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Torrens Aloha Pty Ltd v Citibank NA

Torrens Aloha Pty Ltd v Citibank NA

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Case Copied 21 February 1997 44 min read

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CATCHWORDS

LIMITATION OF ACTIONS - cause of action to recover moneys paid under a mistake of law - when cause of action first accrues - whether cause of action does not accrue until the High Court recognises a right to recover moneys paid under a mistake of law - relevance of the Court's law-making functions to accrual of a cause of action.

RELEASE - construction of deed of release - whether release applies to a cause of action not in the contemplation of the parties at the time of execution - principles of construction applicable to releases.

Federal Court Rules O 8, r 1, r 2; O 9, r 7; O 11, r 16; O 20, r 2
Income Tax Assessment Act 1936 (Cth), s 128B(5), s 221YL, s 221YN, s 261
Income Tax (Dividends and Interest Withholding Tax) Act 1974 (Cth)
Judiciary Act 1903 (Cth), s 79
Limitation Act 1969 (NSW), s 14(1)(a), s 56(1), s 63

Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1
Baker v Courage & Co [1910] 1 KB 56
Bilbie v Lumley (1802) 2 East 469
Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1
Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51
Commonwealth of Australia v Dixon (1988) 13 NSWLR 601
Cooke v Gill (1873) 8 LR CP 107
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 23 FCR 1
De Beauvoir v Owen (1850) 5 Ex 166; 155 ER 72
Dietrich v The Queen (1992) 177 CLR 292
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112
In re Mason [1929] 1 Ch 1
John Robertson & Co Ltd v Ferguson Transformers Pty Ltd (1973) 126 CLR 65
Love and Peters v Attorney-General (NSW) (1988) 16 NSWLR 24
McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1
Pavey v Matthews Pty Ltd v Paul (1987) 162 CLR 221
State Government Insurance Office v Trigwell (1979) 142 CLR 617

United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Wik Peoples v State of Queensland (1996) 141 ALR 129

TORRENS ALOHA PTY LIMITED v CITIBANK N.A.
NG 230/96

Foster, Sackville, Lehane JJ.
Sydney
21 February, 1997

IN THE FEDERAL COURT OF AUSTRALIA     )
NEW SOUTH WALES DISTRICT REGISTRY     )    NG 230/96
GENERAL DIVISION  )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: TORRENS ALOHA PTY LIMITED

Appellant

AND: CITIBANK N.A.

Respondent

CORAM: FOSTER, SACKVILLE, LEHANE JJ.
PLACE: SYDNEY

DATE:21 February, 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

The appeal be dismissed with costs.

NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1997] FCA 77
Decision Date: 21 FEBRUARY 1997

CaseChat Overview and Summary

This is an appeal from orders made by a Judge of this Court dismissing an application filed by the appellant, Torrens Aloha Pty Ltd (Appellant), and also dismissing the appellant's motion for substituted service of the application and statement of claim. The appeal is brought as of right, on the basis that the orders made by the trial Judge were final. The Appellant was incorporated in New South Wales and was at all material times the trustee of the Tovey Trust. On 19 June 1984, the Appellant entered into a "Multi-Currency Credit Agreement" (the "Credit Agreement") with the Respondent, Citibank NA, a corporation incorporated in the United States and having a registered office in Singapore. Under the Credit Agreement, Citibank NA agreed to make periodic advances of foreign currency to the Appellant not exceeding A$16 million. The Credit Agreement provided that if the borrower was required to deduct any taxes from interest payments due to Citibank NA, the sum payable was to be increased so that Citibank NA received an amount equal to the sum it would have received had no deductions been made. The Appellant pleaded a case apparently based on the principles considered by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. The statement of claim alleged that the Appellant had paid $232,553.15 to the Australian Tax Office ("ATO"), in the mistaken belief that the payment of interest withholding tax ("IWT") was its responsibility and not that of Citibank NA. The Appellant asserted that Citibank NA was liable to refund the sums paid to the ATO under a mistake of law. The trial Judge dismissed the application on the ground that a deed of waiver executed by the Appellant on 8 October 1987 was effective to extinguish any claim that the Appellant may have had based on the principles laid down by David Securities, a case decided five years after the deed was executed. The trial Judge rejected an alternative argument put on behalf of Citibank NA, that any claim by the Appellant had been barred by the operation of the Limitation Act 1969 (NSW) (the "Limitation Act"). Having regard to the grounds on which the trial Judge made the orders, it is apparent that the parties were correct in regarding the orders as final rather than interlocutory. Accordingly, it is appropriate to address the substantive issues argued on the appeal. The parties debated the limitation point at some length. Mr Walker, who appeared with Mr Bell for the Appellant, argued that any cause of action available to the Appellant, even if not yet precisely formulated, is statute barred. Since the case has been conducted on this basis, in my opinion the better course is to address the issues on the assumption, expressly adopted by the Appellant, that its substantive case is that identified by the trial Judge, if not by the pleadings as presently framed. It is convenient to commence with the limitation point, which was raised on the appeal by Citibank NA's notice of contention. Section 14(1)(a) of the Limitation Act provides as follows:"An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom he claims:(a)a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed."The Appellant submitted that its action to recover the grossing-up payments made to Citibank NA was not barred by s.14(1)(a) of the Limitation Act because the cause of action did not "first accrue" until the High Court changed the law in David Securities to allow restitutionary claims based on a mistake of law. Mr Walker contended that it was now virtually universally accepted that judges make law. The "fairy tale" that judges simply declare the law had been discarded. As Brennan J said in O'Toole v Charles David Pty Ltd (1991) 171 CLR 232, at 267:"Nowadays nobody accepts that judges simply declare the law; everybody knows that, within their area of competence and subject to the legislature, judges make law".Until the High Court delivered judgment in David Securities, an action to recover moneys paid under a mistake of law was doomed to failure. By holding that a restitutionary claim could be based on a mistake of law, the High Court in effect created a new cause of action. Had the Appellant instituted proceedings within six years of making the grossed-up payments to Citibank NA, the proceedings would have been summarily dismissed. Since the Appellant could only have succeeded in its claim once the High Court had altered the law, the Appellant's cause of action should be regarded as having "first accrued" on 7 October 1992, the date of the High Court's decision. It is, perhaps, a little curious that the Appellant's argument appears not to have been authoritatively considered in Australia. There is plainly nothing novel about courts making new law, whether by overruling previous decisions or by developing new or modified principles. It was not until 1966 that the House of Lords pronounced itself capable of overruling its own decisions: Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. But the High Court has not been so constrained and from an early stage has been prepared to depart from its own decisions: Australian Agricultural Co v Federated Engine-Drivers and Fireman's Association of Australia (1913) 17 CLR 261, at 275-279, per Isaacs J. In a constitutional context, the Engineers' Case provides a striking example: Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1928) 28 CLR 129. More fundamentally, there is nothing novel about judges and legal commentators acknowledging that courts make law. It is true that the acknowledgments have become more frequent as courts grapple with the difficult task of defining or identifying the limits of the judicial law-making function. But rejection of the "fairy-tale" is not, as Mr Walker's submissions rather implied, a recent phenomenon. In State Government Insurance Office v Trigwell (1979) 142 CLR 617, at 650-651, Murphy J pointed out that in 1873 John Austin had characterised the theory that the judiciary does not make the law as a "childish fiction": Lectures in Jurisprudence (4th ed, 1873) at 655. Indeed in the same judgment, Murphy J noted (at 650) that Bracton had accepted that the growth of the law through judicial decisions was inevitable and that Sir Francis Bacon, later Lord Chancellor, in The Advancement of Learning (1605), had recognised that the law grew consciously through decided cases. Recognition of the law-making function of appellate courts has provided the rationale for the technique of prospective overruling, which has been applied by United States courts since at least the mid-nineteenth century

Orders