Court in the recent
David Securities case. There were three categories of payments as appears from Mr Justice Hedigan's judgment at pages 41 and 42 of the application

book, the first category being divided into two

subcategories.

The payments were made, as the Court probably

appreciates, in respect of workers' compensation

insurance policies, after amendments had been made

to the Stamps Act exempting such policies from

liability for stamp duty. The amendments were made

in two stages; a second amendment being made some two years after the first when it was appreciated

by the draftsman and the stamps officials that the

first set of amendments was not wide enough, so the

operation and that related to what are sometimes	second amendment was made to have retrospective
called liabilities policies where premiums were
paid on the basis of liabilities incurred within a
particular period.

MASON CJ: But why does this make it inappropriate to grant

special leave?

MR MERRALLS:  I will come to that, Your Honour. The first

category of payments - the largest amount was in
the third category, that is in respect of
liabilities policies affected by the second

amendment so that when those payments were made or when most of those payments were made there was an actual legal liability and it was only as a result

Revenue 2 13/11/92

of the retrospective amendment that the entitlement

to repayment arose.

Now, within the period between 30 June 1985

and 12 November 1987, which was the operative date

of the second amendment, the sum of $1.373 million

was paid. Now, that was paid in respect of

liabilities policies and at that time duty was

exigible. There was also a sum of some $300,000

paid in respect of liabilities policies in

ignorance of the amendment in 1987 after

13 November 1987.

Now, the second category of payments was

comparatively small. It involved some $95,000 and

it concerned adjustments of stamp duty for premiums

paid before 1 July in respect of liabilities
incurred before 1 October 1985, and it was part of

a general administrative process that had been adopted where comparatively small amounts were

refunded when the true facts were discovered, and

this was a recognized part of administration and

was not affected by the amendments.

The third category was $138,000-odd worth of

duty paid on premiums in respect of extensions

after 4 pm on 30 June 1985, with policies taken out

before then. Now, that is the second class of

policy mentioned in section 99(3) and liability for

that insurance was removed by the first amendment

in 1985. Now, those moneys were paid in ignorance

of the amendment, giving a total of roughly

$1.9 million.

The respondent's case in the supreme court was

that the Comptroller was under a duty to repay all

amounts once she was satisfied that there had been

an overpayment, section 111 of the Stamps Act

requiring her to be satisfied - - -

MASON CJ:  We are familiar with the circumstances that give

rise to the case. The problem from your point of

view is that the decision of the Full Court on

section 111 and section 20A of the Limitation of Actions Act appear, prima facie, to be arguable.

MR MERRALLS:  We say two things, Your Honour. May I deal

with the section 20A point first?

MASON CJ: Yes.

MR MERRALLS:  That really no question under 20A arises. The

first thing we say about section 20A is this: it

is a unique provision, unique to Victoria in its terms. It was enacted, as appears quite clearly

from Hansard at the time, in response to a series

of decisions under section 92 of this Court in the

Revenue 3 13/11/92

1950s and the scare that the State received in the

Dennis Hotels case; hence the expression, "Paid

under the authority or purported authority" of an

Act.

Now, we say that it applies to none of the present payments. It does not apply to the

payments that were made under - we say that it does

not limit the right to recover what I have called

the first category of payments, that is the

$1.3 million which were paid under the authority of

an Act, but we say that the second Act quite

clearly either impliedly repealed or overrode the

application of the limitations section to those

payments. If it did not, then it would be absurd

to have given a right for repayment which was
retrospective over a greater period than the

limitation period.

The other payments, we say, were not made

under the authority or purported authority of the

Act at all. They were simply made in mistake and

they do not fall, prima facie, within the words of

the section. So, no point involving section 20A

arises and it is therefore irrelevant whether

mandamus is an action brought to recover moneys or

not.

MASON CJ:	What about purported authority?
MR MERRALLS:	The Act did not purport to require the

payments to be made at all. The phrase, "under the

authority or purported authority" was adopted, in

our respectful submission, in order to cover the

case of an Act which was subsequently held to be

invalid and the draftsman clearly had a doubt as to

whether the word "authority" was good enough if the

court's declaration of invalidity really meant that

there was not any authority at all ..... the Act

purported to have effect.

BRENNAN J: But this is paid under a purported authority.

Did the Commissioner have purported authority to

receive these payments?

MR MERRALLS:  No. I do not know what the concept would mean

but he was not authorized by anybody to receive the

payments.	Your Honour is talking about the
payments other than the $1.3 million.	He certainly

had authority to receive the $1.3 million. They

stand in a different category.

BRENNAN J: Well now, if the Commissioner did not have

authority to receive the payments, does the

Commissioner have authority to refund?

MR MERRALLS:  Did he have authority? Yes, because - - -

Revenue 4 13/11/92

BRENNAN J:  How does he get authority to refund without having had authority to receive?

MR MERRALLS:  Because they were overpaid. They were paid

under a mistake of circumstances and although he

has paid them into the consolidated fund he had no

authority to do so.

BRENNAN J: In exercising the power to refund, is there no

power to consider whether 20A expresses a

legislative policy which administratively can be

taken into account in determining whether or not to

refund under 111?

MR MERRALLS: It might, Your Honour. In respect of the

first category, perhaps, although one would need to
know the terms of the Act which made the authority

no authority. Here you have different periods. In respect of purported authority, no, if there was no authority at all, there is no purported authority.

He simply had no authority to receive the moneys.

So, you never get to the words of the statute in

the case of the payments that were made under a

mistake. It is almost a contradiction of the

terms; certainly of ideas, to regard moneys paid

under a mistake as being paid under the purported

authority of anything.

Now, as to section 111, we say that there is

no question of public importance involving the
interpretation of section 111 because of the
general application of that section as contended

for by paragraph 4(a)(b) of the affidavit.

We have taken the liberty of preparing a

schedule showing the sections that are relied upon,

sections of other statutes that are relied upon as

being in common form and it shows that they are not

at all, there are very significant differences

involving discretions, special limitations, leave

to be satisfied of various other things, so that

the only sections that are in common form are those

of the Victorian Acts themselves of which the

Stamps Act section is an example.

What has happened in Victoria is that the present section 111 was brought into Victorian law

when Victoria was given pay-roll tax in 1972. The

Commonwealth Pay-roll Tax Act contained a section

in that form. It was adopted by the Pay-roll Tax

Act in Victoria and over a period of years it has

been used as a model or precedent for repayment
provisions in various Victorian revenue statutes

and over a period of years, as the Acts came to be
amended, it has been adopted, as it were, as

a - - -

Revenue	13/11/92
MASON CJ:	But is it not true to say that in other Acts, in

New South Wales, South Australia and, for that

matter, the ACT, there is a discretionary power

conferred upon a commissioner to repay where

certain circumstances are found to exist or where

he is satisfied of certain circumstances.

MR MERRALLS:  In those jurisdictions - well, the sections

vary, but they are very different. To give

Your Honour the example of the ACT - - -

MASON CJ:	The top of page 3.
MR MERRALLS:	This is the Rates and Land Tax Act, if I can give Your Honours an example of that:

Where the Minister is satisfied that it is

just and equitable that any rates or land tax

or a portion of any rates or land tax payable
or paid in respect of any land should be

remitted or refunded -

that quite clearly gives the Commissioner a wide

discretionary power and, in terms, it does.

Here, the authorities merely require to be

satisfied of a particular fact; the fact of

overpayment. The Comptroller was satisfied of that

in the present case.

BRENNAN J: It is the same as the Pay-roll Tax Act in

Queensland, is it? The top of page 4.

MR MERRALLS: Probably, Your Honour.

BRENNAN J:  And the Stamp Duties Act of Tasmania, and the

Pay-roll Tax Act of Tasmania?

MR MERRALLS:  Yes. Well, of course, it is not surprising to

find these provisions in Pay-roll Tax Acts because

the Commonwealth Pay-roll Tax Act was the source of

the form almost precisely.

BRENNAN J: So, there is a fairly widespread use of the

statutory formula of where they are satisfied of an

overpayment he may refund?

MR MERRALLS: Well, it is not very wide. It is in Victoria

and it is in some Pay-roll Tax Acts - not all.	The
Tasmanian Pay-roll Tax Act has an inbuilt
limitation period.	Some statutes give the

Commissioner a discretionary power to remit or

refund part of the amount. So, there is quite

clearly a discretionary element in the power even

though he may have found that a larger amount was

overpaid.

Revenue 6 13/11/92

Some sections refer to the grounds of

overpayment; some sections add conditions to the

right of overpayment that the overpaid amounts be

applied in particular ways. So, there are many,

many formulas; they are not mere formulae; they are
many sets of provisions which differ substantively

from the Victorian section 111.

BRENNAN J: But your argument is, I take it, that although the words are expressed in discretionary terms in the statute, that there are no factors which might

legitimately be taken into account which could

justify a refusal to refund?

MR MERRALLS:  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 and so

forth. There is a history of provisions of this

kind. In old provisions there were two steps

involved: one was the satisfaction about the

overpayment; the other was the issuing of a
certificate or the making of some sort of formal

application to the Treasurer or whoever it may be

who had authority to unlock the doors of the

consolidated fund.

Now, the Victorian Act now has a standing appropriation for amounts to be repaid and an

enabling provision which enables the officer

himself to make the repayment, otherwise he would

not have the power to do that because of

King Charles' head, I suppose, because he would have no authority to disburse moneys that had been

lodged in the consolidated fund, even though

wrongly received.

BRENNAN J: What is the source of your right to recover the

money?

MR MERRALLS: That is found in the general law. There are

two elements involved: one is the satisfaction,

the finding that it has been overpaid; the

second - - -

BRENNAN J: But that only activates the key to the Treasury,

in your argument.

MR MERRALLS:  Yes. Well, there would have to be an

entitlement that the law confers and that would

depend upon - perhaps until David's case, it might

have depended upon the circumstances in which the

error was made.

BRENNAN J:	Then to put it that way means that your cause of action is to recover the fund but you can get
Revenue	13/11/92

satisfaction from the Comptroller rather than from

the Treasury, and that involves you with

section 20A.

MR MERRALLS:  It does not, Your Honour, because it was not

an amount that was paid under the - I am talking

about the second class of amounts - purported

authority or purported authority of the Act.	It
simply was not. It is paid under mistake.

MASON CJ:  But I did not understand that you had presented the case that way in the courts below. I thought

in the courts below your case was treated as an

application for mandamus or an application in the

nature of mandamus to compel the Commissioner to

perform a duty.

MR MERRALLS:  Yes. There is an explanation for that,

Your Honour. At the time the proceedings commenced we did not know that the Comptroller had made a

decision under section 111. In fact, she had seven

days, I think it was, before the proceedings

commenced. So, the proceedings had two limbs:

they required her to be satisfied as her officers

had been satisfied that there had been an

overpayment and we needed mandamus to compel her to

perform her duty there.

Mandamus was extended to requiring her to make

the repayment. Now, before the hearing it was

discovered that she had made a decision and was
satisfied that there had been a repayment, so the

first part of our relief was no longer required.

Now, the proceedings continued as originally

formed.

Now, the point I make is that if there is any

doubt as to whether mandamus is a p~oceeding for

the recovery of funds within the opening words of

section 20A, it does not matter in these

proceedings because section 20A does not otherwise

apply and if we proceeded by the wrong route to

obtain recovery of the funds, that is, if we would

have been better advised or, rather, if we would

have set out by a different route had we known that

the Comptroller had made her decision, then it

really would be to elevate form over substance for

this Court to take the matter and to, in effect,

hold that we ought to commence our proceedings

again simply to get to the same - - -

BRENNAN J: But is it not right to say that your case

hitherto has been a case where, if the Commissioner

does her duty, you receive the money?

MR MERRALLS:  Yes .

Revenue 8 13/11/92

BRENNAN J: Performs her statutory duty, you receive the

money.

MR MERRALLS:	Yes.
BRENNAN J:	Was it not your case hitherto that the source of

your right to receive was section 111?

MR MERRALLS:  It was presented in a slightly different way

in the Full Court from the way it was presented

before Mr Justice Beach. Before Mr Justice Beach

the case sort of resolved itself into an argument

about "may" and "shall", as to whether the word

"may" in section 111 should be regarded as

imperative. Before the Full Court, the argument

was slightly different. It emphasized the enabling

aspect of the word "may" in conjunction with the
standing appropriation in the Stamps Act as

enabling the Comptroller to make the payment - to

withdraw moneys from the consolidated fund herself.

That was how the case was presented. So, it was

not on the, what I might call, narrow finance

facilities ground that the case was argued in the

Full Court.	Does that answer Your Honour's
question?

BRENNAN J:  Yes. The answer really leave it that the source

of your right to receive was not really debated in

the Full Court.

MR MERRALLS:  The source? Well, I think that is probably

right, Your Honour, yes. There certainly was no

argument as to whether the moneys had been paid
under a mistake of fact or a mistake of law, our

contention being that once there was a satisfaction that the moneys had been overpaid then any argument

that may have been raised on that score was

irrelevant.

MASON CJ:	You are giving us advance notice that if we grant special leave to appeal, you are going to justify
the decision on a ground not argued at first
instance or before the Court of Appeal decision.
MR MERRALLS:	We would not be seeking to justify the right

on any ground that was not argued before the

Full Court.

MASON CJ: But I thought you were saying that basically you

are entitled to recover these moneys on general

principles of restitution?

MR MERRALLS:  Your Honour is now adverting to my reference

to David's case?

MASON CJ: Yes.

Revenue 9 13/11/92

MR MERRALLS: Well, I say that if ever there were a question

of the character of the mistake, that had
disappeared. That question was not debated before

the Full Court, but that does not - - -

MASON CJ: But it is more than your reference to David's

case. As I understood you, you were saying that

section 111 confers authority on the Comptroller to

return the moneys, once he is satisfied that there

was an overpayment, and you linked that to the

general principles of restitution.

MR MERRALLS:	We say it is implicit in the statute in the reference to the finding that there had been an
overpayment, and we do say it would only be where
the general law denied the person a right to
receive moneys that it would be denied. But that
was mentioned before the Full Court.
MASON CJ:	It seems at this stage we are seized of the various ways in which you seek to justify the decision of the Court of Appeal Division.
MR MERRALLS:	I hope you are, Your Honour.
MASON CJ:	We have done our best, Mr Merralls.

MR MERRALLS: That makes five of us, Your Honour. For those

reasons, Your Honours, we say there is no question

of public importance involved in the case;

certainly no question of public importance involved

in the particular facts of the case, and special

leave ought therefore to be refused.

MASON CJ: Thank you. 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?

MR FORSYTH:  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 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.

MASON CJ:  What about the relationship between availability

of mandamus and section 111, having regard to the

way in which Mr Merralls approached section 111, or

one of the ways in which he approached it?

Revenue 10 13/11/92

MR FORSYTH:  One of the ways: well, the provision about

appropriation from the consolidated fund which my

learned friend referred in answer to

Mr Justice Brennan is of relevance to this

because -

MASON CJ: Now, we need not trouble you further. There will

be a grant of special leave in this case,

Mr Forsyth.

MR FORSYTH:  I am indebted to Your Honours. I always knew

that appearing for the Revenue would be much

easier.

AT 11.44 AM THE MATTER WAS ADJOURNED SINE DIE

Revenue 11 13/11/92