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OAMINGTON PTY LTD (RECEIVER AND MANAGER APPOINTED) & ANOR v COMMR OF LAND TAX & ANOR

Judges:
Hamilton J

Court:
Supreme Court of New South Wales - Administrative Law Division

Judgment date: 24 November 1997

Hamilton J

These are proceedings between Oamington Pty Limited (Receiver and Manager Appointed) (``Oamington'') and the Australia and New Zealand Banking Group Ltd (``ANZ'') as plaintiffs, the Commissioner of Land Tax as first defendant and Sanwa Australia Limited (``Sanwa'') as second defendant for declaratory relief concerning the incidence of land tax payable upon certain properties. The second defendant is variously referred to in Court documents, in documents created in his office and in legislation as ``the Commissioner of Land Tax'' and ``the Chief Commissioner of Land Tax'' and is hereinafter referred to by me as ``the Commissioner''. The proceedings have been heard in the Administrative Law Division of this Court. It is unusual for what are essentially proceedings between private parties to be heard and determined in the Administrative Law Division. This unusual situation has arisen because there were originally proceedings in this Division relating to the subject matter in the form of a statutory appeal by the first defendant against an assessment of land tax by the Commissioner and, upon these proceedings being instituted to determine the dispute among all 3 parties, they have been conducted in this Division although it is no longer necessary to hear the statutory appeal.

Facts

These proceedings arise from one undoubted and one or more alleged mistakes made within government departments relating to the valuation of land and the imposition of land tax and the statutory charge therefor. The following facts are undisputed or appear plainly from the documents. The first plaintiff, Oamington, was the registered proprietor and beneficial owner of 2 parcels of land, one at Vaucluse being the land comprised in Folio Identifier 1/708695 known as 1A Coolong Road, Vaucluse (``the Vaucluse land'') and one consisting of various allotments at Berkeley Vale being the land comprised in Folio Identifier 3000/815746 (``the Berkeley Vale land''). Sanwa held a mortgage over the Vaucluse land which was registered No W709205 on 16 January 1987 (``the mortgage'') and ANZ held a fixed and floating equitable charge over all of the assets of Oamington which was granted on 30 June 1989 and registered No 39959 (``the charge''). The mortgage and the charge are collectively referred as ``the mortgages''. The relevant effect of the charge was that it was a first charge in respect of the Berkeley Vale land and a second ranking security in respect of the

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Vaucluse land ranking in priority after the mortgage. In addition, the Land Tax Management Act 1956 (``the Act'') provides for the charging of land tax on land situated in New South Wales owned as at 31 December in each year. Tax is charged in respect of a calendar year in respect of land owned on 31 December of the previous year. Tax is imposed and assessed by reference to the value as it stands at that date. The Valuer General in 1987 revalued the Vaucluse land. It was intended to record a value of $4,800,000. Through a mistake there was recorded a value of $480,000. The actual circumstances of the occurrence of that mistake do not appear from the evidence but it was very likely the simple omission of a nought. The erroneous valuation was communicated to the Commissioner and on the basis of that valuation the Commissioner issued notices of assessment to Oamington for 4 relevant years, being 1989, 1990, 1991 and 1992.

Oamington failed to meet its obligations under the mortgages and on 21 December 1990 ANZ appointed Gary Kenneth Unwin as receiver and manager of Oamington's assets. Clause 13.5 of the charge provided that he was so appointed as Oamington's agent. On 25 November 1992 the Crown Solicitor lodged Caveat No 930989 on behalf of Her Majesty Queen Elizabeth II over the Vaucluse land and the Berkeley Vale land in respect of the land tax charge. By 1993 Oamington had no assets other than the Vaucluse land and the Berkeley Vale land. Sanwa proceeded to exercise the power of sale conferred by the mortgage. On 5 February 1993 it contracted to sell the Vaucluse land to Duncan Paul Saville and Julie Maree Saville for $4,750,000, which was far less than Oamington's indebtedness to it. Steps were taken to ascertain from the Commissioner the amount of land tax outstanding in respect of the Vaucluse land so that it could be paid and an acquittance obtained of the land tax charge over the Vaucluse land before settlement of the sale, the reason being that the whole of the land tax payable is a charge on all of the taxpayer's land.

On 4 February 1993 Clayton Utz, as Sanwa's solicitors, lodged a Property Information Inquiry Form (``the Inquiry Form'') relating to the Vaucluse land with the Land Tax Office and received it back with the following notation on behalf of the Commissioner, partly by rubber stamp and partly in handwriting, dated, it seems, 9 February 1993 (``the first rubber stamp''):

``$5,172.96 land tax including $NIL deferred under Section 9A of the Land Tax Management Act 1956, as amended, is payable and is a charge upon the land described up to and including the 1992 tax year. The land is also subject to a charge for the 1993 tax years. The amount of such charge cannot, on the information at present available to me, be stated.''

On 26 February 1993 the Office of State Revenue further informed Clayton Utz in writing that the amounts required to clear the Vaucluse land on settlement were as follows:

``1992 - $5,172.96 1993 - $65,625.00''

On completion of the sale of the Vaucluse land by Sanwa on 5 April 1993, Sanwa tendered the required $70,000-odd to the Commissioner, who accepted that sum in satisfaction of the charge for land tax on the Vaucluse land. The Commissioner caused to be made by rubber stamp at the foot of the Inquiry Form next to the first rubber stamp a further notation dated 5 April 1993 and signed on his behalf (``the second rubber stamp'') as follows:

``The charge referred to in this certificate is no longer effective against the subject land.''

The Crown Solicitor delivered at or before settlement a withdrawal of the caveat insofar as it affected the Vaucluse land.

However, prior to 5 April 1993, the Valuer General had discovered and commenced to remedy the clerical error relating to the valuation of the Vaucluse land. The mechanism of this appears to have been that Sanwa's solicitors, Clayton Utz, became aware that a land value of $4,375,000 had been assigned to the Vaucluse land in respect of the 1993 land tax year. On 4 March 1993 they wrote to the Commissioner objecting to this value in light of the sale of the improved property to the Savilles for only $4,750,000. Investigations prompted by this communication led the Office of State Revenue to write to the Valuer General drawing attention to the valuation of $480,000 only as at 1 July 1987 as being apparently anomalous by reference to prior and subsequent valuations and asking for it to be reviewed. The Valuer General replied on 24 March 1993 as follows:

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``The value has been reviewed in terms of Section 55(4) of the Land Tax Management Act 1956 and amended under clerical error to $4,800,000.''

This reply was initialled in the Office of State Revenue on 31 March 1993, so had been received by that date. It would seem that this was not known by the officer who placed the second rubber stamp on the Inquiry Form on 5 April 1993, but this is not certain. Miss Bodkin, a very experienced but now retired land tax officer, thought it was not, but the officers actually handling the matter were not called as witnesses.

The Commissioner issued amended assessments as follows: 

+---------------------------------------------------+
| Date           | Tax Year | Additional amount due |
|---------------------------------------------------|
| 6 April 1993   | 1991     | 147,083.10            |
|---------------------------------------------------|
| 6 April 1993   | 1992     | 147,083.10            |
|---------------------------------------------------|
| 5 October 1993 | 1989     | 125,712.00            |
|---------------------------------------------------|
| 5 October 1993 | 1990     | 86,400.00             |
|---------------------------------------------------|
| TOTAL          |          | 506,278.20            |
+---------------------------------------------------+

The Commissioner also issued on 30 April 1993 an assessment for 1993 showing a balance of $6,925.30 owing. It is not entirely clear whether the Valuer General formally corrected his valuation list, or the Commissioner, if relevant, amended his Register of land values (as to both of which see below). However, no challenge was made in these proceedings to the validity of the amended assessments on these or any other grounds.

The additional sums totalling $513,203.50 are undoubtedly charged on the Berkeley Vale land. This was stated by counsel for ANZ to be worth only $600,000 to $700,000. There is not conclusive evidence of the value; the land values of the Berkeley Vale land for the 1993 tax year (this being vacant land) totalled $1,092,000. It is said that by reason of the present value of the Berkely Vale land there would be no surplus for ANZ out of a sale of that land after funds were provided to procure a release of the Commissioner's charge. Certainly the necessity to obtain a release of the charge would diminish the funds available to ANZ out of the proceeds, which would in any event be insufficient to meet Oamington's debt to ANZ.

It is clear that, had the amended assessments been issued before the land tax charge over the Vaucluse land was released, Sanwa would have had to provide some half a million dollars more to procure release of the charge; it would have netted so much less from the proceeds of sale; and so much more would be available to ANZ from any sale or sales it makes of the Berkeley Vale land.

Scheme of the Act relating to charges

Various provisions of the Act are material to a determination of the incidence of the land tax charge. The provisions of the Act in the form in which they stood at the times relevant to these proceedings are set out or summarised below. The provisions were analysed by the High Court in
Hollinworth v The Commissioner of Land Tax (1968) 118 CLR 45, but §47 was promptly amended to reverse the effect of that decision.

The Act by §7 provided that land tax is to be levied and paid on the value of all land situated in New South Wales which is owned by taxpayers. Section 3 also contained the following definitions:

```Mortgage' includes any charge whatever upon land, or interest therein, howsoever created, for the securing of money.

`Mortgagee' includes every person entitled at law or in equity to a mortgage or any part thereof.

...

`Owner' includes:

  • (a) in relation to land, every person who jointly or severally, whether at law or in equity:
    • (i) is entitled to the land for any estate of freehold in possession; or
    • (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether

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      as beneficial owner, trustee, mortgagee in possession, or otherwise;
  • ...
  • (d) a person who, by virtue of this Act, is deemed to be the owner.''

By §8 the Act provided that land tax shall be charged on land as owned at midnight on the 31 December immediately preceding the year for which the land tax is levied. Section 9 provided that land tax is payable by the owner of land on the taxable value of all the land owned (sub§(1)) and that the taxable value of that land is the total sum of the land value of each parcel of that land (sub§(2)).

Section 9A provided for postponement of payment of part of land tax by reference to an unutilised value allowance which operates by reference to the particular parcel of land and not the total amount of land tax.

Section 14 provided that the Commissioner shall cause an assessment to be made of the taxable value of the land owned by any taxpayer and of the land tax payable thereon. Section 16 relating to the amendment of assessments should be set out in full:

``16(1) Subject to the provisions of this section, the Chief Commissioner may, of his own motion or upon an application received from a taxpayer, amend any assessment by making such alterations in or additions thereto or such further alterations in or additions thereto as he thinks necessary to ensure its completeness and accuracy.

16(2) An amendment may be made under this section:

  • (a) where an application by a taxpayer under this section is made within three years after service of notice of the assessment or any amendment thereof and the taxpayer has supplied to the Chief Commissioner within that period or such further period as the Chief Commissioner may allow all information required for the purpose of deciding the application - at any time;
  • (b) where a taxpayer has failed to lodge a complete and accurate return - at any time; or
  • (c) in any other case - within three years after the service of notice of the assessment or of any amendment thereof.

16(3) Where any amendment of an assessment has been made in accordance with this section and a period of more than three years has elapsed since the service of notice of the original assessment any further amendment of the assessment shall, subject to the provisions of this section, be limited to the matter the subject of such prior amendment, notice of which was served within the previous three years.

16(4) Where the amendment of an assessment has the effect of imposing any fresh liability, or increasing any existing liability:

  • (a) the taxpayer shall be liable to pay the difference between any land tax which he has paid and the land tax which he ought to have paid if the assessment had been originally made as altered or added to; and
  • (b) the alteration or addition shall, unless it has been made with the consent of the taxpayer, be subject to objection.

...''

Section 19 provided that the Commissioner shall cause notice in writing of the assessment to be served on the taxpayer but that the omission to serve any such notice shall not invalidate the assessment.

The provisions of §§23 and 34(1) of the Act should be set out in full:

``23(1) A mortgagee or other person owning any estate or interest in land by way of security for money shall not be liable to land tax in respect of that mortgage, estate or interest:

Provided that a mortgagee in possession of land, or any other person in possession of land by way of security for money shall, so long as such possession continues (though not to the exclusion of the liability of any other person) be deemed to be the owner of the land; and the mortgagor shall be deemed to be the primary taxpayer, and the mortgagee in possession to be the secondary taxpayer; and there shall be deducted from the land tax payable by the latter in respect of the land such amount (if any) as is necessary to prevent double taxation:

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Provided further that the foregoing proviso shall not apply:

  • (a) to any mortgagee or person in possession whose possession began before the first day of November, one thousand nine hundred and fifty-six, until a period of three years has elapsed since that date; or
  • (b) to any mortgagee or person in possession whose possession began on or after the first day of November, one thousand nine hundred and fifty-six, until a period of three years after he has entered into possession.

23(2) For the purposes of this section a mortgagee in possession shall include a mortgagee of land who is using such land, or who is in receipt of the rent or profits of such land, or who is in receipt of the income from any business carried on on such land, or who has appointed a receiver of the rents or profits of such land.

23(3) Nothing in this section affects section 46.

...

34(1) Where in this Act reference is made to the land tax payable by a person in respect of any land or interest, the reference is to so much of the whole land tax payable by him as bears to the whole land tax payable by him the proportion which the adjusted value of the land or interest referred to bears to the adjusted value of all the land (including any interest in land) owned by him.''

Land tax becomes due and payable as required by the relevant notice of assessment served on the taxpayer (§39). Section 42 provided that any land tax shall be deemed when due to be a debt due to Her Majesty and shall be collected and received by the Commissioner on account of and shall be paid into the Consolidated Revenue Fund (sub§(1)); any land tax unpaid may be recovered in any court of competent jurisdiction by the Commissioner (sub§(2)). Section 46 provided that, where an owner is in default, a mortgagee, lessee or occupier of part of the owner's land can be, by being served with a notice by the Commissioner requiring payment thereof, made liable to pay land tax in respect of that part of the owner's land.

Section 47 is central to the issues in this case and so far as material should be set out in full:

``47(1) Land tax shall until payment be a first charge upon the land taxed in priority over all other encumbrances whatever, and where the land taxed comprises two or more parcels the land tax payable on the land taxed shall be a first charge on each and every such parcel and notwithstanding any disposition of the land or any part thereof the land or part shall continue to be liable in the hands of any purchaser or holder for the payment of the land tax so long as it remains unpaid.

47(1A) The Chief Commissioner is to issue a certificate showing if there is any land tax charged on land on application by a purchaser, vendor, mortgagee, lessee or occupier of the land and payment of the prescribed fee (or the making of arrangements satisfactory to the Chief Commissioner for its payment).

...

47(2) The Chief Commissioner may release the land taxed or any part thereof from the charge thereon pursuant to subsection (1) on payment of an amount he estimates to be not less than the proportion of tax referable to the land or part.

...

47(3) The provisions of this section shall have effect notwithstanding anything contained in section 34 or any other provision of this Act.''

Section 54 of the Act contained the following provisions:

``54(1) For the purposes of this Act, but subject to this section, the land value of land, in relation to a year for which land tax is being levied, means:-

  • (a) where the land is included in the valuation list or supplementary list last furnished under the Valuation of Land Act, 1916, by the Valuer-General to the Chief Commissioner... before the first day of that year, the land value of such land as appearing in such valuation list or supplementary list immediately before the first day of the year;
  • ...

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54(7) Where-

  • ...
  • (b) an alteration of any such valuation has been made in any valuation list, supplementary list or valuation roll for the purposes of correcting any clerical error or misdescription,

the valuation as so altered shall be the land value of such land for the purposes of this Act in substitution for the valuation so objected to or altered.''

Some of the above provisions were amended by Act No 84 of 1992 prospectively but not retrospectively (see clause 18 of Schedule 2 to the Act as inserted by Act No 84 of 1992 Schedule 2 Clause (9)). In particular a Register to be kept by the Commissioner supplanted lists furnished by the Valuer General as the source of taxable value (see new §§55, 62U). However, the power to amend for clerical error is repeated: §62V. Insofar as these amendments apply they make no material difference so far as this case is concerned.

ANZ's contentions

The primary contention of ANZ is that Sanwa having benefited by the sum of some half million dollars as set out above must be obliged to remit that benefit to ANZ by paying to the revenue the additional amounts of land tax assessed on the Vaucluse land or paying the equivalent sum to ANZ. This was said by Mr Emmett of Queen's Counsel, who appeared with Miss Kaur-Bains for the plaintiffs, to arise from the doctrines of exoneration or recoupment, contribution or restitution for benefit under a mistake conferred. Marshalling has also been mentioned. It is said that these principles are well known and the application of one or more of them is compelled by the injustice wrought in the circumstances set out above. If ANZ fails against Sanwa then it claims that it is entitled as against the Commissioner to be relieved by the doctrine of mistake, or by an estoppel, from paying tax, insofar as it is calculated by reference to the Vaucluse land, in order to procure the release from the land tax charge on the Berkeley Vale land.

The central questions in these proceedings are, therefore, whether ANZ is entitled in the premises to relief against Sanwa by reason of the principles of contribution, exoneration, marshalling, recoupment, or restitution for mistake, or against the Commissioner by reason of mistake or an estoppel.

Before proceeding to consider these ultimate questions, it is necessary to decide some preliminary questions.

Preliminary Question: Quantum of charge

There has been a deal of argument over the quantum of the land tax which is charged upon land from time to time by the operation of §8 of the Act. There is no doubt that the tax is charged on the land as of the termination of the 31 December of each year by virtue of the operation of the section itself; the operation of the charge does not await the issue or service of an assessment: see
Tooth & Co Limited v Newcastle Developments Limited (1966) 116 CLR 167;
Lynch v Olympic Bowling Centres Pty Ltd [1968] NSWR 351. The effect of the assessment is to quantify the amount payable for the year and render it a debt due to Her Majesty recoverable in a court of competent jurisdiction. Until then the amount charged is inchoate. If, while the charge is inchoate, a discharge is required for the purpose of carrying out a transaction, the Commissioner must estimate the amount and, upon receiving that amount, give a discharge. This is necessary because, in the course of ordinary conveyancing transactions, no one is going to pay over the purchase money and complete a purchase, or advance moneys against the grant of a mortgage, if there is any risk that the land is subject to an unregistered, statute-imposed charge for someone else's land tax. Mr Coles, of Queen's Counsel for Sanwa, submits that the charge should not, after the tax has been quantified by an assessment, be taken to secure 2 separate liabilities in respect of the one land tax year, ie, first, the amount assessed and, secondly, in case a greater amount be imposed in the future by an amended assessment, an inchoate amount, being the amount which may become due, if the assessment be amended. In my opinion, this submission is correct. The true situation which arises from the provisions of the Act, bearing in mind its purpose in this regard, is that the charge is inchoate in respect of each year's tax from and including 1 January until assessment, then from the time of assessment the amount secured is the sum assessed unless and until an amended assessment be issued, at which time the amount secured becomes the amount of the amended assessment. This means that the amounts levied by the amended

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assessments for the 1989 to 1992 tax years and were not charged on any of Oamington's land as at 5 April 1993 when the charge was released. Similarly, the amount of land tax for the 1993 year was quantified by the statutory process of estimation so that the only amount charged in respect of that year was paid before release and the additional amount levied by the assessment was not charged on Oamington's land at the time of the release.

Preliminary Question: Was either Sanwa or ANZ personally liable for Oamington's land tax?

The only ways in which this could have occurred are, (a) by service of a notice by the Commissioner (§46 of the Act) (which it is agreed has not been done to either Sanwa or ANZ), or, (b) if either of them went into possession as mortgagee and remained in possession for 3 years (§23(1) of the Act). It was at one stage of the argument suggested that Sanwa was in possession of the Vaucluse land as mortgagor and that this was of significance in the determination of the case and evidence was entered into concerning this; indeed the evidence appeared to establish that it did; it did not, however, establish, and in the end it was not seriously argued, that Sanwa was in possession of the Vaucluse land for 3 years. There was no evidence or suggestion that either Sanwa or ANZ was ever given a notice by the Commissioner requiring payment by it of any land tax. On that basis, neither of them could at any time be characterised as an owner of the Vaucluse land and I find, therefore, that no part of the land tax on Oamington's land was ever due as a debt from either ANZ or Sanwa to Her Majesty or the Commissioner.

Preliminary Question: Was the first rubber stamp a certificate?

It was agreed that the Inquiry Form with the first rubber stamp on it (or, indeed the second rubber stamp as well) did not constitute a certificate under §47(1A) of the Act. In the event, I do not think it makes any difference to the decision of this case, but I record my view that the first rubber stamp in the context of the Inquiry Form does constitute such a certificate.

ANZ's claims against Sanwa

Bearing in mind my answers to those questions, I turn first to ANZ's claims against Sanwa.

Claim against Sanwa: Contribution

Contribution is a well-known doctrine. It existed both at common law and in equity. It is the equitable doctrine, which was somewhat different, which has prevailed. The modern locus classicus is
Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342. In that case Kitto J said (at 350-352):

``The general doctrine of contribution, as I have said, forms part of the common law. It was applicable by Lord Mansfield in
Godin v London Assurance Co (1758) 1 Burr 489 [97 ER 419] and
Newby v Reed (1763) 1 Bl W 416 [96 ER 237], no less than by Lord Chief Baron Eyre when exercising the equitable jurisdiction of the Court of Exchequer in
Dering v Winchelsea (Earl) (1787) 1 Cox Eq Cas 318 [29 ER 1184]. This was because the basic concept was accepted by both law and equity as one of natural justice, as indeed it had been by the law of other countries since ancient times.... Lord Mansfield put the matter squarely on that ground: `If the insured is to receive but one satisfaction, natural justice says that the several insurers shall all of them contribute pro rata, to satisfy the loss against which they have all insured' (1758) 1 Burr 489 at p 492 [97 ER 419 at p 420].... The judgment in
Dering v Winchelsea (1787) 1 Cox Eq Cas 318 at p 321 [29 ER 1184 at p 1185] itself had said that `If we take a view of the cases both in law and equity, we shall find that contribution is bottomed and fixed on general principles of justice' - founded on equality, and established by the law of all nations (to quote the same judgment as differently reported, (1787) 2 B&P 270 at p 274 [126 ER 1276 at p 1278]) - and it had gone on to show that law and equity were at one as to the nature of the right, though the doctrine of equality operated more effectually in a court of equity than in a court of law, and there were differences as to the mode and conditions of its application: see generally Halsbury's Laws of England, 3rd ed, vol 14, pp 492, 493, pars 934, 935; vol 22, pp 266-268, pars 527, 528. The right arises at law when `one of several persons has paid more than his proper share towards discharging a common obligation':
Davies v Humphreys (1840) 6 M&W 153, 168-169 [151 ER 361 at pp 367, 368];

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Dimdore v Leventhal (1936) 36 SR (NSW) 378 at p 385, and it arises in equity when a liability of one of several to pay more than his share has been ascertained:
Wolmershausen v Gullick [1893] 2 Ch 514;
McLean v Discount & Finance Ltd (1939) 64 CLR 312 at p 341; but for present purposes this difference is immaterial: what is important is the reason, namely that payment by the one discharges not only himself but each of the others, and qui sentit commodum sentire debet et onus.''

In that case it was argued that there was no double insurance or right of contribution between insurers where the same risk in fact fell within the indemnity of 2 policies, but the policies were of totally different natures, one the common law extension of a workers' compensation policy, the other a motor vehicle 3rd party insurance policy. The High Court held there was a right of contribution, Kitto J continuing (at 352):

``What attracts the right of contribution between insurers, then, is not any similarity between the relevant insurance contracts as regards their general nature or purpose or the extent of the rights and obligations they create, but is simply the fact that each contract is a contract of indemnity and covers the identical loss that the identical insured has sustained; for that is the situation in which `the insured is to receive but one satisfaction' (to use Lord Mansfield's expression) and accordingly all the insurances are `regarded as truly one insurance':
Sickness and Accident Assurance Association Ltd v General Accident Assurance Corporation Ltd (1892) 19 Rettie at p 980; 29 Sc LR 836 at p 837.''

As Kitto J pointed out, the right to contribution arises from the existence of a common obligation. The decision of the High Court in
McLean v Discount and Finance Limited (1939) 64 CLR 312, illustrates that it matters not that one of the obligations has subsequently been discharged, nor that the obligations were not by way of personal liability to pay a sum of money, but by way of a charge over property or a fund without a personal covenant to pay. There one cosurety guaranteed a firm's indebtedness to a Bank. The plaintiff also gave security for the same indebtedness by way of a letter of lien over Commonwealth bonds, with power to the Bank to sell the bonds and take the proceeds in case of the firm's default. The Bank sold the bonds and took the proceeds; thereafter the cosurety paid the balance of the firm's indebtedness and the Bank cancelled its guarantee; but the plaintiff had borne more than its proportionate share of the principal indebtedness. The High Court held the plaintiff entitled to contribution. Starke J said (at 346-347):

``Another contention of the respondent was that the transaction of February 1937, when the respondent paid the bank £4,638 16s 10d and its guarantee of 1929 was indorsed `cancelled,' released it and deprived the appellant of any right to contribution against the respondent.
Ex parte Gifford (1802) 6 Ves 805 [31 ER 1318] and
Ward v National Bank of New Zealand Ltd (1883) 8 App Cas 755 were referred to. But the argument is untenable. The bank did not release the respondent, as I understand the facts, from any part of the principal debt. It required and obtained payment of the whole of the principal debt. It had in hand from the appellant £3,134 1s 5d (£2,936 16s 3d and £197 5s 2d interest on bonds), and the respondent paid the balance of the principal debt then owing, £4,638 16s 10d. The bank had exercised its rights against each party whereby unequal contributions to the principal debt had arisen: cf Rowlatt on Principal and Surety, 3rd ed (1936), pp 173, 174. But it is the unequal contribution so enforced that establishes the right to contribution on the part of the party who has provided more than his just proportion.''

ANZ is therefore not precluded from entitlement to contribution simply by reason that neither it nor Sanwa was personally indebted to the Commissioner for any of Oamington's land tax. Nor does the fact that the land tax charge over the Vaucluse land has been discharged of itself preclude liability for contribution.

But what, in my opinion, is fatal to ANZ's claim for contribution is that there was never in the requisite sense any common obligation. I have already held that neither ANZ nor Sanwa was ever indebted to Her Majesty in respect of any of the land tax. There was therefore no common debt for which each was responsible. And, so far as the possibility of a common liability (other than by way of debt) is concerned, there is no liability which was ever

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secured by the charge at the same time over the Vaucluse land and over the Berkeley Vale land. This is because the sums assessed by the amended assessments were never secured over the Vaucluse land. While the liability secured by the charge was still inchoate, the valuation in the relevant valuation lists stood at $480,000, on which basis the original assessments when issued were correct, and, so long as the original assessments stood, the amounts secured by the charge were the amounts thereby assessed, which were fully paid before or upon discharge of the charge over the Vaucluse land. Similarly the amount owing under the charge in respect of the 1993 land tax year was quantified by estimate made under the statute and paid at the same time. The first of the sums raised by the fresh assessments became charged upon the Berkeley Vale land on 6 April 1993 (or, more accurately, at the time when the amended assessments bearing that date were served on Oamington). By that time the charge over the Vaucluse land was discharged and the additional liability thereby raised was never charged upon it. The same applies to the 1993 assessment and the further amended assessments later issued. There was never, therefore, any coordinate liability to base any entitlement to contribution.

It was argued that the second rubber stamp did not operate as a release or discharge of the land tax charge. Although the argument was not fully spelt out, I take it that the purport of the argument is that the land tax charge continued in force over the Vaucluse land after 5 April 1993. I do not accept that argument. Apart from other objections which might be made to it, the second rubber stamp is clearly in the form by which the Commissioner customarily effects releases or discharges. Despite its informality, that is clearly its purport. It is executed on behalf of the Commissioner. A withdrawal of caveat was delivered at the same time. If I were wrong, and the release is somehow invalid for informality, it would in my view have effect in equity or give rise to an estoppel against the Commissioner in favour of Sanwa which would be effective despite what is said about estoppel in another context later in these reasons for judgment.

Claim against Sanwa: Exoneration

As was stated by Cohen J in
Chase Corporation (Australia) Pty Ltd & Anor v North Sydney Brick and Tile Co Ltd & Ors (1994) 12 ACLC 997 at 1,011; (1994) 35 NSWLR 1 at 22, ``Exoneration is one of the exceptions to the equitable doctrine of contribution.'' His Honour continued to explain the principle of exoneration by an example taken from Fisher & Lightwood's Law of Mortgage (10th Edn, 1983). The corresponding passage in Tyler, Young & Croft's Australian Edition (1995) of Fisher & Lightwood (at 652) is as follows:

``The doctrine of contribution is founded on equality. It assumes that of two properties, X and Y, comprised in the same security, both are equally liable to bear the debt; but this prima facie equality is subject to exception. Thus if the mortgagor, being personally liable, assigns one property, X, and retains the other, Y, X is no longer treated as equally with Y to bear the debt, unless the assignment is expressly made subject to the mortgage:
Re Mainwaring; Mainwaring v Verden [1937] Ch 96; [1936] 3 All ER 540, CA. The duty of the mortgagor to discharge his own personal liability makes the property in his hands the primary fund for payment.''

See also the decisions of Deane J in
Farrugia v Official Receiver in Bankruptcy (1982) 58 FLR 474, and of Cole J in
Caldwell v Bridge Wholesale Acceptance Corporation (Australia) Ltd (1993) 6 BPR [97482].

The principle operates to exclude a charged property from an obligation to contribute which would otherwise exist. Since, in my opinion, no obligation of contribution arises in the present circumstances, the principle of exoneration equally has no operation. This renders it unnecesary for me to decide whether each of the relevant properties (the Vaucluse land and the Berkeley Vale land) bore by reason of the land tax charge a primary liability for the proportion of tax calculated by reference to that property and a secondary liability only for the proportion of tax calculated by reference to the other property, as submitted by ANZ, or whether there is a single liability only for the global sum charged by the statute upon both properties. Despite provisions such as §§9(2), 34(1) and 47(2), I am inclined to think the latter view correct, but do not need to decide the question.

Claim against Sanwa: Marshalling

I am not certain that a claim was squarely put against Sanwa on the basis of marshalling, but

ATC 5062

mention was made in submissions of marshalling principles, and it is appropriate for a court of equity in appropriate circumstances to marshal assets or funds within its control, whether suit is brought for such relief or not this is claimed on the pleadings: Tyler, Young & Croft's Fisher & Lightwood's Law of Mortgage (Australian Edn, 1995) [30.14]. The basis of marshalling is stated as follows in Tyler, Young & Croft's Fisher & Lightwood's Law of Mortgage (Australian Edn, 1995) [30.8]:

``The doctrine of marshalling rests upon the principle that a creditor who has the means of satisfying his debt out of several funds shall not, by the exercise of his right, prejudice another creditor whose security comprises only one of the funds.''

Marshalling does not apply in the present case for the following reasons.

First, marshalling depends on there being ``caprice'' on the part of a ``double claimant''. Here, Sanwa is not a double claimant; it had recourse to only one security:
Webb v Smith (1885) 30 Ch D 192 at 199, 200, 202; and see Meagher, Gummow & Lehane, Equity Doctrines & Remedies (3rd Edn, 1992) [1102]. There was thus no capricious election on its part so as to attract the doctrine of marshalling.

Secondly, Sanwa's security has already been realised, its mortgage discharged, and the property sold. The Court therefore no longer has control over the fund.

In
Commonwealth Trading Bank v Colonial Mutual Life Assurance Society Ltd [1970] Tas SR 120, Neasey J said (at 128):

``It seems therefore that the operation of the marshalling principle depends upon the assets being subject in some way to the control of the court, which reinforces the view that the doctrine depends not upon the creating of any equitable right of property in the fund over which the claimant has otherwise no security, but upon the grant by the court of an equitable remedy in certain circumstances, and I so hold.''

There the defendant had held as security for its debt a first mortgage of land and an assignment of a life policy and the plaintiff held as security for its debt only a second mortgage of the land. The defendant sold the land. Knowing of the plaintiff's second mortgage of the land it nevertheless reassigned the life policy to the debtor, accepted a surrender of it and paid the proceeds of the surrender to the debtor. The balance of the proceeds of sale of the land were not sufficient to satisfy the plaintiff's debt. It was held that the plaintiff could not recover from the defendant.

There has been debate as to the correctness of this decision, eg, in Meagher, Gummow & Lehane [1104-1106], particularly in light of the fact that the ambit of marshalling has been extended further in United States authorities. However, those learned authors conclude (at [1106]):

``The position in Australia appears to be that marshalling must be understood as a doctrine effectuated only by the exercise of a remedy akin to subrogation to securities otherwise still on foot at the time concerned...''

Both Young J in
Sarge Pty Ltd v Cazihaven Homes Pty Ltd (1994) 34 NSWLR 658, and Cohen J in
Chase Corporation (Australia) Pty Ltd & Anor v North Sydney Brick and Tile Co Ltd & Ors (1994) 12 ACLC 997; (1994) 35 NSWLR 1, contemplate that the doctrine may come to be so extended but that (per Cohen J at ACLC 1,011; NSWLR 21) ``could only be in circumstances where it would be regarded as inequitable or unconscionable to release the security, that is, with full knowledge of the right being asserted by the other mortgagee''.

In this case, I do not need to grapple with the problem whether the law should be so extended in Australia. There is no evidence that Sanwa, when it completed the sale of the Vaucluse land, was aware that ANZ's interest in the Berkeley Vale land would be thereby diminished. The only suggestion of knowledge on Sanwa's part was that it should be taken to know, from the low valuation and low land tax in the 1989 to 1992 land tax years that the tax levied was too low and that there must be a greater liability under the land tax charge. Bearing in mind the paucity of the evidence in this regard, the volatile state of land values at relevant times (as shown in the evidence) and the vagaries of the land tax legislation as to rates and incidence of tax, I am of the view that it is quite impossible that a sufficient degree of knowledge could be imputed to Sanwa in this way.

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Claim against Sanwa: Recoupment

The common law allowed recovery of payments which a plaintiff was obliged to make and which operated to discharge of the debt of another under the common count for money paid for the use of the defendant:
Exall v Partridge (1799) 8 TR 308; 101 ER 1405;
Moule v Garrett (1872) LR 7 Ex 101. In the latter case (at 104), Sir Alexander Cockburn CJ (quoting from Leake on Contracts) laid down:

``Where the plaintiff has been compelled by law to pay, or, being compellable by law, has paid money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability; under such circumstances the defendant is held indebted to the plaintiff in the amount.''

There was a similar but somewhat wider principle in equity: see per Vaughan Williams LJ in
Bonner v Tottenham and Edmonton Permanent Investment Building Society [1899] 1 QB 161 at 175-177, in what is said, interestingly, to be the judgment in which the term ``recoupment'' was first applied to recovery of this sort: and see generally Goff & Jones, The Law of Restitution (4th Edn, 1993) Ch 12.

The right of recovery existed not only where the plaintiff as well as the defendant was legally liable to make payment (as in the case of principal and surety) but where the legal threat would affect the property or rights of the plaintiff, as by forfeiture of a lease, or sale of a property, or distraint of goods, in which he was interested: eg,
Whitham v Bullock [1939] 2 KB 81. Debate has raged as to the extent of the doctrine in cases of ``necessitous intervention'' or ``unsolicited payments'': see the dictum of Bowen LJ in
Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248; and see generally Mason & Carter, Restitution Law in Australia, Ch 8.

Again, I need not explore the boundaries of this doctrine. In this case, ANZ has not yet paid the relevant land tax. If in the future it comes to do so, it will not relieve Sanwa of any liability, as Sanwa has and never had any liability for the land tax. ANZ cannot recover under the principle of recoupment.

Claim against Sanwa: Mistake (Restitution)

The argument put on ANZ's behalf for restitution based on mistake was put as a sequel to its submissions in support of relief on the same basis against the Commissioner, and I shall therefore deal with it after I deal with those submissions. Suffice it to say for the present that, in my view, ANZ is not entitled to relief against Sanwa on this basis.

ANZ's claims against the Commissioner

As I do not find ANZ entitled to any relief against Sanwa, I must turn to its claims against the Commissioner.

Claim against the Commissioner: Mistake (Restitution)

ANZ argued that ``the Commissioner released the charge under mistake and is entitled to recover in restitution from Sanwa the benefit thereby received from Sanwa, namely the $500,000 approximately plus interest''. It then submits that the Commissioner holds that right of recovery as a fiduciary for ANZ because of their respective positions as first and second mortgagees over the Berkeley Vale land, and that accordingly, any failure by the Commissioner to seek to recover those moneys from Sanwa results in the Commissioner being liable to make equitable compensation to ANZ. Note therefore that this submission relies upon the Commissioner, rather than ANZ, being entitled to recover in restitution from Sanwa.

Whatever the correct analysis of principle in the present fluid state of the law in this area, in my opinion the plaintiff's fatal difficulty is in establishing that there is any relevant mistake on the part of the Commissioner. The recording of the wrong value of the Vaucluse land and its forwarding to the Commissioner was a mistake of the Valuer General, not of the Commissioner. The giving of the certificate stamped and written on the Inquiry Form on 9 February 1993 complied dutifully with the information recorded at that time, even though that information was later discovered to be wrong and corrected; it was not a mistake. Equally, when on 26 February 1993 the Commissioner notified $5,172.96 plus $65,625.00 as the sum necessary to clear the Vaucluse land, this was an accurate statement of the balance of the amounts assessed in respect of previous years still outstanding and, as it turned out, a reasonably accurate estimate of the unassessed tax liability for 1993; no word of the Valuer General's mistake had yet reached the Commissioner; there was no mistake here. All that happened on 5 April 1993 was that the

ATC 5064

Commissioner accepted the sum of the previously communicated amounts and gave a discharge in respect of the Vaucluse land. By this time notice of the Valuer General's correction was in the Commissioner's office and amended assessments were under preparation. But they had not been issued or served. The amounts to be raised under them were not yet charged on the land. It is dubious whether the Commissioner could properly have declined to give the discharge requested against payment on that day. It is this discharge which ANZ principally focuses on as a mistake. To give it was not a mistake. This in itself is determinative of the claim in mistake against Sanwa as put.

In addition, even if the Commissioner had a good claim in restitution against Sanwa and did not pursue it, I have grave doubts that that fact would confer on ANZ a good claim for equitable compensation against the Commissioner. Counsel for the plaintiff were unable to cite me any authority in which any such claim had succeeded in similar circumstances.

Deane J in
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-257 characterised the concept of unjust enrichment as constituting

``a unifying legal concept which explains why the law recognises, in a variety of distinct categories of cases, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case.''

And see
David Securities Pty Limited & Ors v Commonwealth Bank of Australia 92 ATC 4658; (1992) 175 CLR 353. Four elements have been identified as essential to establishing a claim for restitution for unjust enrichment in Mason & Carter, Restitution Law in Australia [203]. The 4 elements are (per Mason P in
National Australia Bank Limited v Budget Stationery Supplies Pty Limited 23 April 1997, Court of Appeal, unreported, transcript 11):

``1 benefit

2 at the plaintiff's expense

3 `injustice'; and

4 absence of a recognised defence.''

ANZ's claim faces additional difficulties arising from the second and fourth of these elements.

In this case it would seem that the second element, viz, that the gain or enrichment be at ANZ's expense, is absent. Any gain which accrues to Sanwa as a result of the Commissioner's supposed mistake ultimately costs the Commissioner nothing; his right of recovery against the proprietor at the relevant times of the Vaucluse land remains unaffected. If the mistake by the Commissioner were ``at the expense of'' anyone, it was at the expense of ANZ, but even this is not so, since ANZ is not personally liable for the tax.

Equally, ANZ would face difficulty in establishing the fourth of the elements enunciated above, viz, that the mistake by the Commissioner was productive of ``injustice''. ANZ here faces one of the same difficulties that attends the submission dealt with below based upon an estoppel against the Commissioner, namely, that such an estoppel cannot arise to prevent the operation of a statute for the public benefit and the result which occurs flows from the statute.

I therefore hold that ANZ has no good claim in restitution against either Sanwa or the Commissioner.

Claim against the Commissioner: Estoppel

ANZ seeks to raise an estoppel against the Commissioner preventing him from ``seeking to recover the unpaid land tax referable to the Vaucluse land against the Berkeley Vale land in priority to [ANZ]''.

It seems to me there are at least 3 reasons why ANZ cannot succeed on the basis of an estoppel.

The first is that there is no representation, or common basis from which departure will not be allowed, that will found an estoppel. As observed above in relation to mistake, the certificate of 9 February 1993 was correct; it stated correctly the assessed amount still charged as at that date and warned of the unassessed 1993 liability. It purported to state the situation at that date and at that date only. Similarly, the communication of 26 February 1993 repeated the statement as to liability from past years and gave a reasonably accurate estimate of what proved to be the 1993 liability; no doubt it constituted while it stood a

ATC 5065

representation of the sum for which a discharge would be given and that sum was tendered and was accepted while the representation stood. The rubber stamp of 5 April 1993 records the discharge. In view of my conclusions as to the incidence of the statutory charge and the presence in the Act at all times of §16 and §55 I do not see that the Commissioner made any representation that the statutory powers of amendment would not be exercised if an occasion within the statute arose, or any other representation that would found an estoppel. Nor do I see that he proceeded with anyone else on a common basis from which departure will not be allowed.

The second difficulty is in establishing that ANZ in any sense relied to its detriment upon any representation or act of the Commissioner. First, there is no evidence that ANZ knew of the events of early 1993. Indeed, Mr Urwin says he did not know. And if Mr Urwin knew, that knowledge would not be imputed to ANZ (in the absence of actual communication) because in acting as receiver and manager of Oamington he was acting as Oamington's agent, and not ANZ's. And if ANZ did know, what could it have done? Mr Urwin said he would have sought advice. But if the law as to the incidence of the land tax charge is as I have stated it, the correct advice would have been that the Commissioner in proceeding to release the charge was acting correctly; and, in any event, it is at least dubious that ANZ had any right to change the course of events whatever advice it received. Any detriment which ANZ suffers arises as a result of the fortuitous circumstances which have occurred (a principal one being the insolvency of Oamington) and the operation of the provisions of the Act.

The third difficulty with this argument is that there is, as previously mentioned, no estoppel in the face of a statute. Estoppel will run against the Crown (assuming the ``Commissioner'' to be the Crown in this context): Spencer Bower & Turner, The Law Relating to Estoppel by Representation (3rd Edn, 1977) 121-122; Hogg, Liability of the Crown (2nd Edn, 1989), 189-190. An example of its operation is
The Commonwealth of Australia v Verwayen (1990) Aust Torts Reports ¶81-036; (1990) 170 CLR 394. And as to the effect on the Crown of estoppel per rem judicatam, see Spencer Bower Turner & Handley, The Doctrine of Res Judicata (3rd Edn, 1996) [226]. However, no estoppel will be effective against the operation of a statute: Spencer Bower & Turner, 139-142; Spencer Bower Turner & Handley, Ch 12;
Commissioners of Inland Revenue v Brooks [1915] AC 478 at 491-492;
FC of T v Wade (1951) 9 ATD 337 at 344; (1951) 84 CLR 105 at 116-117;
Commissioner of Inland Revenue v Lemmington Holdings Ltd [1982] 1 NZLR 517 at 522-523; and for examples of the application of this principle in relation to land tax see
Endos Pty Ltd v Commissioner of State Taxation (1993) 11 SR (WA) 47; and
Rockvale Pty Limited v Commissioner of Land Tax 26 August 1994, Supreme Court of New South Wales, Dunford J, unreported.
Maritime Electric Company Ltd v General Dairies Ltd [1937] AC 610, was a case in which a private company was treated as a public utility by a statute which stipulated the rates at which electricity was to be charged for. The respondent was charged and paid at wrong rates and acted to its detriment in assuming those rates to be correct. In delivering the opinion of the Privy Council that estoppel did not operate in the respondent's favour Lord Maugham said (at 619-620):

```The specific question for determination here is, can the duty so cast by statute upon both parties to this action, be defeated or avoided by a mere mistake in the computation of accounts?'

In the view of their Lordships the answer to this question in the case of such a statute as is now under consideration must be in the negative. The sections of the Public Utilities Act which are here in question are sections enacted for the benefit of a section of the public, that is, on grounds of public policy in a general sense. In such a case - and their Lordships do not propose to express any opinion as to statutes which are not within this category - where, as here, the statute imposes a duty of a positive kind, not avoidable by the performance of any formality, for the doing of the very act which the plaintiff seeks to do, it is not open to the defendant to set up an estoppel to prevent it. This conclusion must follow from the circumstances that an estoppel is only a rule of evidence which under certain special circumstances can be invoked by a party to an action; it cannot therefore avail in such a case to release the plaintiff from an obligation to obey such a statute, nor can it

ATC 5066

enable the defendant to escape from a statutory obligation of such a kind on his part. It is immaterial whether the obligation is onerous or otherwise to the party suing. The duty of each party is to obey the law. To hold, as the Supreme Court has done, that in such a case estoppel is not precluded, since, if it is admitted, the statute is not evaded, appears to their Lordships, with respect, to approach the problem from the wrong direction; the Court should first of all determine the nature of the obligation imposed by the statute, and then consider whether the admission of an estoppel would nullify the statutory provisions.''

Here, the charge is, to protect the revenue thereby raised, imposed by the statute itself, which allows for its discharge only by payment or through the mechanism provided by §47(2). An estoppel cannot effect the operation of the charge thus imposed and subsisting until discharged by payment.

The claim against the Commissioner in estoppel cannot succeed.

Order

As appears from the foregoing, none of Oamington's claims can succeed. Accordingly, the order of the Court will be that there be judgment for each of the defendants with costs.


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