David Securities Pty Ltd & Ors v Commonwealth Bank of Australia

David Securities Pty Ltd and A & T Rahme & Sons Pty Ltd (the applicants) sought special leave to appeal to the High Court of Australia against a decision of the Full Court of the Federal Court. The dispute arose from foreign exchange loans made by the Commonwealth Bank of Australia (the respondent), concerning the recovery of moneys paid under a mistake of law.

The primary legal issue before the High Court was whether moneys paid pursuant to a mistake of law are recoverable by the payer. A secondary issue concerned whether the absence of specific evidence of mistake, such as a witness statement asserting a mistaken belief as to the law, constitutes a bar to recovery, or if the Court's views on reliance are applicable. The parties also wished to reserve the question of whether section 261 of the *Income Tax Assessment Act* rendered void a provision in the loan documents requiring the borrower to pay withholding tax.

The Full Court of the Federal Court had proceeded on the assumption that section 261 rendered the withholding tax provision void. On that basis, it held that the moneys paid could not be recovered because the established law is that money paid under a mistake of law is not recoverable, unless the High Court were to alter that principle. The respondent did not oppose the grant of special leave on the question of recovery of moneys paid under a mistake of law, but sought to reserve the issue of section 261's operation.

Special leave to appeal was granted on the question of whether moneys paid under a mistake of law are recoverable. The Court also reserved the question of the operation of section 261 of the *Income Tax Assessment Act* and the requirement for specific evidence of mistake.