COMMISSIONER OF STATE REVENUE (VIC) v ROYAL INSURANCE AUSTRALIA LIMITED
Judges: Mason CJBrennan J
Dawson J
Toohey J
McHugh J
Court:
Full High Court
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 Comptroller of Stamps amounts which Royal believed to be due to the Comptroller as stamp duty chargeable on premiums received in respect of those policies. The appellant Commissioner is the statutory successor of the Comptroller
[60]
The overpayments of stamp duty were made in respect of premiums paid on two classes of policy which were described respectively as ``wages'' policies and ``cost plus'' policies. The premium payable in respect of a wages policy was initially calculated on an estimate of wages for a year with an adjustment being made at the end of the year based on the actual wages paid for that year. The premium payable in respect of a cost plus policy was paid in arrears and was effectively a reimbursement of incurred liabilities, that is the amount paid out by the insurer in respect of claims made in the preceding period plus the cost involved in handling the claim.
The
Accident Compensation Act
1985
[62]
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in the case of premiums paid for policies where the period of risk commenced before but expired after that time (the first 1985 amendment). If a registered company had paid an amount of stamp duty and the period of risk commenced before but ended after 4.00pm on 30 June 1985, provision was made for proportionate refunds to be made by the Comptroller. The provision for refunds was itself amended later in 1985 by the Stamps and Business Franchise (Tobacco) (Amendment) Act 1985 (Vic.) [64]The following amounts were the integers of the total amount that was overpaid before Royal realized that the premiums in respect of which it had been making payments to the Comptroller were no longer chargeable with stamp duty:
- (i) $138,179.21 in respect of premiums on wages policies received for extensions after 4.00pm on 30 June 1985;
- (ii) $1,674,301.94 in respect of premiums on cost plus policies received after 4.00pm on 30 June 1985, of which approximately
-
- (a) $1,370,000 was paid in respect of premiums received before the 1987 amendment commenced, and
- (b) $300,000 was paid in respect of premiums received after the 1987 amendment commenced;
- (iii) $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.
The payments in items (i) and (ii)(b) were made by mistake of law, Royal being unaware of the 1985 and 1987 amendments. The payments in item (ii)(a) were due and owing when paid but, by retrospective operation of the 1987 amendment, were deemed not to have been due and owing. The payments in item (iii) were made provisionally and should have been adjusted in the ordinary course of dealing between Royal and the Comptroller when the over-estimate of premiums was ascertained. No error of law affects this item.
When Royal became aware that it had made payments to the Comptroller that it was not liable to pay or was deemed not to have been liable to pay, it demanded a refund, but no response was received to Royal's solicitors letter of demand written on 19 September 1990. On 17 October 1990, Royal commenced proceedings against the Comptroller 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.''
Royal thus sought an order in the nature of a mandamus to compel the Comptroller to perform what was said to be her duty under s. 111(1) of the Act. That sub-section read:
``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.''
When the proceedings were commenced the Comptroller had made no finding of overpayment for the purposes of s. 111(1). However, a finding was made on 19 October 1990 as appears from a statement of facts, agreed for the purposes of the proceedings, which contains the following paragraph:
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``On the 19th October 1990, the Comptroller of Stamps:
- (a) found that duty had been overpaid in the amounts referred to in [ an affidavit setting out the amounts appearing in items (i), (ii) and (iii), above;]
- (b) decided not to make a refund of any part of that amount under s. 111 of the Stamps Act 1958.''
Although Royal's solicitors on 25 January 1991 requested reasons for the Comptroller's decision not to make a refund, no reasons were furnished. The proceedings were continued on the footing that the original notice of motion was sufficient to enliven the Supreme Court's jurisdiction to make an order in the nature of mandamus under s. 111(1). The question in issue is whether an order should be made directing the Commissioner to refund the moneys overpaid by Royal.
Does s. 111(1) create a duty to refund?
Although the power conferred by s. 111(1) is expressed to be discretionary, Royal submits that on a true construction of the Act, the Commissioner is under a duty to refund overpaid duty once she ``finds... that duty has been over-paid''. The question whether the repository of a discretionary power is under a duty to exercise the power depends upon the intention of the legislature as revealed in the language of the statute and, in ascertaining that intention, there is a prima facie presumption ``that permissive or facultative expressions operate according to their ordinary natural meaning''.
[66]
Section 111(1) was introduced into the Act by the Stamps Act 1978 (Vic.) which commenced on 1 January 1979. Prior to that time, the general refund provision was to be found in s. 111 which read:
``111. 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.''
This provision, by using the mandatory ``shall'', cast upon the Comptroller a duty to apply to the Treasurer for a refund to the party entitled once the Comptroller was satisfied that an overpayment had been made and it cast upon the Treasurer a duty to make a refund accordingly. But these duties could arise only if the party entitled applied for a refund within 12 months after the overpayment had been made. Under this provision, the Comptroller had no access to the Consolidated Fund of Victoria out of which the refund was to be paid. When the new s. 111(1) was introduced, not only was the mandatory term ``shall'' replaced by the facultative term ``may'' in the creation of the power to refund but the Comptroller was given power to make the refund directly.
[68]
When the first 1985 amendment was introduced by the Accident Compensation Act , a duty to make certain refunds was imposed on the Comptroller and a time limitation for applying for those refunds was prescribed by s. 99(5) and (7). Those provisions read:
``(5) Where a registered company paid an amount in respect of stamp duty in respect
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of a premium for workers compensation insurance in respect of a period commencing before and ending after four o'clock in the afternoon on 30 June 1985 at a rate of 3.5 per centum of the premium, that registered company may, before 1 December 1985, apply to the Comptroller of Stamps in writing in the form approved by the Comptroller for a refund of stamp duty calculated in accordance with [ a formula which apportioned premiums by reference, inter alia, to the number of days after 30 June 1985 to which the insurance relates.](7) 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.''
The first 1985 amendment was itself amended by the second 1985 amendment. The latter amendment deleted the special time limitation in s. 99(5), altered the formula therein contained and provided for rebates as well as refunds of stamp duty. An express duty to make refunds and rebates was retained in a new s. 99(7). Evidently, it was not then the legislature's understanding that any duty had been imposed on the Comptroller by s. 111(1) to make a refund once an overpayment was found to have been made. Had that been the legislature's understanding, it would not have imposed expressly a duty to refund a proportion of the stamp duty which, by reason of the 1985 amendments, had been overpaid. Rather, I would take the legislature to have intended that, while s. 111(1) was the source of the power to make a refund out of the Consolidated Fund, s. 99(7) should be the source of a particular duty imposed on the Comptroller to make the refund prescribed by s. 99.
Subsequently, s. 166D of the Act was introduced
[69]
In terms, s. 111(1) confers a discretionary power on the Commissioner to refund moneys overpaid out of the Consolidated Fund of Victoria (in lieu of applying to the Treasurer for the money), but creates no duty to do so. In other words, once the Commissioner finds that an overpayment has occurred, there arises a power to make a refund by withdrawing from the Consolidated Fund an amount which is limited to the amount found to have been overpaid but which, by reason of s. 166D, does not exceed the amount which the Commissioner is liable to pay. But no enforceable obligation to make the refund arises merely from a finding that there has been an overpayment. It is arguable that, prior to the commencement of s. 166D, the Commissioner was empowered in exercise of her discretion to refund an overpaid amount ex gratia where there was no legal liability to refund. Presumably, s. 111(1) would have been construed as an implied appropriation. But the express appropriation of the Consolidated Fund by s. 166D is limited to refunds in discharge of liabilities of the Commissioner. If the Commissioner is liable to make a refund she is liable ``to pay amounts in accordance with the provisions of this Act'', that is, she is liable to discharge her liabilities in accordance with s. 111(1). But she is under no duty to make a refund unless there be an antecedent liability to do so. Unless such a liability exists, there is no duty to exercise the power conferred by s. 111(1) nor any authority to do so.
Relief
If the Commissioner is under a liability to refund an amount which she has found to have been overpaid under s. 111(1) of the Act, can she be compelled to perform her duty to do so? The power is conferred in terms that are broad enough to embrace two situations of overpayment: one, where there is no legal liability to refund the overpaid amount; the other, where there is such a liability. In the former situation, there is nothing in the Act or in the general law which would create a duty to refund the overpaid amount and s. 166D precludes the Commissioner from making such a payment. In the latter situation, however, an exercise of the power conferred by s. 111(1) of
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the Act is the means by which the Commissioner's legal liability is discharged.Where the Commissioner is liable to refund an amount overpaid and has power to do so, a refusal to exercise the power can be judicially reviewed in accordance with the approach stated by Earl Cairns L.C. in
Julius v. Lord Bishop of Oxford
:
[70]
``there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so.''
The Commissioner is a public officer vested with a power to be exercised for the purpose, inter alia, of discharging her liabilities. When the power exists and the circumstances call for the fulfilment of a purpose for which the power is conferred, but the repository of the power declines to exercise the power, mandamus is the appropriate remedy even though the repository has an unfettered discretion in other circumstances to exercise or to refrain from exercising the power.
[71]
Legal liability to refund
Some of the moneys overpaid by Royal were paid under a mistake. The amounts in items (i) and (ii)(b) were paid under a mistake as to the existence of a statutory liability to pay; the amount in item (iii) was paid under a mistake as to the quantum of premiums to be received or, alternatively, was paid provisionally pending final determination of the quantum of the premiums actually received. In the case of the amounts in items (i) and (ii)(b), the Comptroller must be taken to have known at all material times that the statutory liability had been repealed and that she had no entitlement to retain these amounts.
[73]
However, there was no mistake affecting the payment of the amount in item (ii)(a). When paid, the Comptroller was entitled
-
indeed, she was bound
-
to retain it. But, by force of the operation attributed to the 1987 amendment, the Commissioner is retrospectively disentitled to retain what was paid as stamp duty under the Act as it had stood before the 1987 amendment commenced. What effect in law does the 1987 amendment have? If the 1987 amendment is to be effective retrospectively, the rights and liabilities of the Commissioner and those who overpaid money must be so altered as to place them in the same position as they would have been in had the Act not imposed the stamp duty abolished by the 1987 amendment during the period of the retrospective operation of the 1987 amendment. In other words, the Commissioner is bound to refund the amount paid by way of stamp duty exigible under the Act during the period of the retrospective operation of the 1987 amendment. It is only by creating a right to a refund of stamp duty already paid that retrospective effect can be given to the 1987 amendment. The Commissioner's 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]
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.
However, as against the prima facie liability to repay the entire sum of $1,907,908.10
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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
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]
Time limitations on claims for refunds
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]
``(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.
FC of T 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]
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.
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
ATC 4978
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.The appeal should be dismissed.
Footnotes
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