THE COMMONWEALTH AND ANOTHER Sales Tax-Tax paid on sale of secondhand goods-Claim for refund-Voluntary
payment-Mistake of law-Validity of Act-Sales Tax Procedure Act 1934-1935 (No. 53 of 1934-No. 12 of 1935), sec. 12A. Constitutional Law (Cth.)-Action against Commonwealth-The Constitution (63 64
Vict. c. 12), sec. 75. MELBOURNE,
Prior to the decision in Deputy Federal Commissioner of Taxation (S.A.) V. Ellis &Clark Ltd., (1934) 52 C.L.R. 85, the plaintiff had paid, though with reluctance, sales tax on certain secondhand goods sold by him in 1931. In an action commenced in 1935 the plaintiff sought to recover from the Common- wealth and the Federal Commissioner of Taxation the money so paid as money unlawfully demanded and received by the commissioner as tax in respect of the sale of secondhand goods.
Held that judgment should be entered for the defendants:- By Latham C.J. and McTiernan J., on the ground that the money was paid voluntarily under a mistake of law and, therefore, was irrecoverable,
By Rich, Starke and Dixon JJ., on the ground that the action was barred by sec. 12A of the Sales Tax Procedure Act 1934-1935, which was a valid enact- ment of the Commonwealth Parliament.
Per Rich and Dixon JJ.: See. 75 of the Constitution has not the effect of precluding the Commonwealth Parliament from exercising legislative control in respect of the existence of causes of action against the Commonwealth.
The Commonwealth v. New South Wales, (1923) 32 C.L.R. 200, explained.
In an action brought in the High Court by James Werrin against the Commonwealth of Australia and the Federal Commissioner of Taxation the parties concurred in stating, for the opinion of the Full Court. a case which was substantially as follows :--------
1. Prior to and at the time of the execution of the agreement hereinafter referred to and until the completion of the purchase under the agreement the plaintiff, under the name of James Werrin &Co., carried on the business of a glass merchant and manufacturer at Newcastle in the State of New South Wales.
2. On or about 9th June 1931 a company styled James Werrin &Co. Ltd. (hereinafter called the company) was registered under the Companies Act of the State of New South Wales. The company appointed one Norman Oliver Whale to be its public officer for the purposes of the Sales Tax Assessment Acts.
3. By agreement bearing date 15th September 1931, made between the plaintiff and the company, the plaintiff sold to the company, for a certain consideration, £1,274 4s. 7d., mentioned in par. 1 (2) of the agreement, inter alia, certain plant, machinery, office furniture and equipment and tools of trade and a certain typewriter, motor- car and motor delivery truck, all of which were and had been used by the plaintiff in carrying on his before-mentioned business. The total consideration was to be satisfied as to the greater part by the issue of shares in the company, the balance of the consideration being met…
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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Werrin v The Commonwealth [1938] HCA 3
Case
[1938] HCA 3
Decision Date
CaseChat Overview and Summary
The plaintiff, James Werrin, commenced an action in the High Court of Australia against the Commonwealth of Australia and the Federal Commissioner of Taxation seeking to recover £36 1s. 9d. paid as sales tax on secondhand goods sold in 1931. The plaintiff contended that this tax was unlawfully demanded and received. The case was presented to the Full Court by way of a special case stated for their opinion.
The legal issues before the court were whether the plaintiff was entitled to recover the sum paid as sales tax, and if so, whether any legislative provisions prevented such recovery. Specifically, the court had to consider whether the payment was voluntary, made under a mistake of law, and the effect of section 12A of the Sales Tax Procedure Act 1934-1935 on the plaintiff's claim. The validity of section 12A was also challenged.
A majority of the court, comprising Latham C.J. and McTiernan J., held that the plaintiff was not entitled to recover the money. Their reasoning was that the payment was made voluntarily under a mistake of law, and therefore, it was irrecoverable. Rich, Starke, and Dixon JJ. reached the same conclusion, but on the ground that the action was barred by section 12A of the Sales Tax Procedure Act 1934-1935, which they considered to be a valid enactment. Rich and Dixon JJ. further noted that section 75 of the Constitution did not preclude the Commonwealth Parliament from legislating to control the existence of causes of action against the Commonwealth.
The court ordered that judgment be entered for the defendants, with costs.