Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd

[1994] HCA 61

HIGH COURT OF AUSTRALIA

COMMISSIONER OF STATE REVENUE (VICTORIA) v ROYAL INSURANCE AUSTRALIA LIMITED

(1994) 182 CLR 51

7 December 1994

Stamp Duty (Vict.)—Insurance premiums—Overpayment of duty Recovery—Provision empowering Commissioner to refund where he finds that duty overpaid—Whether duty to refund where finding made—Stamps Act 1958 (Vict.), ss. 111(1), 166D. Restitution—Stamp duty—Overpayment—Recovery—Unjust enrichment—Passing on—Whether defence—Stamps Act 1958 (Vict.), ss. 111(1), 166D. Limitation of Actions (Vict.)—Action to recover tax paid under authority or purported authority of Act—Overpayment of stamp duty—Stamps Act 1958 (Vict.), ss. 111(1), 166D.

Headnote

Section 111(1) of the Stamps Act 1958 (Vict.) provided: "Where the Comptroller finds in any case that duty has been over-paid ... he may refund to the company, person or firm or firms which or who paid the duty the amount of duty found to be overpaid."


Section 20A of the Limitation of Actions Act 1958 (Vict.) provided: "No action shall be brought to recover, from the Crown or the State of Victoria or any Minister of the Crown, or from any corporation officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount of any tax, fee, charge or other impost paid under the authority or purported authority of any Act, after the expiration of twelve months after the date of payment."


An insurance company paid to the Comptroller of Stamps amounts which it believed to be due under the Stamps Act 1958 (Vict.) as duty on premiums received in respect of workers' compensation policies issued by it. Between 1985 and 1989 the company paid nearly $2 million more than it was liable to pay in ignorance of certain amendments of the Act. An amendment made in 1985 exempted from duty premiums paid for "wages" policies issued after 30 June 1985. An amendment made in 1987 exempted premiums on "cost plus" policies issued after 30 June 1985. The 1987 amendment commenced on 12 November 1987 but was deemed to have come into operation on 30 June 1985. The overpayments consisted of an amount in respect of premiums on wages policies received for extensions after 30 June 1985 ("post-1985 wages payments"), an amount in respect of premiums on cost plus policies received before 12 November 1987 ("pre-1987 cost plus payments"), an amount in respect of premiums on cost plus policies received after 12 November 1987 ("post-1987 cost plus payments"), and an amount in respect of over-estimates of premiums on cost plus policies received before 1 July 1985 ("overestimated payments"). Pursuant to s. 111(1) of the Act the Comptroller made a finding that duty had been overpaid but decided not to make a refund. The company brought proceedings to recover the overpayments more than twelve months after they were made.


Held, (1) that the Comptroller was obliged to refund the amounts overpaid, by Brennan, Toohey and McHugh JJ. on the ground that it was unjust for the Comptroller to retain the post-1985 wages payments and the post-1987 cost plus payments which were accordingly recoverable under the general law of restitution-, that the overestimated payments were made on the understanding that the amount would be adjusted when the quantum of the premiums became known, so that the Comptroller was bound to refund the amount of the overpayment when ascertained; and that the retrospective effect of the 1987 amendment created a right to a refund of the pre-1987 cost plus payments; by Mason CJ on the ground that it was unjust for the Comptroller to retain them, and they were accordingly recoverable under the general law of restitution; and by Dawson J. on the ground that the word "may" in s. 111(1) merely conferred authority on the Comptroller to refund. When the condition for the exercise of that authority, the finding of overpayment, arose, s. 111(1) created a duty to refund.


Per Mason CJ, Brennan, Toohey and McHugh JJ., Dawson J. contra. Section 111(1) of the Stamps Act conferred a discretionary power on the Comptroller to refund money overpaid, but created no duty to make a refund.


Per Brennan, Toohey and McHugh JJ. The Comptroller had no residual discretion to refrain from making a refund under s. 111(1) once a finding of overpayment had been made and there was a legal liability to refund.


Julius v. Lord Bishop of Oxford (1880), 5 App Cas 214, applied.


Per Mason CJ The discretion under s. 111 was to be exercised in accordance with the principles of the law of restitution.



(2) That if the company had passed on to its policy holders the burden of the payments made to the Comptroller that fact would not have provided a defence to the claim for recovery.



(3) That s.20A of the Limitation of Actions Act was not a bar to the claim, by Brennan, Toohey and McHugh JJ. on the ground that the post-1985 wages payments, the post-1987 cost plus payments and the overestimated payments were not made under a provision of the Stamps Act which imposed or purported to impose a duty to pay the amount paid and that, although an action to recover the pre-1987 cost plus payments answered the description of an action falling within s. 20A, the retrospective operation of the 1987 amendment excluded s. 20A; and by Mason CT and Dawson J. on the ground that none of the payments was made under the authority or purported authority of the Stamps Act.


Decision of the Supreme Court of Victoria (Appeal Division): Royal Insurance Australia Ltd. v. Comptroller of Stamps (Vict.) (1992), 23 ATR 528; 92 ATC 4,399, affirmed.

Hearing

1993, November 16; 1994, December 7
#DATE 7:12:1994


APPEAL from the Supreme Court of Victoria

Royal Insurance Australia Ltd. ("Royal") issued policies of insurance against liability for workers' compensation, and remitted to the Comptroller of Stamps amounts which Royal believed were due under the Stamps Act 1958 (Vict.) ("the Act") as duty on premiums received in respect of those policies. Between 1 July 1985 and 21 August 1989 Royal paid to the Comptroller $1,907,908.10 more than the amount it was ultimately liable to pay. Royal was unaware of amendments made to the Act by the Accident Compensation Act 1985 (Vict.). The overpayments were made in respect of premiums paid on two classes of policy - "wages" policies and "cost plus" policies. The 1985 Act exempted from charge premiums paid for wages policies where the period of risk commenced after 30 June 1985. The Taxation Acts Amendment Act 1987 (Vict.) exempted from charge premiums on cost plus policies received after 30 June 1985 in respect of liabilities incurred before 1 October 1985. The 1987 amendment was deemed to have come into operation on 30 June 1985. The overpayment was made up as follows: $138,179.21 in respect of premiums on wages policies received for extensions after 30 June 1985 ("post-1985 wages payments"), $1,674,301.94 in respect of premiums on cost plus policies received after 30 June 1985 of which $1,373,938.11 was paid in respect of premiums received before the 1987 amendment commenced ("pre-1987 cost plus payments") and $300,363.83 was paid in respect of premiums received after the 1987 amendment commenced ("post-1987 cost plus payments"), and $95,426.95 in respect of over-estimates of premiums on cost plus policies received before 1 July 1985 in respect of liabilities incurred before 1 October 1985 ("overestimated payments"). When Royal became aware of its overpayments it commenced a proceeding against the Comptroller in the Supreme Court of Victoria claiming, inter alia, "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 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 (b) refund to the plaintiff any such sum found to have been overpaid". The Comptroller subsequently made a finding that the amount of $1,907,908.10 duty had been overpaid but decided not to make a refund under s. 111. Beach J. dismissed the proceeding (1). The Appeal Division (Brooking, Marks and Hedigan JJ.) allowed an appeal by Royal and made an order in the form of mandamus directing the Commissioner of State Revenue (the Comptroller's successor) to refund the amount in question (2). The Commissioner appealed from that judgment to the High Court, by special leave granted on 13 November 1992 by Mason CJ, and Brennan and McHugh JJ.


D. Graham QC, Solicitor-General for the State of Victoria, (with him Dr. C. Howard), for the appellant. Permissive or facultative expressions prima facie operate according to their ordinary natural meaning (3). The presumption may however be displaced by the context (4). (MASON CJ Does not Finance Facilities Pty. Ltd. v. Federal Commissioner of Taxation indicate that if a power expressed in facultative terms is predicated on a condition precedent, that prima facie presumption is displaced?) The case does not stand for that general proposition. The mere existence and fulfilment of conditions precedent to the exercise of a power does not displace the presumption, though it may assist in displacing it. There were other indications in Finance Facilities Pty. Ltd. v. Federal Commissioner of Taxation. Section 111 is cast in general terms when it speaks of overpayments. There are overpayments and overpayments, whereas the provision considered in that case concerned a distinct set of circumstances. Where an application is made under s. 111 and an overpayment is found to have occurred, the taxpayer is entitled only to require that the Commissioner should exercise the power according to law. The section does not in those events entitle him to a refund. The legislative history of s. 111 supports this construction. Before 1978 (when s. 111 assumed its present form) the section required the Comptroller to apply to the Treasurer for a refund to the taxpayer when the Comptroller was satisfied that there had been

(1) (1991) 21 ATR 1285; 91 ATC 4,147.

(2) (1992) 23 ATR 528; 92 ATC 4,399.

(3) Ward v. Williams (1955), 92 CLR 496, at p. 505.

(4) Julius v. Lord Bishop of Oxford (1880), 5 App Cas, at pp. 222-223, 229-230, 235, 240-241; Ward v. Williams (1955), 92 CLR, at pp. 505-506; Finance Facilities Pty. Ltd. v. Federal Commissioner of Taxation (1971), 127 CLR 106, at pp. 134-135.
an overpayment. The mandatory element was omitted in the current provision. On the respondent's argument, s. 111 requires the Commissioner to make a refund in every case in which an overpayment of duty is found to have been made. There will be no cases where the Commissioner has a discretion to refuse a refund. Yet there are cases where it would not be appropriate to deny a discretion to refuse to refund an overpaid amount. A refund would be inappropriate where the taxpayer had passed the tax on and did not intend to reimburse those from whom it had itself recouped the tax. The result of ordering restitution would be the unjust enrichment of the taxpayer. It is not unconscionable for money to be retained for public purposes when a private party has no moral claim to it. When the legislature intends that a windfall not accrue, it says so. Examples are the Sales Tax Assessment Act (No. 1) 1930 (Cth), s. 26 and the Swimming Pools Tax Refund Act 1992 (Cth), s. 4.


Section 20A of the Limitation of Actions Act 1958 is not limited to taxes which are invalid in the sense that the legislation pursuant to which they are imposed is held to be invalid, although the section clearly applies to such a case. It is not necessary, to reconcile s. 20A with the 1987 amendment, to treat the latter as operating to modify the former. The effect of the 1987 amendment was retrospectively to remove a substantive liability to pay stamp duty whilst leaving the procedural provisions in s.111 unaltered. There is, of course, no difficulty about reconciling s. 20A and the 1987 amendment if s. 111 is construed as conferring a discretionary power to make a refund. The words "paid under the authority or purported authority of any Act" are apt to cover payments made under the actual authority of an Act and the apparent authority of an Act. The pre-1987 cost plus payments clearly were paid under the authority of the Act, since at the time when each payment was made, the taxpayer was admittedly liable to make them. It is irrelevant for present purposes that the liability was retrospectively removed. At the least, all the other overpayments were made under the purported authority of the Act, and it is also legitimate to conclude that they were made under the authority of the Act. A motion seeking relief by way of mandamus clearly falls within the definition of action in s. 3(1) - "any proceeding in a court of law". Mandamus is a remedy which issues in the name of the Crown and cannot be granted against the Crown itself. Nor can it issue against a servant of the Crown who is merely acting in that capacity (5). (MASON CJ Is that the position according

(5) Reg. v. Lords Commissioners of Treasury (1872), LR 7 QB 387, at pp. 394, 398, 402; G.H. Michell and Sons (Australia) Pty. Ltd. v. Minister of Works (1974), 8 SASR 7, at pp. 26-28; Hogg, Liability of the Crown, 2nd ed. (1989), pp. 3234.

to the current Victorian procedure? Mandamus is no longer a remedy which issues in the name of the Crown.) The means by which a person to whom the Commissioner is liable to make a payment recovers it are found in s. 166D. This indicates that, at least for the purpose of actually paying over the refund, in contrast to deciding whether there has been an overpayment and whether a refund should be made, the Commissioner acts merely as a servant of the Crown. Further, mandamus will not be granted where there is another remedy available (6). (He also referred to Reg. v. Commissioners for Special Purposes of the Income Tax (7) and Campbell, "Private Claims on Public Funds" (8).) (MASON CJ referred to de Smith's Judicial Review of Administrative Action (9).) The taxpayer could have proceeded for money had and received against the Commissioner. The fact that such an action could have been met by a plea under s. 20A if the Commissioner had elected to rely upon it does not detract from the point. If the taxpayer is entitled to mandamus, not only is s. 20A circumvented but the constraints of the objection and appeal provisions can be subverted.


J. D. Merralls QC (with him J. F. Styring), for the respondent. Section 111(1) of the Stamps Act 1958 is a facultative provision enabling the Comptroller to refund duty when the Comptroller finds it to have been overpaid. As a public officer the Comptroller is under a duty in appropriate circumstances to investigate whether duty has been overpaid and to exercise the power to refund any amount found to have been overpaid. Alternatively, if s. 111(1) does not impose a duty to investigate, it does not confer on the Comptroller a discretionary power to refuse to refund any amount actually found to have been overpaid. Either interpretation of s. 111(1) is consistent with, and derives support from, the legislative history of the refund provisions traced by Hedigan J. in the Appeal Division (10). The power is of such a nature that it ought to be exercised when the factual conditions are satisfied (11). The only condition that s. 111(1)

(6) Reg. v. Commissioners of Inland Revenue; Re Nathan (1884), 12 QBD. 461, at pp. 471, 479.

(7) (1888), 21 QBD 313.

(8) University of Tasmania Law Review, vol. 3 (1969), 138.

(9) 4th ed. (1980), p. 555.

(10) (1992) 23 ATR, at pp. 540-543; 92 ATC, at pp. 4,4094,412.

(11) Julius v. Lord Bishop of Oxford (1880), 5 App Cas, at pp. 223, 225; Finance Facilities Pty. Ltd. v. Federal Commissioner of Taxation (1971), 127 CLR, at p. 134.

requires to be satisfied for the exercise of the power is a finding that duty has been overpaid. The payer's right depends upon only that finding. Hence the legal right is implicit in the terms of the power (12). (He referred to the Stamps Act, s. 99(7)(b) and the Interpretation of Legislation Act 1984 (Vict.), s. 45.) If s. 111(1) allows the Comptroller not to refund overpaid duty, it is not an absolute discretionary power but one which must be exercised upon proper grounds (13). If the payer's right depends 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 rubric of restitution where a payee has beenunjustly enriched by a payment (14). The legal right to a refund of the payments made up to 12 November 1987 depends upon inferences from the retrospective character of the 1987 amendment. 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 absolute. It would be extraordinary to attribute to Parliament any other intention. The right to repayment of the sums resulting from over-estimates of premium income, amounts paid on premiums received after 30 June 1985, and amounts paid after 12 November 1987, rests upon the absence of any legitimate basis for the money to be retained by the revenue. If the relevant public and private law principles are the same, the legal right to the refund of payments resulting from over-estimates of premiums 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. If the relevant public and private law principles are the same, the legal right to the refund of the amounts paid on premiums received after 30 June 1985 and those paid after 12 November 1987 depends upon their having been made under a mistake of law. That mistake was one in which the payment was made without conscious adversion to the relevant law. Such payments were 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 (15). The fact that the payment was caused by a mistake of any kind is sufficient to give rise to a prima

(12) Ward v. Williams (1955), 92 CLR, at p. 506.

(13) Minister for Aboriginal Affairs v. Peko-Wallsend Ltd. (1986), 162 CLR 24, at pp. 3942; Reg. v. Tower Hamlets London BC; Ex parte Chetnik Developments Ltd., (1988) AC 858, at pp. 872-873.

(14) ibid., at p. 882.

(15) David Securities Pty. Ltd. v. Commonwealth Bank of Australia (1992), 175 CLR 353, at pp. 397-398.

facie obligation on the part of the appellant to make restitution. 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 (16). There are no special rules of public law that may preclude the ordering of restitution on the ground that it would be unjust. Moreover, it has been suggested that restitutionary rights may exist in public law in circumstances in which they would not exist in private law (17). (He also referred to Burrows, "Public Authorities, Ultra Vires and Restitution" (18) and to Air Canada v. British Columbia (19).) The "passing-on" justification for refusal to repay should be rejected. Liability to pay stamp duty upon insurance premiums is cast upon an insurer, not an insured: an insured is never under a legal liability to pay. Hence, between an insurer and the Crown, any enrichment is at the expense of the insurer. The issue of the unjustness of the retention of an amount by which the Crown is enriched likewise should be determined between the Crown and the insurer. The existence and extent of third party rights can be determined in appropriate proceedings. To pass on a loss does not necessarily mean that the loss is recouped (20). Alternatively, if passing on might ever 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 (21). A passing on condition or defence should not be implied where it is not express. It is a matter of policy whether 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 and, if so, by what means reimbursement should be achieved. Section 111(1) imposes no condition and confers no right, and no condition was imposed or right was conferred by the 1987 amendment (22).

The right to the repayment of payments made up to 12 November

(16) Australia and New Zealand Banking Group Ltd. v. Westpac Banking Corporation (1988), 164 CLR 662, at p. 673; David Securities Pty. Ltd. v. Commonwealth Bank of Australia (1992), 175 CLR, at p. 379; Reg. v. Tower Hamlets London BC; Ex parte Chetnik Developments Ltd., (1988) AC, at pp. 876-877.

(17) Birks, Restitution - The Future (1992), ch 3, esp. pp. 82-83; Birks, "English Recognition of Unjust Enrichment", (1991) Lloyds' Maritime and Commercial Law Quarterly 473, at pp. 500-501; Palmer, Law of Restitution (1978), vol. 11, pp. 337-344; vol. 111, pp. 246-258; Jones, Restitution in Public Law (1991), ch 1.

(18) Essays on the Law of Restitution (1991) 39, at pp. 61-62.

(19) (1989) 1 SCR 1161; (1989) 59 DLR (4th) 161.

(20) See, e.g., Amministrazione delle Finanze dello Stato v. San Giorgio S.A., (1985) 2 CMLR 658, at pp. 672-675, 689; Les Fils de Jules Bianco S.A. v. Directeur General des Douanes et Droits Indirects, (1989) 3 CMLR 36, at pp. 44-45, 4849; Burrows, op cit, p. 59.

(21) Burrows, op cit, p. 59.

(22) Cf. subsequent amendments which inserted s. 32A and amended s. 111.

1987 is not affected by s. 20A of the Limitation of Actions Act. If it were to apply to those payments, the full retrospective effect of the 1987 amendments would be defeated. Mistaken payments of duty which at the time the Act neither imposed nor purported to impose are not within s. 20A. (He referred to Victorian Hansard (23).) The payments were not made "under the authority or purported authority of any Act". Those words are not apt in their natural meaning to apply to payments made where the payer only believed itself liable to pay and purported to pay pursuant to an Act. The words are not concerned with the payer's state of mind but with an authority the Act imposed or purported to exert. "Purported" in this context means "professed" or "ostensible". In Reg. v. Commissioners of Inland Revenue; Re Nathan (24), mandamus was refused as much for reasons of convenience as for high constitutional principle.


D. Graham QC, in reply. If the public and private law principles of restitution are the same, the David Securities Case (25) provides a sufficient answer to the claim. The revenue was not enriched at the respondent's expense.

(23) Legislative Assembly; 26 Sept. 1961, pp. 181-184.

(24) (1884) 12 QBD 461.

(25) (1992) 175 CLR, at pp. 378-379.
Cur. adv. vult.

Counsel for the Appellant: D. Graham QC Solicitor General
for Victoria and C. Howard


Solicitors for the Appellant: T.D. Weerappah Solicitor to
the Commissioner of State Revenue


Counsel for the Respondent: J.D. Merralls QC and J.F. Styring

Solicitors for the Respondent: Mallesons Stephen Jaques

Orders

Appeal dismissed with costs.

Decisions

MASON C.J. This appeal arises out of proceedings brought by the
respondent ("Royal") to secure a refund of $1,907,908.10 representing
the amount of stamp duty overpaid by Royal to the appellant
Commissioner. Royal commenced proceedings by way of originating
motion in the Supreme Court of Victoria seeking:

1. an order that the Commissioner refund to Royal in accordance with
s.111 of the Stamps Act 1958 (Vict.) ("the Act") the amount mentioned;
or

2. alternatively, an order that the Commissioner refund such sum as
may be found to have been overpaid by Royal to the Commissioner in
respect of premiums for workers' compensation insurance received after
30 June 1985 in respect of liabilities incurred before 1 October 1985; or
3. alternatively, a declaration that Royal has, since 1 July 1985,
overpaid the amount mentioned in respect of such premiums received
after 30 June 1985 and is entitled to a refund of that amount.



2. At first instance, Beach J. dismissed the summons with costs,
holding that the Commissioner was entitled as a matter of discretion
under s.111 of the Act to refuse to make a refund. It was and is
common ground between the parties that there was an overpayment in the
amount claimed by Royal. On appeal, the Appeal Division of the
Supreme Court (Brooking, Marks and Hedigan JJ.) came to a different
conclusion, allowing the appeal and making an order by way of mandamus
directing the Commissioner to refund the amount.



Background facts and statutory provisions

3. Throughout the 1980s Royal carried on assurance and insurance
business, including workers' compensation insurance. Royal was
registered as a company carrying on such a business, pursuant to s.96
of the Act. Being registered as such a company, Royal was required by
the provisions of Subdiv.11 of Div.3 of Pt II of the Act (ss.95-111)
to lodge monthly returns of premiums, including workers' compensation
premiums, received in the preceding calendar month and to pay stamp
duty on the return in an amount equal to 7 per cent of the amount of
all premiums chargeable with stamp duty (1 s.97(2)) , except in the
case of workers' compensation premiums in respect of which duty was
subsequently reduced to 3.5 per cent.



4. Prior to 1985, private insurers, of whom Royal was one, had
conducted workers' compensation business as approved insurers under
the Workers Compensation Act 1958 (Vict.). As approved insurers,
private insurers had insured employers against their liability to
workers' compensation under that Act and in respect of employers'
liability for common law claims for damages arising from breach of duty
to employees. The imposition of stamp duty on the returns of insurers
registered under the Act was a consequence of the regime of approved
private insurers.



5. This regime was replaced by a different regime, called WorkCare,
which came into operation on 1 September 1985. The Accident
Compensation Act 1985 (Vict.) introduced and implemented the new
scheme. By that Act, the Accident Compensation Commission was
constituted as the sole insurer in respect of workers' compensation
liabilities. Because the Commission, a statutory authority, was the
sole insurer, it was decided to discontinue the imposition of stamp
duty on workers' compensation insurance.



6. With a view to giving effect to this policy, s.99 of the Act was
amended by s.276 of the Accident Compensation Act. A number of
sub-sections were added to s.99, including sub-s.(3), which was in
these terms:

"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
are not chargeable with stamp duty."

At the same time the definition of "Workers compensation insurance" in
s.95 was replaced by a new definition so that s.99(3), when read with
the new definition, would exempt workers' compensation insurance
business from the operation of Subdiv.11 of Div.3 of Pt II of the Act.



7. Section 99(4) provided for the payment of stamp duty on a pro
rata basis where a premium was payable after 4 o'clock in the
afternoon on 30 June 1985 for workers' compensation insurance in
respect of the issue, renewal, taking out or extension of a policy for
a period commencing before and expiring after that date. Sub-section
(5) provided for the making of an application for a refund in such a
case where the insurer had paid stamp duty at the full rate previously
chargeable. Sub-section (7) went on to provide that, when an
application for a refund was duly made, "the (Commissioner) ... shall
make a refund to the applicant accordingly".



8. Sub-sections (5), (6) and (7) of s.99 were replaced when s.11 of
the Stamps and Business Franchises (Tobacco) (Amendment) Act 1985
(Vict.) came into operation. Section 11 introduced a new sub-s.(5)
and a new sub-s.(7). The new sub-s.(5) replaced the old sub-ss.(5)
and (6). The new sub-s.(5) took account of the fact that stamp duty
may have been paid at the rate of 7 per cent or 3.5 per cent of the
premium and provided for a rebate or refund of duty accordingly,
whereas the old sub-s.(5) did not take account of the fact that stamp
duty may have been paid at the higher rate. The new sub-s.(7)
provided:
"Where an application is made in accordance with sub-section
(5) -

(a) if the application is for a rebate, the amount of the rebate shall
be deducted from the amount payable as stamp duty on a return lodged
... 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 (Commissioner of State
Revenue) shall make a refund to the applicant accordingly."



9. In 1987, it was realized for the first time that the exemption
granted in 1985 did not extend to the liability to pay stamp duty on a
particular class of premium income, namely, premiums received by
insurers after 30 June 1985 when the WorkCare scheme came into
operation in respect of "cost-plus" policies. Under a cost-plus
policy, the annual premium was recalculated after the close of the
relevant period of insurance so that the insurer was reimbursed for
the whole of the costs of the claims made and paid during the
antecedent period, those costs including the costs of handling the
claims. This class of policy was to be distinguished from the ordinary
policy in respect of which a premium was calculated on the basis of
the employer's estimate of wages to be paid during the ensuing year
with an adjustment made at the end of the year by reference to the
amount of wages actually paid during the year. That latter form of
policy was sanctioned by the Workers Compensation Act and Regulations;
the form of it was prescribed in a schedule to that Act.



10. In order to extend the exemption to cover the cost-plus
policies, s.8 of the Taxation Acts Amendment Act 1987 (Vict.) ("the
1987 Act") was enacted. That section amended s.99(3) of the Act by
inserting after the words "from that time" the words "or received
after that time in respect of liabilities incurred before 1 October
1985". Section 2(4) of the 1987 Act provided that s.8 should be deemed
to have come into force on 30 June 1985, thereby making the operation
of s.8 retrospective to that date.



11. Strange as it may seem, Royal remained unaware of the 1985
amendments for some years and of the 1987 amendments 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 received after 30 June 1985 and paid
stamp duty on that part of the premiums included in the returns. It
seems that, as a result of advice from the Commissioner in 1989, Royal
ceased to pay stamp duty on exempted premium income.



12. On 19 September 1990, Royal made a demand for repayment of the
amount of stamp duty overpaid. The Commissioner did not make a refund
with the result that, on 17 October 1990, Royal commenced the
proceedings by way of originating motion. The proceedings related to
s.111(1) of the Act. That sub-section provided:

"Where the (Commissioner) finds in any case that duty has been
overpaid, 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."

It is common ground that Royal's demand for a refund is governed by
s.111(1), not by s.99(7).



The Commissioner's decision

13. On 19 October 1990, two days after the proceedings were
commenced, the Commissioner found that duty had been overpaid in the
amounts mentioned below and decided not to make a refund of any part
of the amounts under s.111. The Commissioner did not give reasons for
her decision.



The categories of overpayment

14. According to a document prepared by the Commissioner, the
overpaid duty falls into three categories. First, an amount of
$1,674,301.94 which is divisible into two further categories, (a) and
(b). The amount was paid as duty on premiums received by Royal after
4.00 p.m. on 30 June 1985 in respect of liabilities incurred before 1
October 1985. The amount comprised duty on premiums received by the
Commissioner for the cost-plus policies. Category (a), amounting to
$1,370,000 approximately, consists of duty on premiums received by
Royal during the period from 30 June 1985 to 12 November 1987 being
the commencement date of the 1987 Act. Category (b), amounting to
$300,000 approximately, consists of duty on premiums received by Royal
from 12 November 1987 to 21 August 1989 in ignorance of the exemption
from duty on premiums in respect of cost-plus policies.



15. The second main category is an amount of $95,426.95 overpaid by
Royal 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. The third category is an
amount of $138,179.21, being duty paid on premiums received by Royal
for extensions after 4.00 p.m. on 30 June 1985 of policies (other than
cost-plus policies) taken out before that date.



The scope and purpose of the discretion conferred by s.111

16. The Commissioner contends that the presence of the word "may" in
s.111(1) attracts a prima facie presumption that the word is to be
understood in its natural and ordinary sense, that sense being
permissive or facultative only. That submission is in accord with the
principle as expressed by the judgment of this Court in Ward v.
Williams (2 (1955) 92 CLR 496 at 505) . What is more, the legislative
history supports the Commissioner's submission. Section 111, before it
was amended in 1978, provided that, if the Commissioner was satisfied
that overpayment of duty had been made, on application made within
twelve months after such payment, the Treasurer "shall without further
or other authority than this Act refund the amount" to the person by
whom the overpayment was made. The change from the mandatory "shall
... refund" to the facultative "may refund" disposes of any suggestions
that s.111 as amended was mandatory and not facultative. But, as the
Court went on to point out in Ward v. Williams, the question whether a
public officer, to whom a power is given by facultative words, is bound
to exercise that power upon any particular occasion, or in any
particular manner, is to be solved from the context, from the
particular provisions, or from the general scope and objects of the
enactment conferring the power (3 ibid) .



17. The Commissioner argues that there is nothing in the context or
the scope and objects of the Act which requires or indicates that the
discretion to make a refund must be exercised on any particular
occasion. Indeed, the Commissioner points to the use of the word
"may" again in s.111(2) and (3) and the contrasting use of the word
"shall" in s.111(4) (4 "The duty paid on a return ... shall be
denoted on the return by a cash register receipt imprint.) . But these
provisions do no more than support the presumption that in s.111(1) the
words "may refund" are facultative. They do not establish that the
discretion is in any sense absolute or unfettered. Nor do they bear
upon the question whether the discretion must be exercised in a
particular way or upon a particular occasion.



18. In approaching that question, the first and foremost
consideration is that the Act is a taxing Act and that in terms it
confers no authority upon the Commissioner to levy, demand or retain
any moneys otherwise than in payment of duties and charges imposed by
or pursuant to the Act. In that context, there is no persuasive
reason why the grant of a positive discretionary power to make a
refund, once an overpayment of duty has been found by the Commissioner
to have taken place, should be treated as a source of authority in the
Commissioner to retain the overpayment in the absence of circumstances
disentitling the payer from recovery. Nothing short of very clear
words is sufficient to achieve such a remarkable result. The Court
should be extremely reluctant to adopt any construction of s.111 which
would enable the Commissioner by an exercise of discretionary power to
defeat a taxpayer's entitlement to recover an overpayment of duty. No
reason emerges for thinking that the purpose of the provisions was
other than to confer legal authority upon the Commissioner to refund
an overpayment found by her to have taken place.



19. In Reg. v. Tower Hamlets London Borough Council, Ex parte
Chetnik Developments Ltd. (5 (1988) AC 858) , the House of Lords dealt
with a discretionary power to refund in particular circumstances rates
paid when not payable and not recoverable otherwise than by means of
an exercise of the discretionary power. Lord Bridge of Harwich
expressed the principle invoked by the House of Lords in these terms (6
ibid. at 877) :
"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 under a mistake of law ... 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".

Much the same comment may be made about s.111.



20. At the same time, I cannot accept the proposition that, once
overpayment has been found to have been made, the discretion must be
exercised by making a refund. Assume the State has in good faith
changed its position for the worse acting in reliance on the fact that
the payment was made and received for duty apparently due and payable
under the Act, the regime of monthly returns and payments being one of
self-assessment, it could scarcely be suggested that a refusal to make
a refund in such a situation could be an erroneous exercise of
discretion. In David Securities Pty. Ltd. v. Commonwealth Bank of
Australia (7 (1992) 175 CLR 353 at 384-386) , it was recognized that,
according to the principles of the law of restitution, such a change of
position would constitute a good "defence" to an action for recovery of
money paid under a mistake of fact or law. It would be surprising, to
say the least of it, if the conferral of a discretion to make a refund
was intended to exclude power to refuse a refund when in the
circumstances the taxpayer was not entitled to recover under the
general law. An action which is time barred is another illustration of
circumstances in which refusal to make a refund would be justified.



21. Royal sought to answer this difficulty by submitting that under
s.111 the Commissioner was under a duty to investigate whether there
had been an overpayment and that, in the context of a duty to
investigate, there was a duty to refund once overpayment was found to
have taken place. On the assumption that the section creates a duty
to investigate, I do not consider that the existence of such a duty
leads to the existence of an obligation to refund once overpayment is
established. No doubt there will be circumstances in which it will be
a proper response, indeed the only proper response, to refund the
overpayment but that will not always be the case.



The primary judge's finding that a refund might result in a windfall
to Royal

22. In argument, much attention was directed to the question whether
the Commissioner could properly refuse to make a refund on the ground
that Royal had charged the duty to its insured and that, as a
consequence, the duty had been paid by the insured so that recovery by
Royal would result in a windfall to Royal. Here, it seems that Royal
charged the duty to its insured, believing it to be payable. Whether
the duty formed the subject of a separate charge in addition to the
premium does not appear from the materials. Generally, insurers
charge duty separately to the insured in premium notices. The insured
paid to Royal the duty as well as the premium. Royal then paid the
duty to the Commissioner.



23. According to the Commissioner's counsel, one of the reasons why
the Commissioner refused to make a refund was that, if the duty was
refunded to Royal, in all probability it would be a windfall because
difficulties Royal would face in seeking to refund the duty to its
policy holders would be so great as to make it unlikely that it would
seek to take that course. The primary judge did not make a finding

that these difficulties existed or that it was unlikely that Royal
would seek to take that course. Instead, his Honour regarded the
possibility that such a situation could arise as a reason for
rejecting the proposition that there was an obligation to make a refund
whenever an overpayment took place or was found by the Commissioner to
have taken place. According to his Honour, the discretion could be
exercised adversely to Royal by reference to the possible existence of
that situation. I should mention that at no stage of the proceedings
did counsel for Royal suggest that Royal was suing for the benefit of
the insured who bore the burden of the tax or that it would seek to
pass on a refund, if obtained, to them.



Recovery according to restitutionary principles

24. As I have already indicated, the grant of the discretionary
power to refund an overpayment should not be regarded as authority to
refuse a refund which a taxpayer is entitled to recover according to
the principles of the general law. It is necessary then to ascertain
how Royal's claim to recover stands under the law of restitution. We
begin with the proposition, accepted in David Securities, that mistake
of law is no bar to recovery, and in this case there is no question
but that Royal made the relevant payments in the mistaken belief that
in law it was bound to do so. In one respect, Royal's belief at the
time of payment was not mistaken: in the case of the cost-plus
policies, payments were made when there was a legal liability to pay
them. Only subsequently and retrospectively was an exemption granted.
But the retrospective operation of s.2(4) of the 1987 Act enables one
to say that, in the light of the law as it was enacted with
retrospective effect in 1987, the payments of duty were made under a
mistake as to the legal liability to pay them. In David Securities it
was accepted that (8 ibid. at 378) :

"the payer will be entitled prima facie to recover moneys paid under a
mistake if it appears that the moneys were paid by the payer in the
mistaken belief that he or she was under a legal obligation to pay the
moneys or that the payee was legally entitled to payment of the
moneys. Such a mistake would be causative of the payment".

And, prima facie, that is all that is required where, as here, the
recipient has no legal entitlement to receive or retain the moneys.
The recipient has been unjustly enriched. Indeed, it is perhaps
possible that the absence of any legitimate basis for retention of the
money by the Commissioner might itself ground a claim for unjust
enrichment without the need to show any causative mistake on the part
of Royal (9 Air Canada v. British Columbia (1989) 59 DLR (4th) 161 at
169-170 per Wilson J. (dissenting)) . But there is no occasion to
pursue this aspect of the case further.



25. The belated recognition in David Securities that moneys paid
away as a result of a causative mistake of law are recoverable enables
us to discard some of the complications associated with the old law
governing the recovery of moneys paid as and for taxes which were not
due and payable because causative mistake of law was not thought to be
a sufficient basis of recovery. Recovery was permitted only in cases
in which money was exacted under an unlawful demand by a public
authority where the payment was made under a mistake of fact or under
compulsion of some kind. The relevant principles have been examined
by this Court in Sargood Brothers v. The Commonwealth (10 (1910) 11
CLR 258) and Mason v. New South Wales (11 (1959) 102 CLR 108) , and,
very recently, by the House of Lords in Woolwich Building Society v.
I.R.C. (12 (1993) AC 70) In Woolwich, the House of Lords, though
unwilling to acknowledge that causative mistake of law is a basis for
recovery, reformulated the principles so as to recognize a prima facie
right of recovery based solely on payment of money pursuant to an ultra
vires demand by a public authority. With that development in the law
of restitution in England we are not presently concerned because, as I
have explained, Royal made the relevant payments as a result of a
causative mistake of law. In conformity with David Securities, payment
in these circumstances opens the gateway to recovery where the payment
results in the enrichment of the defendant at the expense of the
plaintiff.



Disruption of public finances as a possible defence to a
restitutionary claim

26. The Commissioner did not argue that an exception from recovery
should be acknowledged in order to protect public finances from
disruption and the necessity of re-imposing taxes invalidly imposed.
That proposition was accepted by La Forest J. in Air Canada v. British
Columbia (13 (1989) 59 DLR (4th) at 197) but it was repudiated by
Wilson J. (14 ibid. at 169) , in her dissenting judgment, for reasons
which, to my mind, are compelling (15 In Woolwich (1993) AC at 176,
Lord Goff of Chieveley found Wilson J.'s reasons on this point "most
attractive") . Those reasons centre upon the unfairness of requiring
the innocent individual taxpayer, as opposed to taxpayers as a whole,
to bear the burden of the government's mistake (16 (1989) 59 DLR (4th)
at 169) . Wilson J.'s exposition gives emphasis to the "innocence" of
the taxpayer and the "mistake" of the government, factors which were
present in Air Canada. These elements are not essential to the making
out of a restitutionary claim for the recovery of money paid as and for
tax as a result of a causative mistake and I do not see why the absence
of these elements should justify the recognition of a vague and
amorphous defence based on the notion of avoiding disruption of public
finances. The remedy for any disruption of public finances occasioned
by the recovery of money in conformity with the law of restitution lies
in the hands of the legislature. It can determine who is to bear the
burden of making up any shortfall in public funds.



27. That only brings us to what is a crucial question in this case:
was the Commissioner unjustly enriched at the expense of Royal (17
Birks, "The English Recognition of Unjust Enrichment", (1991) Lloyds
Maritime and Commercial Law Quarterly 473 at 507) ? That the
Commissioner was unjustly enriched there can be no doubt. The
Commissioner received payments to which the State revenue was not
entitled under the Act. The question remains whether the enrichment
was at the expense of Royal. And here the fact that Royal charged the
duty to its insured again becomes significant. The suggestion is that
the enrichment of the Commissioner has taken place not at the expense
of Royal but at the expense of its policy holders. They are the
persons who have suffered a detriment; Royal has suffered no detriment
and, if it recovers, it will make a windfall gain (18 See Burrows,
"Public Authorities, Ultra Vires and Restitution", in Burrows (ed.),
Essays on the Law of Restitution, (1991) at 59-60) . Indeed, it might
be said that, if Royal recovers, it will be unjustly enriched. But
such an enrichment, if it be unjust, would be at the expense of the
policy holders, not at the expense of the Commissioner. The source of
any windfall, if windfall there be, was in the excessive charges made
by Royal to its policy holders, and the payments which they made to
Royal.



Is passing on a good defence to a restitutionary claim?

28. Whether a passing on "defence" should be recognized must be
considered at two levels: the levels of public law and restitutionary
law. There is the fundamental principle of public law that no tax can
be levied by the executive government without parliamentary authority,
a principle which traces back to the Bill of Rights (19 (1688) 1 Will.
and Mar., Sess.2, c.2, ("That levying Money for or to the Use of the
Crowne by pretence of Prerogative without Grant of Parlyament for
longer time or in other manner than the same is or shall be granted is
Illegal.")) . In accordance with that principle, the Crown cannot
assert an entitlement to retain money paid by way of causative mistake
as and for tax that is not payable in the absence of circumstances
which disentitle the payer from recovery. It would be subversive of an
important constitutional value if this Court were to endorse a
principle of law which, in the absence of such circumstances,
authorized the retention by the executive of payments which it lacked
authority to receive and which were paid as a result of causative
mistake.



29. From the perspective of the law of restitution, there is some
support for the view that, if the payer has passed on the burden of a
tax which is found not to be payable, the payer will not be entitled
to recover payments made to the public authority as and for tax. The
suggestion is that, in these circumstances, the defendant's enrichment
is not at the expense of the plaintiff. In Air Canada, the plaintiff
airlines had passed on an unconstitutional gasoline tax in the form of
fares charged to their passengers. Four justices considered the
question whether the airlines could recover the payments which they
had made as and for the tax. La Forest J. (with whom Lamer and
L'Heureux-Dub JJ. concurred) decided that question against the
airlines. La Forest J. cited (20 (1989) 59 DLR (4th) at 193) the
comments of Professor Palmer in his work The Law of Restitution (21
1986 Supplement at 255) :
"There is no doubt that if the tax authority retains a payment to
which it was not entitled it has been unjustly enriched. It has not
been enriched at the taxpayer's expense, however, if he has shifted
the economic burden of the tax to others. Unless restitution for
their benefit can be worked out, it seems preferable to leave the
enrichment with the tax authority instead of putting the judicial
machinery in motion for the purpose of shifting the same enrichment to
the taxpayer."



30. La Forest J. expressed his agreement with the comment and went
on to say (22 (1989) 59 DLR (4th) at 193-194) :

"The law of restitution is not intended to provide windfalls to
plaintiffs who have suffered no loss. Its function is to ensure that
where a plaintiff has been deprived of wealth that is either in his
possession or would have accrued for his benefit, it is restored to
him. The measure of restitutionary recovery is the gain the province
made at the airlines' expense."

Wilson J. did not agree, concluding that to deny recovery in such a
situation would be tantamount to allowing the legislature to impose
illegal burdens and would be inconsistent with restitutionary
principles (23 ibid. at 169-170) . The levying of an unconstitutional
tax is an imposition of an illegal burden, but there was no such
imposition in the present case.



31. The approach taken by La Forest J. in Air Canada accords with
that adopted in the United States in Shannon v. Hughes and Co. (24
(1937) 109 SW (2d) 1174) There, the plaintiff failed to recover
payments of an unconstitutional tax on its ice cream operations because
it had passed on the tax to its customers and had shifted to them the
burden of the imposition. The Court invoked Lord Mansfield's
proposition in Moses v. Macferlan (25 (1760) 2 Burr 1005 at 1010 (97
ER 676 at 679)) that, in the common law action for money had and
received, the defendant "may defend himself by every thing which shews
that the plaintiff, ex aequo et bono, is not intitled to the whole of
his demand, or to any part of it". In Shannon v. Hughes and Co. (26
(1937) 109 SW (2d) at 1175-1176) , the Court concluded that to hold
otherwise would result in unjust enrichment of the plaintiff, despite
the fact that the imposition of the tax and its passing on to customers
caused the plaintiff's ice cream sales to drop sharply and the
plaintiff's profits to collapse. By denying relief on the ground that
the plaintiff would unjustly be enriched by a windfall, the Court left
the plaintiff without a remedy even though it had suffered significant
loss and damage.



32. The argument that a plaintiff who passes on a tax or charge will
receive a windfall or will unjustly be enriched if recovery from a
public authority is permitted rests at bottom upon the economic view
that the plaintiff should not recover if the burden of the imposition
of the tax or charge has been shifted to third parties. In the
context of the law of restitution, this economic view encounters major
difficulties. The first is that to deny recovery when the plaintiff
shifts the burden of the imposition of the tax or charge to third
parties will often leave a plaintiff who suffers loss or damage
without a remedy. That consequence suggests that, if the economic
argument is to be converted into a legal proposition, the proposition
must be that the plaintiff's recovery should be limited to compensation
for loss or damage sustained. The third is that an inquiry into and a
determination of the loss or damage sustained by a plaintiff who
passes on a tax or charge is a very complex undertaking. And, finally,
it has long been thought that, despite Lord Mansfield's statement in
Moses v. Macferlan, the basis of restitutionary relief is not
compensation for loss or damage sustained but restoration to the
plaintiff of what has been taken or received from the plaintiff without
justification (27 Mason v. New South Wales (1959) 102 CLR at 146 per
Windeyer J) .



33. Shannon v. Hughes and Co. illustrates the first problem. Because
passing on the tax or charge increases the price or cost of the goods
or service to the customer or consumer it may have an adverse economic
impact upon demand and, accordingly, upon the profitability of the
plaintiff's activities. That means that passing on should not be
accepted as a universal defence to a restitutionary claim unless it is
related and limited to denying recovery except for loss or damage
sustained. And that requires a consideration of practical and legal
objections inherent in the third and fourth objections mentioned
above.



34. In the United States, the Supreme Court has rejected the passing
on defence in the context of treble-damages claims under anti-trust
laws by plaintiffs who have passed on overpayments to their
customers (28 Hanover Shoe Inc. v. United Shoe Machinery Corp. (1968)
392 US 481; Illinois Brick Co. v. Illinois (1977) 431 US 720; see also
McKesson Corporation v. Division of Alcoholic Beverages and Tobacco
(1990) 110 L Ed 2d 17 at 42-43) . Though the context is different, the
reasons given for that rejection are relevant to the present case.
They include the difficulty of determining the economic impact upon the
plaintiff's business of passing on the overpayment (29 (1968) 392 US
at 492-493) , the practical problems which availability of the defence
would generate involving "massive evidence and complicated theories"
(30 ibid. at 493) to demonstrate the occurrence or non-occurrence of
passing on. Further, the defence would probably apply all the way down
the chain of distribution to the ultimate consumer who would have
little interest to sue (31 ibid. at 494) . In Illinois Brick Co. v.
Illinois, the Supreme Court confirmed these grounds of objection and
pointed to the problems of multiple litigation if both direct and
indirect purchasers could sue for anti-trust damages. The Court also
noted that economic theories rely upon assumptions that do not operate
in the real world, thereby making the proof of passing on extremely
difficult (32 (1977) 431 US at 741-742) .



35. A similar approach was taken in the opinion of Advocate-General
Mancini in Amministrazione delle Finanze dello Stato v. San Giorgio
SpA (33 (1985) 2 CMLR 658) . San Giorgio was required to pay health
inspection charges under an Italian decree and regulations. They were
held to be invalid. An Italian court ordered repayment to San Giorgio,
notwithstanding another law which denied recovery when the charge is
presumed to have been passed on. The Advocate-General considered that
the nature of a free market is such that one cannot isolate any portion
of the price and link it causally to a particular cost (34 ibid. at
673) . However, the European Court concluded (35 ibid. at 688-689) :

"Community law does not prevent a national legal system from
disallowing the repayment of charges which have been unduly levied
where to do so would entail unjust enrichment of the recipients.
There is nothing in Community law therefore to prevent courts from
taking account, under their national law, of the fact that the unduly
levied charges have been incorporated in the price of the goods and
thus passed on to the purchasers."

The Court has also decided that it is inconsistent with Community law
for a State to impose on a taxpayer the burden of establishing that
unduly paid charges have not been passed on (36 Les Fils de Jules
Bianco SA v. Directeur Gnral des Douanes (1989) 3 CMLR 36) . Thus, in
European law it is accepted that the defence of passing on, though
difficult to establish, does not infringe Community law when made
available by the statute of a member State.



36. The United States and European decisions demonstrate that any
acceptance of the defence of passing on is fraught with both practical
and theoretical difficulties (37 See also Rudden and Bishop, "Gritz
and Quellmehl: Pass it on", (1981) 6 European Law Review 243 esp. at
253-256) . Indeed, the difficulties are so great that, in my view, the
defence should not succeed unless it is established that the
defendant's enrichment is not at the expense of the plaintiff but at
the expense of some other person or persons (38 There is limited
support from the textwriters for the view that passing on is not a
defence: see Birks, Restitution - The Future, (1992) at 75, fn.55;
Burrows, The Law of Restitution, (1993) at 475-476 (though he favours a
mitigation of loss defence in some cases where it is established that
the charge has been passed on); but others consider it is a defence:
see Jones, Restitution in Public and Private Law, (1991) at 46; Palmer,
The Law of Restitution, 1986 Supplement at 255; see also Goff and
Jones, The Law of Restitution, 4th ed. (1993) at 553 where it is
suggested that "(t)he burden should, in principle, be on the defendant
to show that the plaintiff has suffered no loss." In Woolwich, Lord
Goff of Chieveley commented: "(T)he point is not without its
difficulties; and the availability of the defence may depend upon the
nature of the tax": (1993) AC at 178) . In that event, the plaintiff
fails, not because it has passed on the tax or charge, but because the
defendant has been enriched by receiving moneys which belonged to or
proceeded from someone other than the plaintiff. Take, for example,
the case where there is an overpayment of a tax levied on someone other
than the plaintiff who collects the tax and pays it to the public
authority. In such a case, the plaintiff should not recover unless it
is established that the plaintiff will distribute the proceeds to the
true taxpayers.



37. Historically, as I have already noted, the basis of
restitutionary relief in English law was not compensation for loss or
damage but restoration of what had been taken or received. The
requirement that the defendant be unjustly enriched "at the expense
of" the plaintiff can mean that the enrichment is "by doing wrong to"
or "by subtraction from" the plaintiff (39 Birks, An Introduction to
the Law of Restitution, (1985) at 23-24) . Hence, a plaintiff can
succeed by showing that he or she was the victim of a wrong which
enriched the defendant - this is not such a case - or that the
defendant was enriched by receiving the plaintiff's money or property.



38. When the plaintiff succeeds in a restitutionary claim, the court
awards the plaintiff the monetary equivalent of what the defendant has
taken or received, except in those cases in which the plaintiff is
entitled to specific proprietary relief. Because the object of
restitutionary relief is to divest the defendant of what the defendant
is not entitled to retain, the court does not assess the amount of its
award by reference to the actual loss which the plaintiff has
sustained. That is what Windeyer J. was saying in Mason v. New South
Wales (40 (1959) 102 CLR at 146) when he rejected the notion that
impoverishment of the plaintiff is a correlative of the defendant's
unjust enrichment (41 But cf. Air Canada v. British Columbia (1989) 59

DLR (4th) at 193-194 per La Forest J. (with whom Lamer and
L'Heureux-Dub JJ. concurred); Wilson J. contra. See also Beatson,
"Restitution of Taxes, Levies and Other Imposts: Defining the extent
of the Woolwich Principle", (1993) 109 Law Quarterly Review 401 at
427-428; The Law Commission, Restitution of Payments Made Under a
Mistake of Law, (1991) Consultation Paper No.120, pars 3.83-3.85) .



39. Windeyer J. did not regard the fact that the plaintiffs had
"passed on" to their customers the amounts unlawfully charged for
permits as a reason for denying recovery. His Honour said (42 (1959)
102 CLR at 146; see also at 136 per Menzies J) :
"If the defendant be improperly enriched on what legal principle can
it claim to retain its ill-gotten gains merely because the plaintiffs
have not, it is said, been correspondingly impoverished? The concept
of impoverishment as a correlative of enrichment may have some place
in some fields of continental law. It is foreign to our law. Even if
there were any equity in favour of third parties attaching to the
fruits of any judgment the plaintiffs might recover ... this
circumstance would be quite irrelevant to the present proceedings.
Certainly it would not enable the defendant to refuse to return moneys
which it was not in law entitled to collect and which ex hypothesi it
got by extortion."



40. Windeyer J. was directing his remarks to a case in which, as in
Air Canada, the State was asserting its entitlement to payment of the
charge. In the present case, there never was a demand or claim by the
State or the Commissioner that tax was payable in respect of premiums
received under the relevant policies. Here overpayment occurred
simply because Royal made a mistake in the process of self-assessment.
But I do not consider that this difference touches the question
whether passing on the tax or duty is relevant to restitutionary
recovery. Once it is accepted that causative mistake of law is a basis
for recovery, the making of an unlawful demand for payment, though
material to the making of a causative mistake, is no longer of
critical importance.



41. Restitutionary relief, as it has developed to this point in our
law, does not seek to provide compensation for loss. Instead, it
operates to restore to the plaintiff what has been transferred from
the plaintiff to the defendant whereby the defendant has been unjustly
enriched. As in the action for money had and received, the defendant
comes under an obligation to account to the plaintiff for money which
the defendant has received for the use of the plaintiff. The
subtraction from the plaintiff's wealth enables one to say that the
defendant's unjust enrichment has been "at the expense of the
plaintiff" (43 Birks, (1985), op.cit. at 23-24) , notwithstanding that
the plaintiff may recoup the outgoing by means of transactions with
third parties.



42. On this approach, it would not matter that the plaintiff is or
will be over-compensated because he or she has passed on the tax or
charge to someone else. And it seems that there is no recorded
instance of a court engaging in the daunting exercise of working out
the actual loss sustained by the plaintiff and restricting the amount
of an award to that measure.



43. Nonetheless, in the United States, relief has been denied, on
equitable amongst other grounds, to a plaintiff who has passed on the
tax or charge, reference being made to coming to court with unclean
hands (44 Standard Oil Co. v. Bollinger (1929) 169 NE 236; see also
Richardson Lubricating Co. v. Kinney (1929) 168 NE 886) . Why, as
between the plaintiff and the defendant, the passing on of the tax to
customers of the plaintiff results in conduct which should disentitle
the plaintiff in equity from recovery is difficult to understand. The
better view is that, if passing on of the tax disentitles the
plaintiff, it is because, in the particular circumstances, the
defendant's enrichment has not been at the expense of the plaintiff.



44. That was the way in which the problem was approached by Learned
Hand J. in his dissenting opinion in 123 East Fifty-Fourth Street v.
United States (45 (1946) 157 F Rep (2d) 68) . There the Court
rejected the defence of passing on in circumstances where a restaurant
owner, in accordance with advice received from revenue authorities that
it was liable to cabaret tax, paid amounts as and for that tax. The
Court held that the tax was not payable because the restaurant was not
a cabaret. The restaurant owner had charged the tax to its patrons so
that items on the patrons' bills were actually part of the price paid
by them and the money became that of the restaurant owner. The
majority considered that this was no bar to recovery by the restaurant
owner because the money, when paid to the government, belonged to and
was the property of the restaurant owner. However, Learned Hand J. was
prepared to infer that the owner had added the tax as a separate item
to the bills and described it as a tax which it must pay and was
collecting it from patrons in order to pay it to the Treasury. His
Honour regarded as crucial the distinction between passing on the tax
in this form and merely including in the bills the amount of the tax
without saying anything about it.



45. Learned Hand J. went on to say (46 ibid. at 70; see also Wayne
County Produce Co. v. Duffy-Mott Co. (1927) 155 NE 669 at 669 per
Cardozo C.J. (where Duffy-Mott recovered the tax that it had paid to
the federal government but, having charged the tax specifically to its
customers in addition to the price of the goods sold, was held liable
to account to them for the tax recovered)) :
"If it said nothing, I should agree ... that the guests had no legally
recognizable interest in the money collected, which gave them any
claim to it superior to the plaintiff's ... On the other hand, if the
plaintiff collected the money under what the guests must have
understood to be a statement that it was obliged to pay it as a tax,
and that it meant to do so, the money was charged with a constructive
trust certainly so long as it remained in the plaintiff's hands."

According to his Honour, the constructive trust attached to the claim
for recovery of the money so that if the plaintiff recovered the
payments it would hold as trustee for the patrons. That would be no
answer to the claim if the plaintiff could and would distribute the
recovery to the patrons. But that did not appear to be the case so
that in the result, the equities being equal, the legal title should
prevail.



46. In Decorative Carpets Inc. v. State Board of Equalization (47
(1962) 373 P 2d 637) , the Supreme Court of California followed the
dissenting opinion of Learned Hand J. In that case, the plaintiff had
overpaid sales tax with respect to transactions combining sales and
installation. The plaintiff had collected for each transaction giving
rise to a liability to pay sales tax a separately stated amount to
cover the tax imposed on it, and had charged to its customers the
amounts computed to be payable as sales tax on those transactions. The
Court held that the plaintiff's mistake of law gave rise to an
involuntary trust in favour of the customers and that the plaintiff
could recover only if it submitted proof that the refund would be
returned to the customers from whom the payments were erroneously
collected. Traynor J., with whom Gibson C.J., Peters and White JJ.
concurred, said (48 ibid. at 638) :
"To allow the plaintiff a refund without requiring it to repay its
customers the amounts erroneously collected from them would sanction a
misuse of the sales tax by a retailer for his private gain."



47. The Court considered that, although the defendant would
ordinarily, like the plaintiff, become a constructive trustee of the
moneys for the plaintiff's customers, adherence to statutory
procedures precluded the imposition on the defendant of an obligation
to make refunds to the customers. The Court did not discuss the
question whether the defendant would be unjustly enriched if the
plaintiff were unable to offer proof that it could and would refund the
sums to its customers.



48. On the other hand, in Javor v. State Board of Equalization (49
(1974) 527 P 2d 1153) , car purchasers sought to recover amounts of
sales tax which had been passed on to them by retailers. The amount
paid was excessive because of the repeal, with retrospective effect, of
a federal manufacturers' excise tax which had been included in the
sales tax base. The overpaid tax was in excess of $10,000,000;
however, each customer was owed only a very small amount (50 For
example, the plaintiff, who had purchased a Rolls Royce, was owed
$65.72) . Only a retailer could apply for a refund, which was required
to be paid over to the customer. Accordingly, a retailer had no
particular incentive to request the refund. Sullivan J., with whom
Wright C.J., Tobriner, Mosk and Burke JJ. concurred, considered that
(51 (1974) 527 P 2d at 1160-1161) :
"the Board is very likely to become enriched at the expense of the
customer to whom the amount of the excessive tax actually belongs.

... The integrity of the sales tax requires not only that
retailers not be unjustly enriched, but also that the state not be
similarly unjustly enriched."

The Court found that the customers could compel the retailers to make
refund applications, and require the refunded sales tax to be paid
into court.



49. I would accept so much of Learned Hand J.'s analysis in 123 East
Fifth-Fourth Street as leads to the conclusion that the restaurant
owner was a constructive trustee of the amount of the tax received
from its patrons if the owner charged the separate amount of the tax to
its patrons. The tax so received was received by the owner as a
fiduciary on the footing that it would apply the money in payment of
the tax. If that purpose failed or could not be effected because the
tax was not payable then the owner held the moneys for the benefit of
the patrons who paid the moneys. The same result would ensue if the
owner recovered payments from the revenue authority made as and for tax
which was not payable. And, in my view, the patrons who paid the tax
to the owner would have a right of recovery, as Learned Hand J. makes
clear, against the revenue authority so long as it retained the
payments which it was not entitled to retain.



50. But does all this require the further conclusion that in the
circumstances predicated by Learned Hand J. - the addition of the tax
as a separate item to the bills - the restaurant owner could not
recover? I would answer the question in the negative on the footing
that the restaurant owner had a legal title to the money immediately
before it was paid to the revenue authority. In that respect, the
money belonged to the plaintiff even though, if it recovered the
money, it would hold as trustee for the patrons. But, in such a case,
the plaintiff should be required to satisfy the court, by the giving of
an undertaking or other means, that it will distribute the moneys to
the patrons from whom they were collected, thereby recognizing their
beneficial ownership of those moneys.



51. If, however, the plaintiff did not become the constructive
trustee of the moneys by separately charging them as tax to the
patrons, I do not see why the plaintiff's claim should be defeated
simply because the plaintiff has recouped the outgoing from others.
As between the plaintiff and the defendant, the plaintiff having paid
away its money by mistake in circumstances in which the defendant has
no title to retain the moneys, the plaintiff has the superior claim.
The plaintiff's inability to distribute the proceeds to those who
recoup the plaintiff was, in my view, an immaterial consideration, as
Windeyer J. suggested it was in Mason v. New South Wales. There was in
that case the additional element of an unlawful demand but the absence
of that element does not mean that, in the situation under
consideration, unjust enrichment was otherwise than at the plaintiff's
expense.



52. In the present case, that reasoning leads me to the conclusion
that the Commissioner would have no defence to a restitutionary claim
by Royal to recover the mistaken payments of duty. Even if it had
been established that Royal charged the tax as a separate item to its
policy holders so that it was a constructive trustee of the moneys
representing that separate charge when it made the payments to the
Commissioner, it would have been entitled to recover from the
Commissioner, provided that it satisfied the court that it will
account to its policy holders. The Courts below, unlike Learned Hand
J. in 123 East Fifty-Fourth Street, did not draw an inference that the
tax was charged as a separate item to the policy holders. And, in any
event, it has not been suggested that the Court should draw such an
inference.



53. It then follows, in the light of my earlier conclusion that the
discretion under s.111 is to be exercised in accordance with the
principles of the law of restitution, that the discretion was
exercised erroneously. On the basis on which the case was fought in
the courts below, subject to consideration of the two issues still
outstanding, Royal was entitled to recover the overpayments in
conformity with the law of restitution.



Limitation of Actions Act 1958 (Vict.), s.20A

54. Section 20A provided as follows (52 A new s.20A was substituted by
the Limitation of Actions (Amendment) Act 1993 (Vict.)) :
"Actions to recover moneys paid as taxes etc.

(1) No action shall be brought to recover, from the Crown or the
State of Victoria or any Minister of the Crown, or from any
corporation officer or person or out of any fund to whom or which it
was paid, the amount or any part of the amount of any tax, fee, charge
or other impost paid under the authority or purported authority of any
Act, after the expiration of twelve months after the date of payment.

(2) Sub-section (1) of this section shall not apply to any action
or proceeding brought pursuant to any specific provision of any Act
providing for the mode of challenging the validity, or for the
recovery of the whole or any part, of any tax, fee, charge or other
impost actually paid."



55. As the last payment of duty sought to be recovered was paid on
21 August 1989, if s.20A(1) applied, the time within which any action
might be brought to recover duty expired no later than 21 August 1990,
which was prior to the commencement of the proceedings for recovery of
the duty paid.



56. The Appeal Division was of the view that s.20A had no
application for three reasons. First, their Honours thought, from the
speeches of the Attorney-General and others as reported in Hansard,
that the section was introduced to protect the State from the
obligation to repay moneys that might become payable as a consequence
of successful challenges to the constitutional validity of State
fiscal laws. In those speeches reference was made to Dennis Hotels
Pty. Ltd. v. Victoria (53 (1961) 104 CLR 621) and the "windfall" that
the hotel industry would have gained had its challenge to the licensing
fees been successful. While apprehension of the prospect of a
liability to refund imposts as a result of successful challenges to the
constitutional validity of fiscal laws was the occasion and the
mainspring for the introduction of s.20A, the terms of sub-s.(1) are
much wider. It prohibits the bringing of an action to recover the
amount of any impost "paid under the authority or purported authority
of any Act" (emphasis added).



57. The second reason was that the 1987 amendment which
retrospectively declared that duty was not exigible back to 30 June
1985, covering a period of 2 years, would not have been necessary if
s.20A had the effect contended for by the Commissioner. The Appeal
Division therefore concluded that the 1987 amendment at least modified
the operation of s.20A in relation to payments of duty properly made
at the time but deemed retrospectively not to be payable. However,
this reasoning overlooks the possibility that the duty to which the
1987 amendment related may have been paid within one year of the
enactment of the amendment.



58. The third reason was that the imposts sought to be recovered
were not "paid under the authority or purported authority of any Act".
In my view, the Appeal Division was correct in so holding. The
effect of the 1987 amendment was to abrogate any requirement to make a
payment after 30 June 1985 of duty on premiums received on "cost-plus"
policies. Hence, the payment of duty mentioned in the first category
in the document prepared by the Commissioner was not "under the
authority or purported authority of any Act". Likewise, the other
payments of duty sought to be recovered were not made under such
authority or purported authority for the simple reason that the duty
was not payable; instead of imposing duty on the relevant categories
of premium the Act abrogated the liability to pay duty. It is not
possible to read the words "under the authority or purported
authority" as denoting "under a mistaken belief as to authority".



59. It follows that s.20A has no application.



Relief

60. The Appeal Division granted relief in the nature of mandamus by
directing the Commissioner to refund the amount claimed. The
Commissioner submitted that mandamus would not result in an order for
payment of that money.



61. Although the argument was not elaborated, it is to be understood
as invoking the principle that mandamus requires the exercise of the
relevant statutory discretion rather than its exercise in a particular
way (54 Randall v. Northcote Corporation (1910) 11 CLR 100 at 105) .
But that principle means no more than that the administrator to whom
mandamus is directed will be required to perform the legal duty to the
public which is imposed by the statute and ordinarily that duty is
limited to exercising the statutory discretion according to law, there
being no obligation to exercise the discretion in a particular way.
However, if the administrator is required by the statute to act in a
particular way and in certain circumstances, or if the exercise of a
statutory discretion according to law in fact requires the
administrator to decide in a particular way, so that in neither case
does the administrator in fact have any discretion to exercise, then
mandamus will also issue to command the administrator to act
accordingly (55 Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. (1965)
113 CLR 177 at 188 per Kitto J. (dissenting but not on this point),
203, 206 per Windeyer J.; Minister for Immigration and Ethnic Affairs
v. Conyngham (1986) 68 ALR 441 at 448-451) . Moreover, it has long
been recognized that mandamus will issue as a remedy for certain forms
of abuse of discretion upon the principle that "the improper or
capricious exercise of discretion is a failure to exercise the
discretion which the law has required to be exercised" (56 Reg. v.
I.R.C.; Ex parte Fed. of Self-Employed (1982) AC 617 at 650 per Lord
Scarman; see R. v. Askew (1768) 4 Burr 2186 at 2188-2189 per Lord
Mansfield C.J. (98 ER 139 at 141); Padfield v. Minister of Agriculture,
Fisheries and Food (1968) AC 997) .



62. At one time it seems to have been thought that mandamus would
not be granted to enforce payment of money by the Crown (57 See, for
example, Reg. v. Lords Commissioners of the Treasury (1872) LR 7 QB
387) . However, in principle there can be no objection to the grant of
relief by mandamus directed to a statutory officer requiring that
officer to pay money if there be a public legal duty to so act (58 See
Reg. v. Commissioners for Special Purposes of the Income Tax (1888) 21
QBD 313 at 322 per Lindley L.J) . In the present case, the duty to
exercise the discretion was a public duty (59 Reg. v. I.R.C.; Ex parte
Fed. of Self-Employed (1982) AC at 651-652 per Lord Scarman) and it
was a discretion which, in the circumstances of this case, could be
exercised only in one way. Consequently, mandamus will issue not only
to compel exercise of the discretion according to law but also to
compel it to be exercised in the way in which it must be exercised.



63. The appeal must be dismissed.


BRENNAN J. The respondent, a company carrying on the business of an
insurer in Victoria (hereafter "Royal"), issued policies of insurance
against liability for workers' compensation and remitted to the

liability thus arises directly from the provisions of the Taxation Acts
Amendment Act 1987. I see no reason to treat the Commissioner's
liability to refund the amount in item (ii)(a) as other than statutory.
There is no occasion to invoke notions of common law restitution in
order to discover a cause of action entitling a payer to a refund (74
This case is quite different in principle from Air Canada v. British
Columbia (1989) 59 DLR (4th) 161 and Woolwich Building Society v.
Inland Revenue Commissioners (1993) AC 70 where payments had been made
under statutory provisions that were held to be invalid) .



17. It follows that, prima facie, all of the amounts claimed by
Royal are recoverable. The Commissioner's liability to refund would
have been enforceable by action if it were not for s.111(1) but, as
that provision is clearly intended to prescribe the means by which the
Commissioner's liabilities should be discharged, mandamus is the
appropriate remedy to compel the Commissioner to refund overpayments
which she is legally liable to refund.



18. However, as against the prima facie liability to repay the
entire sum of $1,907,908.10 overpaid, the Commissioner raises two
defences: (1) the windfall gain that Royal would make if the
Commissioner were liable to refund all the money overpaid when Royal
had already received from its policy holders premiums that covered the
amounts paid; and (2) s.20A of the Limitation of Actions Act 1958
(Vic.).



The windfall gain defence

19. The fact that Royal had passed on to its policy holders the
burden of the payments made to the Commissioner does not mean that
Royal did not pay its own money to the Commissioner. The passing on
of the burden of the payments made does not affect the situation that,
as between the Commissioner and Royal, the former was enriched at the
expense of the latter. It may be that, if Royal recovers the
overpayments it made, the policy holders will be entitled themselves
to claim a refund from Royal (75 Mutual Pools and Staff Pty. Ltd. v. The
Commonwealth (1994) 179 CLR 155 at 177, 191) of so much of the
overpayments made by Royal to the Commissioner as represents the amount
paid to Royal by the policy holder (76 This was the effect of s.99(8)
and (9) of the Act in relation to the particular refunds which the
Comptroller was directed to make to insurers under s.99. The original
sub-sections inserted by the Accident Compensation Act were amended by
the Stamps and Business Franchise (Tobacco) (Amendment) Act 1985:
s.11(3)(a) and (b)) . However that may be, no defence of "passing on"
is available to defeat a claim for moneys paid by A acting on his own
behalf to B where B has been unjustly enriched by the payment and the
moneys paid had been A's moneys (77 Mason v. New South Wales (1959)
102 CLR 108 at 136, 146; see also Woolwich Building Society v. Inland
Revenue Commissioners (1993) AC at 177-178 and Air Canada v. British
Columbia (1989) 59 DLR (4th), per Wilson J. (diss) at 169-170) .



Time limitations on claims for refunds

20. The Limitation of Actions Act contained a particular provision,
inserted into that Act by the Limitation of Actions (Recovery of
Imposts) Act 1961 (Vic.) (78 s.2. It commenced on 19 December 1961) ,
relating to recovery of money paid as taxes. Section 20A read as
follows:
" (1) No action shall be brought to recover, from the Crown or the
State of Victoria or any Minister of the Crown, or from any
corporation officer or person or out of any fund to whom or which it
was paid, the amount or any part of the amount of any tax, fee, charge
or other impost paid under the authority or purported authority of any
Act, after the expiration of twelve months after the date of payment.

(2) Sub-section (1) of this section shall not apply to any action
or proceeding brought pursuant to any specific provision of any Act
providing for the mode of challenging the validity, or for the
recovery of the whole or any part, of any tax, fee, charge or other
impost actually paid."

No doubt this provision was inserted for the purpose of guarding the
revenue in the event of a taxing statute being held to be ultra vires,
for sub-s.(1) related to taxes paid under the "purported authority of
any Act". But in terms s.20A was not limited to that purpose. It
related also to taxes paid under the actual authority of an Act.
There are some situations where money paid and payable under an Act is
refundable. Federal Commissioner of Taxation v. Official Receiver is
an instance. However, none of the amounts claimed under items (i),
(ii)(b) or (iii) was paid under a provision of the Act which imposed
or purported to impose a duty to pay the amount so paid. An action to
recover any of these amounts would not be barred by s.20A. There is
no time limitation applicable to actions to recover these amounts
except, perhaps, the limitations prescribed by s.5(1) of the Limitation
of Actions Act or applied by analogy to that provision (79 In re
Diplock; Diplock v. Wintle (1948) Ch 465 at 514; Re Croyden; Hincks v.
Roberts (1911) 55 Sol Jo 632. It is therefore unnecessary to consider
the question of the limitation period which might be applicable to a
claim for refund of money paid under a mistake of law (as to which, see
Ministry of Health v. Simpson (1951) AC 251 at 274)) . As the time
limited by s.5(1) is six years from the accrual of the cause of action,
the liability of the Commissioner was not statute barred at the time
when the present proceedings commenced.



21. However, an action to recover the amount in item (ii)(a) would
be an action for recovery of an amount paid under the authority of the
Act, for it was due and owing under the Act at the time when it was
paid. On that account, an action to recover the amount in item
(ii)(a) answers the description of an action falling within s.20A.
But, if s.20A had applied to the payments of stamp duty that had been
made within the retrospective period prescribed by the 1987 amendment,
the 1987 amendment could not have operated to entitle a party to a
refund in respect of stamp duty paid as early as 1 July 1985.
Impliedly, s.20A was excluded by the retrospective operation of the
1987 amendment. The limitation provision applicable to an action to
recover the amount in item (ii)(a) is therefore par.(d) of s.5(1) of
the Limitation of Actions Act, that is, "(a)ctions to recover any sum
recoverable by virtue of an enactment". The limitation period
applicable to such an action is six years from the accrual of the
cause of action.



22. Of course, the application made by Royal is not an action for
the recovery of money; it is for relief in the nature of mandamus.
The relevance of the limitation periods is that they mark the periods
during which a legal liability to refund would have been enforceable
by action, if s.111(1) had not transformed the cause of action into a
right to performance by the Commissioner of her duty to exercise her
power to refund. In the exercise of the Court's jurisdiction to grant
mandamus to compel the Commissioner to discharge her duty by making
refunds under s.111(1), the Court should apply the six-year period of
limitation, refusing relief when proceedings are not brought within
that period. Here, the proceedings were brought within time and an
order compelling the Commissioner to make the refund claimed was
rightly made.



23. The appeal should be dismissed.


DAWSON J. The respondent, Royal Insurance Australia Limited
("Royal"), carried on an insurance business in Victoria. It was
registered under s.96 of the Stamps Act 1958 (Vict.) and was obliged,
in accordance with Pt II, Div.3, Subdiv.11 of that Act, to lodge with
the Comptroller of Stamps monthly returns of premiums received by it.
Under s.97 it was required to pay stamp duties upon those returns.



2. One class of business carried on by Royal was workers
compensation insurance. In 1985 a new scheme, known as WorkCare, was
introduced in Victoria to replace the existing workers compensation
scheme (80 See Accident Compensation Act 1985 (Vict.)) . Under the
new scheme the Accident Compensation Commission became the sole insurer
for workers compensation liabilities and it became necessary to phase
out stamp duties on workers compensation insurance. To this end a
number of sub-sections were added to s.99 of the Stamps Act (81 See
Accident Compensation Act 1985, s.276; Sched.2, "Stamps Act") , the
most significant of which was sub-s.(3) which was as follows:

"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
are not chargeable with stamp duty."

Sub-section (4) provided for the payment of stamp duty on a pro rata
basis in respect of premiums payable on policies for a period
commencing before and expiring after 30 June 1985. Sub-sections (5)
and (6) provided for application to be made for a refund of stamp duty
previously paid in respect of premiums for workers compensation
insurance for a period commencing before and ending after 30 June
1985: a situation commonly referred to as "straddle". Sub-section
(7) provided:

"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."

Sub-sections (8) and (9) provided for the insurance company to pass on
to an insured person any part of the refunded stamp duty which had
been paid by the insured to the insurance company.



3. Further amendments were made to s.99 of the Stamps Act by s.11
of the Stamps and Business Franchise (Tobacco) Amendment Act 1985
(Vict.). New sub-ss.(5) and (6) were inserted providing for
application to be made for a rebate or refund. A substituted
sub-s.(7) was as follows:

"Where an application is made in accordance with sub-section
(5)-

(a) if the application is for a rebate, the amount of the rebate
shall be deducted from 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 Comptroller of Stamps
shall make a refund to the applicant accordingly."



4. In 1987 it was realized that the exemption provided in 1985 did
not cover stamp duty payable in respect of premiums upon a particular
type of workers compensation insurance policy known as a cost plus
policy. Under a cost plus policy the annual premium was paid in
arrears and was recalculated after the close of the relevant period of
insurance so as to form, in effect, a reimbursement of claims made and
paid during that period plus the cost of handling those claims. In
order to extend the exemption from duty to premiums paid upon cost
plus policies, s.99(3) was amended by s.8 of the Taxation Acts
Amendment Act 1987 (Vict.) to embrace premiums received after 30 June
1985 in respect of liabilities incurred before 1 October 1985. The
amendment was made retrospective to 30 June 1985 (82 Taxation Acts
Amendment Act 1987, s.2(4)) . Unlike the 1985 amendment to s.99 which
contained a "straddle" provision, the 1987 amendment exempted from duty
all premiums received after 30 June 1985 in respect of liabilities
insured before 1 October 1985, irrespective of when the liability was
incurred.



5. Royal remained unaware of the 1985 amendments, or of their
significance, for some years. It was also unaware of the 1987
amendments 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 upon those amounts.



6. It seems that the Comptroller of Stamps (now described as the
Commissioner of State Revenue although it is convenient to continue
describing her here as the Comptroller of Stamps (83 See
Administrative Arrangements Act 1983 (Vict.), s.3(10)(a);
Administrative Arrangements Order (No.106) 1992, Orders 4 and 5 and
Schedule; Victorian Government Gazette, 29 April 1992 at 1003-1004) )
gave advice to Royal which caused it to cease the payment of stamp duty
on workers compensation insurance premiums. It then made a demand for
a refund of the payments of stamp duty which it had made in ignorance
of the statutory provisions and, when the demand was not met, commenced
these proceedings seeking a refund of the relevant amount or,
alternatively, a finding that the respondent had overpaid stamp duty
and a refund of the amount found to have been overpaid. The relief
sought was in the nature of mandamus by way of originating motion.
Royal also sought a declaration that the amount in question had been
overpaid and that it was entitled to a refund of that amount. The
explanation for the alternative relief sought is to be found in
s.111(1) of the Stamps Act which in its form at the relevant time was a
general provision for the refund of overpaid stamp duty. Section
111(1) provided:
"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."

Since these proceedings commenced, s.111(1) has been amended to
provide that the Comptroller "must refund the amount of the overpaid
duty" upon an application made within three years of overpayment (84
Section 111(1) was amended by s.36 of the State Taxation (Amendment)
Act 1992 (Vict.)) .



7. At the time these proceedings were commenced it was the
respondent's belief that the Comptroller had made no finding that duty
had been overpaid. Two days after the commencement of proceedings the
Comptroller made a decision not to refund the overpaid duty. It was
not in dispute before the trial judge or on appeal to the Full Court
of the Supreme Court that an amount of stamp duty in the sum of
$1,907,908.10 had been overpaid by Royal in respect of premiums for
workers compensation insurance and that the Comptroller had decided
not to refund any part of that amount.



8. The overpaid duty comprises three amounts. The first amount is
$1,674,301.94 paid in respect of premiums received by Royal for cost
plus policies. This amount may be divided into a figure of
approximately $1,370,000 by way of duty paid on premiums received
during the period from 30 June 1985 to the commencement date of the
legislation which retrospectively removed the liability to pay duty in
respect of that period and a figure of approximately $300,000 paid by
way of duty on cost plus premiums subsequently received, being paid by
Royal in ignorance of the 1987 repeal of duty on cost plus premiums.



9. The second amount is $95,426.95 overpaid by Royal upon
overestimates of premiums for cost plus policies received by it before
1 July 1985 in respect of liabilities incurred up to 1 October 1985.
These payments in respect of overestimates were never owing under the
system which prevailed and would have been the subject of an
adjustment when identified even if the amendments to the legislation
had not taken place in 1985 and 1987.



10. The third amount is $138,179.21 paid as duty on premiums
received by Royal for extensions after 4.00 pm on 30 June 1985 of
policies (other than cost plus policies) taken out before that date.



11. Royal was unsuccessful before the trial judge, who reached the
conclusion that the use of the word "may" in s.111(1) gave the
Comptroller a discretion whether or not to refund overpaid tax. The
Full Court on appeal came to a contrary conclusion, holding that the
context in which the power to refund overpayment of stamp duty was
given to the Comptroller called for its exercise when the requirement
upon which its exercise was conditioned - a finding of overpayment by
the Comptroller - was satisfied. I am of the view that the Full Court
was correct in reaching that conclusion.



12. The predecessor of s.111(1) first appeared as s.34 of the Stamps
Act 1892 (Vict.) and was as follows:

"If after any duty has been paid under the provisions ...
relating to annual licences it shall be found within three months
after the payment of such duty that too much duty has been paid the
Collector of Imposts shall upon being satisfied that such overpayment
has been made 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 thereof to the company person or firm by whom the
over-payment has been made or to any person acting in its his or their
behalf."
It is to be noted that, under this provision, once he was satisfied
that an overpayment had been made, the Collector of Imposts had no
discretion whether to apply to the Treasurer for a refund: he was
required to do so. And the Treasurer was required to make the refund.
There was, however, a time limit for making an application for a
refund. This provision remained unchanged in substance in successive
re-enactments of the Stamps Act, including several consolidations,
until 1958 when it appeared as s.111 in the following form:

"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
thereof to the company person or firm by whom the overpayment has been
made or to any person acting in its his or their behalf."

Again, neither the Comptroller of Stamps nor the Treasurer had any
discretion once the Comptroller was satisfied that an overpayment had
been made: the steps resulting in a refund were required to be taken.



13. By an amendment made in 1978 the provision was recast to appear
in the form which is relevant to these proceedings. That form is to
be found in previous legislation, both Commonwealth and State (85 See
Pay-roll Tax Assessment Act 1941 (Cth), s.24; Pay-roll Tax Act 1971
(Vict.), s.19) . There is nothing in the explanatory memorandum
accompanying the 1978 legislation to suggest an intention to convert
the obligation imposed by the previous provisions into a discretion to
refund overpayments and if such a significant change in policy were
intended, it might be expected to have received some attention. What
is evident is that the new provision was intended to remove the
requirement that the Comptroller of Stamps should make application to
the Treasurer for the refund of overpayments and to allow the
Comptroller herself to make the refund. In that context the use of the
word "may" is explicable in terms of enabling the Comptroller to do
something which she was previously unable to do, rather than in terms
of replacing an obligation with a discretion.



14. The word "may" is frequently merely facultative, leaving open
the question whether the faculty bestowed must be exercised when the
occasion prescribed for its exercise has occurred or whether its
exercise is discretionary. The answer to that question is to be
determined by reference to the nature of the provision and its context
in the relevant legislation (86 See Ward v. Williams (1955) 92 CLR 496
at 505-506) . As Lord Selborne said in Julius v. Lord Bishop of Oxford
(87 (1880) 5 App Cas 214 at 235) :
"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."



15. In Finance Facilities Pty. Ltd. v. Federal Commissioner of
Taxation (88 (1971) 127 CLR 106 at 134) Windeyer J. pointed out that
the word "may", when used of a person having an official position, "is
a word of permission, an authority to do something which otherwise he

could not lawfully do". But the word "may" merely confers the
authority and whether the authority must be exercised in the prescribed
circumstances or whether its exercise is discretionary depends upon the
nature of the authority itself (89 See Macdougall v. Paterson (1851)
11 CB 755 (138 ER 672)) .



16. The condition prescribed for the exercise of the authority
conferred by s.111(1) is a finding of overpayment and it is, in my
view, not to be concluded that when such a finding is made there is a
discretion conferred, rather than a duty imposed, upon the Comptroller
to refund the overpayment. Section 111(1) is a remedial provision
and, even without an historical explanation, it should be construed, so
far as its language will allow, to the advantage of those whom it was
intended to benefit (90 See Bull v. Attorney-General for New South
Wales (1913) 17 CLR 370 at 384 per Isaacs J) . But when regard is had
to the history of the provision, I do not think that it is possible to
regard the section as replacing a previous obligation to refund
overpayments with a discretion, particularly when the use of the word
"may" is wholly explicable by an evident desire to confer upon the
Comptroller an authority which was previously exercisable only by the
Treasurer. To borrow the words of Windeyer J. in Finance Facilities
Pty. Ltd. v. Federal Commissioner of Taxation (91 (1971) 127 CLR at
134) , the scope of the permission or power given to the Comptroller is
circumscribed in this instance both by context and circumstances.



17. No significance can be attached to the use of the word "shall"
in s.99(7) of the Stamps Act in relation to the making of a refund in
both that sub-section's original and amended forms. Sub-section (7)
(which does not apply in the present case) was added in 1985 after the
commencement of the Interpretation of Legislation Act 1984 (Vict.).
Section 45 of that Act provides that, where in an Act passed after the
commencement of the Interpretation of Legislation Act the word "may"
is used in conferring a power, that word shall be construed as meaning
that the power so conferred may be exercised, or not, at discretion,
and, where in such an Act the word "shall" is used in conferring a
power, it shall be construed as meaning that the power must be
exercised. Section 45 has no application to s.111(1) in its relevant
form which pre-dates the Interpretation of Legislation Act, but it
serves to explain the choice of the word "shall" in s.99(7).



18. The Comptroller argued that a number of considerations might
justify her withholding a refund of overpaid stamp duty and submitted
that the possibility of these situations arising explains why it was
the intention of the legislature in s.111(1) to confer a discretion
rather than impose an obligation. Chief among these considerations -
indeed it was said in argument to be the relevant consideration in
this case - was the impossibility of ensuring that, where the duty had
been passed on to some other person, any refund should be similarly
passed on. It was said in the present case that the unlikelihood of
Royal's passing on any refund would result in a windfall to it because
the burden of the duty had in fact been borne by its customers. But
that is a situation for which the legislature might have provided had
it wished to do so and its failure to do so does not indicate an
intention to give to the Comptroller a discretion to retain payments of
stamp duty which were not made pursuant to any legal obligation.
Section 99(8) and (9) when enacted in 1985 provided for an insurance
company to pass on the amount of any refund to those who actually bore
the burden of the overpayment and, indeed, a provision such as s.111(1)
is capable of adaptation to meet that situation. An example is
provided by s.26(1) of the Sales Tax Assessment Act (No.1) 1930 (Cth)
which, as amended in 1933, provided:

"Where the Commissioner finds in any case that tax has been
overpaid and is satisfied that the tax has not been passed on by the
taxpayer to some other person, or, if passed on to some other person,
has been refunded to that person by the taxpayer, the Commissioner may
refund the amount of tax found to be overpaid."

The absence of any qualification of this kind in s.111(1) suggests to
my mind an obligation to refund the overpaid duty rather than a
discretion to withhold repayment in situations which the legislature
might have specified but did not.



19. It must be borne in mind that the occasion for the exercise of
the authority conferred by s.111(1) is the finding of an overpayment
of stamp duty; that is to say, a finding that the Comptroller received
moneys to which she had no entitlement. The sub-section must be read
either as requiring her to refund the overpayment or as conferring a
discretion upon her to keep the moneys notwithstanding that she had no
entitlement to receive them. The principle that a statute will not be
read as authorizing expropriation without compensation unless an
intention to do so is clearly expressed has been described as a
"firmly established rule of law" (92 See C.J. Burland Pty. Ltd. v.
Metropolitan Meat Industry Board (1968) 120 CLR 400 at 406 per Kitto J).
It is at least an analogous proposition that clear words are
required to authorize the retention of moneys received without any
entitlement and I, for my part, would not construe a statute as
conferring a discretion to do so unless such an intention were made
explicit.



20. Nor do I think it can be said that s.111(1) confers a discretion
which must then be exercised in accordance with the law relating to
restitution, for that would be to confer no discretion at all.
Clearly the sub-section authorizes the making of a refund, and is not
confined merely to conferring capacity upon the Comptroller should she
otherwise be under a duty to do so. The occasion for the exercise of
the authority is identified. The only question which arises is whether
the authority must be exercised when the necessary finding of
overpayment has been made or whether its exercise is discretionary. If
the common law, rather than the sub-section, were to govern the
Comptroller's obligation to make a refund, then no doubt a refund would
now be required. That would be the result of applying the decision of
this Court in David Securities Pty. Ltd. v. Commonwealth Bank of
Australia (93 (1992) 175 CLR 353) where it was held that the
principle of restitution upon the basis of unjust enrichment extends to
moneys paid under a mistake of law as well as moneys paid under a
mistake of fact. However, as the law stood, or at least was believed
to have stood, before David Securities, moneys paid under a mistake of
law were not recoverable and Royal was not entitled to recover upon the
basis of a mistake of law. And, if the common law of restitution
governed the Comptroller's obligation under s.111(1), that result must
have been intended by the legislature, because s.111(1) came into force
before the decision in David Securities and the legislature cannot be
taken to have anticipated that decision.



21. Moreover, assuming that the common law was intended to govern
the Comptroller's obligations under s.111(1) and even assuming that
the effect of that sub-section changed following David Securities, the
bulk of Royal's claim was not paid under a mistake of law or fact. Of
the total amount of $1,674,301.94, some $1,370,000 was paid in respect
of premiums received for cost plus policies between 30 June 1985 and
the commencement of the retrospective legislation in 1987. That amount
of duty was payable according to law at the time it was paid and only
became an overpayment when the legislation was retrospectively
amended. It does not seem to me that the retrospective amendment
converted the payments of duty making up the amount of $1,370,000 into
payments made under a mistake of law, however much the amendment
retrospectively removed the Comptroller's entitlement or authority to
receive those payments. As Deane J. observed in University of
Wollongong v. Metwally (94 (1984) 158 CLR 447 at 478) :

"A parliament may legislate that, for the purposes of the law
which it controls, past facts or past laws are to be deemed and
treated as having been different to what they were. It cannot,
however objectively, expunge the past or 'alter the facts of
history'".

It need hardly be added that the legislation in question did not deem
the payments made by Royal to have been made under a mistake of fact
or law.



22. No question such as that which arose in Air Canada v. British
Columbia (95 (1989) 59 DLR (4th) 161) would arise in the present case.
In the Canadian case a majority of the Supreme Court held that, whilst
moneys paid under a mistake of law might be recovered upon the basis of
unjust enrichment, that doctrine did not extend to moneys paid under
unconstitutional legislation. No question of unconstitutionality
arises in this case. The application of the common law would also
raise the question whether the principle of unjust enrichment can be
invoked when moneys paid under a mistake of fact or law constitute an
expense which has been passed on to someone else, as the respondent
insurer is said to have passed on the overpayments of stamp duty to its
insured in this case. The better view would seem to be that it is the
unjust enrichment of the payee rather than loss suffered by the payer
which should govern entitlement to restitution, but, having regard to
the view which I take, it is unnecessary to determine that question in
these proceedings.



23. Were the Comptroller to be governed by the common law rather
than s.111(1) with regard to her obligation, if any, to refund the
overpaid stamp duty, the remedy available to the respondent would be
of a quite different nature. The respondent would then have an action
for money had and received based upon a right to restitution. On the
other hand, were the Comptroller's exercise of her authority
discretionary under s.111(1), the remedy available to Royal would be
confined in the first place to requiring the Comptroller to exercise
her discretion and then to contesting the validity of its exercise by
way of judicial review. The confined grounds upon which an
administrative decision may be reviewed by a court would preclude the
substitution of a decision based upon restitutionary principles. Of
course, a court would require the discretion to have been exercised
having regard to the scope and purpose of the relevant legislation and
to be within the confines formulated in Associated Provincial Picture
Houses Ltd. v. Wednesbury Corporation (96 (1948) 1 KB 223) with regard
to reasonableness. But that is something different from an application
of the common law relating to restitution. That may be seen from the
decision in Reg. v. Tower Hamlets London Borough Council; Ex parte
Chetnik Developments Ltd. (97 (1988) AC 858) where it was held that
the purpose of legislation, which conferred a discretion upon a borough
council to refund overpaid rates, extended to the repayment of rates
paid under a mistake of law. The exercise by the council of its
authority was, however, discretionary notwithstanding that it was to be
governed by the scope and purpose of the legislation in question, as
well as the principle of reasonableness as applied to administrative
discretions. True it is that Lord Goff of Chieveley pointed out that
the general principles of the law of restitution should be of
assistance in the exercise of the discretion, but it is clear that he
did not regard those principles as necessarily determining the
outcome.



24. However, as I have said, I do not regard s.111(1) as conferring
a discretion. Once the Comptroller found that duty had been overpaid,
she was under an obligation to refund it. The necessary appropriation
to enable her to do so was to be found in s.166D of the Stamps Act
which provided:

"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."

It may observed that, in the light of s.166D, if the Comptroller's
obligation to refund overpaid tax were dependent upon the common law,
there would seem to be no work for s.111(1) to do and its existence
would be superfluous.



25. It is necessary then to turn to s.20A(1) of the Limitation of
Actions Act 1958 (Vict.). That sub-section provides (98 A new s.20A
has since been substituted into the Limitation of Actions Act 1958
(Vict.) by s.4 of the Limitation of Actions (Amendment) Act 1993
(Vict.)) : "No action shall be brought to recover, from the Crown or
the State of Victoria or any Minister of the Crown, or from any
corporation officer or person or out of any fund to whom or which it
was paid, the amount or any part of the amount of any tax, fee, charge
or other impost paid under the authority or purported authority of any
Act, after the expiration of twelve months after the date of payment."



26. It was pointed out on behalf of Royal that s.20A was inserted in
the Limitation of Actions Act in 1961 to afford protection to the
State of Victoria against its taxing Acts being found to be
unconstitutional (99 cf. Mason v. New South Wales (1959) 102 CLR 108).
However, even accepting that to be the reason for the legislation,
its ambit clearly extends beyond taxes paid under unconstitutional
legislation and there is no occasion to read down its express words in
that regard. Nevertheless, the sub-section is confined to taxes etc.
paid "under the authority or purported authority of any Act" and those
words are not apt to describe the overpayment of duty in this case.
Accepting, as I do, that the retrospective legislation in 1987 removed
any requirement to pay or authority to receive duty on premiums
received in respect of cost plus policies during the period from 30
June 1985 until the commencement of the legislation, none of the duty
overpaid by Royal could be described as paid "under the authority or
purported authority of any Act". There simply was no Act conferring or
purporting to confer authority with respect to the duty overpaid by
Royal. Assuming, without deciding, that s.20A(1) was capable of
applying, directly or indirectly, in proceedings by way of judicial
review, that sub-section had no application in the circumstances of
this case. It was not contended that any limitation period otherwise
prescribed by the Limitation of Actions Act had any application in the
present circumstances.



27. For these reasons, I would dismiss the appeal.


TOOHEY J. For the reasons given by Brennan J., the appeal should be
dismissed.


McHUGH J. I agree that the appeal should be dismissed for the
reasons given by Brennan J.