Commissioner of State Revenue v ACN 005 057 349 Pty Ltd [2016] HCATrans 230 (6 October 2016)

Last Updated: 6 October 2016

[2016] HCATrans 230

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M88 of 2016
No M89 of 2016

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Appellant

and

ACN 005 057 349 PTY LTD

Respondent

KIEFEL J
BELL J
GAGELER J
KEANE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 6 OCTOBER 2016, AT 10.16 AM

Copyright in the High Court of Australia

MR R.M. NIALL, QC, Solicitor-General for the State of Victoria: May it please the Court, I appear with my learned friends, MS C.G. BUTTON and MR N.A. KOTROS, for the Commissioner. (instructed by Solicitor for the Commissioner of State Revenue)

MR N.J. YOUNG, QC: If the Court pleases, I appear with MR T.M. GRACE and MS C. VAN PROCTOR, for the respondent. (instructed by Daniel Allison & Associates)

KIEFEL J: Yes, Mr Solicitor.

MR NIALL: May it please the Court. Your Honours should have to hand our outline of oral argument.

KIEFEL J: Thank you.

MR NIALL: There are five propositions which I will seek to advance by way of oral submission.

KIEFEL J: Does the essential question concern the interaction of sections 19 and 90AA?

MR NIALL: It does, your Honour. In our submission, where the Court of Appeal went wrong was, when it came to 90AA, it failed to appreciate that the money that had already been paid had been paid under valid assessments which were never challenged. Although the close correlation is between section 19 and section 90AA, it is necessary, in our respectful submission, as a starting point to get the baseline of the situation where there were valid assessments in play and what the consequences were.

In our submission, the Court of Appeal made some significant errors in relation to its approach to the consequence of assessments being issued which were not challenged, and which remained on foot. That is why proposition 1 is really directed not so much to section 19 and 90AA, but the anterior question of the significance of the assessment and if the amounts were tax paid.

KIEFEL J: Yes.

MR NIALL: If the Court pleases. Propositions 1 and 2 are essentially questions of statutory construction, and I will come to those shortly. Propositions 3, 4 and 5 deal with the way that the Court of Appeal addressed the statute. Before coming to the statute in some little detail, can I just encapsulate the way the Court of Appeal decided the case – the reasoning of the Court of Appeal – and I can do so quite quickly. There were two proceedings before the court. One was a proceeding for mandamus to amend and refund tax under section 19 of the Act, and a separate and distinct proceeding was for a proceeding for restitution of the amounts paid on the basis of a mistake. No orders favourable to the taxpayer were made on the restitutionary claim other than to allow the appeal. All the orders were made in the mandamus proceeding.

The Court of Appeal reasoned the mandamus claim should succeed on two, or possibly three, bases. The first basis on which the mandamus claim succeeded was that section 19, although cast in permissive terms, created a duty to assess and to refund - - -

GORDON J: “May” was to be read as “must”.

MR NIALL: “May” is to be read as “must”, and also carried with it an implied power of refund and appropriation. The duty was enlivened – that is, the duty became “must” – on the first basis simply because the Commissioner was aware that the tax as recorded in the assessments were excessive.

KIEFEL J: I note in your written submissions, paragraph 12, that you deal with the Court of Appeal’s findings here, and that they varied the primary judge’s. Is there any dispute at this point about the fact of the duplication error in the relevant years and the Commissioner’s knowledge?

MR NIALL: No, your Honour. The relevant knowledge, of course, came at least a decade after the last assessment. But the first basis of mandamus was simply an excessive amount and once the knowledge existed - notwithstanding their objection regimes with time limits - once the knowledge existed a duty came upon the Commissioner to refund. Now, that appears to have been added to – and this is the second basis which was that mandamus went because of conscious maladministration.

It is unclear, in our submission - and I will take your Honours to the passages about the role conscious maladministration played - it was not pleaded in the proceeding, so it was not taken, at least by the pleader, as an essential element of either cause of action, but the Court of Appeal seemed to have concluded that it was a necessary step in the mandamus claim. As your Honours will have appreciated, there was no maladministration here. At best, for the taxpayer, there was an erroneous application of section 90AA rather than a deliberate, wilful failure to do something which the Commissioner was obliged to do and which he knew he was obliged to do. That is the first basis which simply turns on excess.

The second basis, principal basis, is that if, as in Royal Insurance, mandamus to repay depended on an extant legal liability to pay in restitution, here that was satisfied because of an operative mistake and, therefore, a claim in restitution would have succeeded. Therefore, that, together with the terms of section 19 crystallised the duty to refund. That is why the restitution aspect became entwined, so to speak, with the mandamus claim. That last point about the restitution and the operative mistake was also critical, not so much for the duty point, but for the operation of section 90AA because the Court of Appeal reasoned that by reason of the mistake there was no tax paid when it was paid in answer to the assessment.

GAGELER J: Your answer to that is simply the assessment, the debt that arose by reason of the assessment.

MR NIALL: That is so, your Honour. Our answer is that there was an assessment. There was a debt. It was paid. It was tax paid and it fell directly within the terms of section 90AA. So even if there is success on duty, even if there is success on restitution, it would still fail at 90AA although there is an interrelationship, which I will need to come to, between 90AA and restitutionary claim.

Finally, can I just note about the summary? The court concluded that compound interest was payable. It was only payable on the mandamus claim, not on the restitution claim – no relief on the restitutionary claim – and it was made on the basis of the finding of conscious maladministration.

Can I turn then, before coming to the reasons of the Court of Appeal, to the statute and just highlight a few of its points? Of course, the structure of it will be familiar to the members of the Court. If your Honours could turn – and your Honours should have version No 131 as at 30 November 2005. If your Honours turn to section 17, your Honours will see the Commissioner is empowered to make or cause an assessment to be made and it is of:

the taxable value of the land owned . . . and of the land tax payable –

So it is an assessment as to those two matters. A lot of these provisions have cognate provisions in the 1936 federal Act and that is similar to section 166, but I will come to the interrelationship or the analogy shortly. Section 19 provides:

The Commissioner may from time to time –

and the taxpayer relies heavily on that:

amend an assessment . . . to ensure its completeness and accuracy, and shall notify to the taxpayer affected every alteration or addition which has the effect of imposing any fresh liability -

Pausing there for a moment, the reference to liability in section 19 is important because it reinforces that it is the assessment that gives rise to a liability. If there is an additional liability by virtue of an amended assessment, the objection regime triggers in relation to the additional payment. Your Honours will see at the tail end of section 19 some critical words which are that:

the validity of an assessment shall not be affected by reason only that any of the provisions of this Act have not been complied with.

That is corresponding almost in identical terms to section 175, which was considered in Futuris, which I will come to. Section 20 is an evidentiary provision very similar to section 177, requiring that:

a copy of an assessment shall –

(a) be conclusive evidence –

That is, due and payable. Pausing there, the Commissioner was not able to tender in evidence conclusive assessments so as to get the benefit of the evidentiary provision, but it did not matter, in our submission, because there was no dispute that assessments issued and were paid.

KEANE J: That was in fact the basis of the taxpayer’s claim - - -

MR NIALL: Precisely, your Honour.

KEANE J: - - - that it had paid on the strength of the assessments.

MR NIALL: Precisely. Indeed, from the pleading to the submissions of the respondent there has never been a challenge to the validity of the assessment. It was the prerequisite for the application.

Section 24A - I will try not to detain your Honours too long with this - deals with the objection. There is a time limit, a non-extendable time limit of 60 days. It requires, in familiar form, the specification of grounds and a prohibition on entertaining any objection to the unimproved value of the land. So when there are valuation issues in play - objection regime is dealt with exclusively in the Valuation of Land Act 1960 - subsection (3) deals with allowing the objection.

Section 25 deals with review in either the Victorian Civil and Administrative Tribunal or the court, and that is further dealt with in section 26. Can I just note for your Honours that in section 26, when one gets to a review or appeal in the court, similar to Part IVC, the burden rests with the taxpayer and your Honours will see that in 26(1)(b).

Section 38 is also important because it provides that the fact that an assessment has been subject to an objection does not prevent or affect liability to pay and the words of the statute:

in the meantime interfere with or affect the assessment and tax may be made, levied and recovered on the assessment in like manner as if no objection had been received -

In the event of a successful objection there is an adjustment under subsection (2) and a provision requiring refund. We note that because one of the points that the Court of Appeal made was that section 19 carried an implied power of refund. There is an express power of refund in section 38. There is also an express power of refund in section 90A.

Section 39 appears to have assumed some significance in the Court of Appeal’s reasoning, particularly at paragraphs 196 and 197 which I will take your Honours to. It provides that every sum payable for tax shall be a debt and the Court of Appeal appears to have reasoned that there is a disjunction between an amount assessed and the amount payable with the implication that the amount payable is somehow the correct amount of tax rather than the amount assessed.

Now, all section 39 does, in our respectful submission, is crystallise the liability in form of a debt which can be enforced in court and there are provisions which assist that. Section 57 is the next section, I just note, which provides that land tax is:

due and payable on a date stated in the notice of assessment to be the due date –

There are provisions for attaching liability on assessment to various persons including in respect of trusts. If your Honours turn then to section 90, section 90(1) was in the original form and, as enacted in 1958, section 90 dealt with receiving, effectively, too little being paid or not enough being paid. Section 90(2) and section 90(3) were eventually removed and became embodied in section 90AA.

Can I just note at this point, and I will return to it, as enacted section 90, in terms of refunds, had a time limit. In 1974 the time limit was removed consciously and the second reading speech makes it clear that it was removed to cover the sort of case that the taxpayer – the sort of problem the taxpayer had here and then it was reinstated in 1992 and then modified again by the introduction of 90AA in 1993.

If I could just briefly, and I will return to it in some more detail in due course, notice some features of 90AA. Your Honours will see that subsection (1) provides that “proceedings” and that is defined broadly in subsection (8) to include mandamus and other public law remedies:

Proceedings for the refund or recovery of tax paid under, or purportedly paid under, this Act . . . must not be brought . . . except as provided in this section.

So it is a bar to the proceeding at all. Then the method for bringing it is set out in paragraph – subsection (2), I beg your Honours’ pardon – and the trigger point is a person who claims:

to receive a refund of or to recover tax paid under, or purportedly paid –

In our respectful submission, beyond argument what the taxpayer did when he got the valid assessment was pay tax and it was under the Act because liability was imposed by the Act. That then required, if there was to be a refund, a lodgement with the Commissioner within three years of payment “an application in the prescribed form”.

Then subsection (3) is effectively the limitation period. It is predicated on (3)(a), if “a person has lodged an application” the Commissioner then has a period of three months to either refund – so that is (3)(b)(i) - or apply the amount – so that is effectively a running balance type arrangement which your Honours will be familiar with in the federal scene – or refund and apply. If the Commissioner has not done one of those things within three months, the person may within three months after that period, or after the refusal:

bring proceedings for the recovery of the amount, or, if the Commissioner has refunded –

part of the amount. So there is a detailed regime built upon subsection (2).

KIEFEL J: The Commissioner expressly relied upon the provisions of section 90AA in giving reasons for exercising discretion against the taxpayer.

MR NIALL: That is so, at appeal book 210.

KIEFEL J: In the sense that this informed the exercise of discretion, and is that to say that it was contended and is now contended that section 90AA means that no exercise of discretion can be made in favour of the taxpayer? Section 90AA in a sense operates as a preclusion, or it does not give rise to a duty.

MR NIALL: It intersects at a couple of places; one, it does not give rise to a duty. Another is because even if an amendment were made, it would still need to give rise to a claim for a refund or recovery of tax paid which would then trigger 90AA. So, in a sense, the Commissioner reasoned that there was a lack of utility in amending in favour of the Commissioner because 90AA would preclude recovery because it was predicated on the time of payment.

KIEFEL J: And, the Court of Appeal reason that 90AA does not relevantly affect the discretion that they are dealing with separate things and they do not intersect at all.

MR NIALL: No, with respect. The Court of Appeal reasoned that by reason of the operative mistake, it was not tax paid under the Act.

KIEFEL J: Yes.

MR NIALL: So, it was discounted as a textual matter, your Honour.

KIEFEL J: Yes.

MR NIALL: As we understand it, the taxpayer – they are running that and a different argument which is that 90AA does not - - -

KIEFEL J: It is the taxpayer’s argument I am thinking of, not the Court of Appeal’s reasoning.

MR NIALL: Yes, which does not intersect with - - -

KIEFEL J: Yes.

MR NIALL: - - - section 19 at all, they are two separate – and they develop that in their written submissions. But, on the first point, the Court of Appeal’s point, the question is was it tax paid? This other argument of the disconnect, in our submission, there is no disconnect because it is a comprehensive provision for the recovery, or refund, of tax paid. It is protective of the certainty of the revenue, and in 1974 when the Act was amended to remove the time limit, it gave priority to the potential injustice of the circumstance in favour of the taxpayer. But, when it was returned in a more comprehensive form – first in 1992 in amendment to section 90 and then in 90AA – there was express reference to the importance of the certainty of the revenue.

GORDON J: Consistent with the Commonwealth scheme.

MR NIALL: Consistent with the Commonwealth scheme. And, indeed, when one comes to look at the Court of Appeal’s reasons in this point about not being tax paid, it really writes out the time limits of the Act because whenever you have an excess to the knowledge of the Commissioner, you do not have tax paid, 90AA does not rise. It does not matter, for example, that the taxpayer knew within the time for objection that the amount was excessive – declined to object, for whatever reason. Provided the Commissioner knows that is excessive, the duty is engaged.

Now, that analysis – and the Court of Appeal seems to have reasoned that because it was not tax payable or correctly demanded, there was no entitlement to the Commissioner to retain it. The scheme embodied in the provisions which I have just taken your Honours to - - -

GORDON J: If you have finished with the scheme, can I just ask about one section?

MR NIALL: Of course, your Honour.

GORDON J: That is section 94. What is that directed at?

MR NIALL: Section 94 is directed to times in which the – it is directed to be times required by the Act directed to the Commissioner. There was a request to exercise this power.

GORDON J: That is why I am asking.

MR NIALL: It was said as not to be available and no challenge to that has ever been pursued.

GORDON J: Is that right? So, as I understand, the taxpayer sought to have the Commissioner rely on it, or exercise - apply for relief in relation to it. Is that the position? And, it is not the subject of challenge and, therefore, not part of the - - -

MR NIALL: It certainly was said by the Commissioner to be not available and no challenge to that was made.

GORDON J: Is the position of the State that that is a provision that is only open for the Commissioner to use or is it open for the taxpayer to ask the Commissioner to use? Or does it matter?

MR NIALL: It perhaps does not matter. Can I return to that, your Honour?

GORDON J: Sure.

MR NIALL: It was raised. The Commissioner said it is not available and no challenge has been made on the basis of it and there is no submission between the parties that it is available. I will find that letter, if I may. The Treasurer dealt with this at appeal book 152.

GORDON J: I understand that was the request and it was refused. My question is more a question of construction, where it sits as part of the scheme of the Act, and that is, what is the breadth of it.

MR NIALL: Perhaps I might return to that, if I may, your Honour.

GORDON J: Sure.

MR NIALL: The scheme of the Act is very similar to and we would say indistinguishable from in relevantly material respects to the federal assessment. Can I just take your Honours to a couple of positions in Commissioner of Taxation v Futuris [2008] HCA 32; (2008) 237 CLR 146 - just for a couple of propositions. Sections 175 and 177 are set out at page 156 at paragraph 22 in the judgment of Justices Gummow, Hayne, Heydon and Crennan. Your Honours will see 175 is in identical words or immaterially different words to the tail end of section 19. Section 177 is the evidence provision.

The concept of assessments is discussed by members of the Court at paragraph 49 and identifies, by reference to Batagol, that the processes of assessment – this is at the top of page 163 – is a process:

with the consequence that a specified amount will become due and payable as the proper tax in the case in question –

There is a reference to Hoffnung and Justice Isaacs’ judgment requiring:

If an assessment definitive in character is made . . . a fixed and certain sum is definitely due, neither more nor less . . . a precise indebtedness of the taxpayer to the Crown - - -

One of the points in Futuris is that the provision of 175 only applies to an assessment. So if there is not an assessment, having regard to the expanded concept of assessment, given the scheme – there is not an assessment – you do not get the benefit of 175. One of the disqualifying factors which was potentially identified by the Court is at paragraph 52 and this becomes important for the Court of Appeal’s understanding of conscious maladministration because their Honours note:

There remains, however, the question whether there was a conscious maladministration of the Act and, if so, whether s 175 had any operation in respect of a complaint of jurisdictional error.

It is resolved by regards to the construction of 175 and your Honours will see that at paragraph 55 at the last sentence on page 164 and at the top of 165:

These considerations point decisively against a construction of s 175 which would encompass deliberate failures to administer the law according to its terms.

So their Honours identified that if you had an assessment affected by conscious maladministration the Commissioner would not be entitled to the benefit of 175. Now, two points to note about what is meant in this context about conscious maladministration, if I may. The first is by reference to some passages of Justice Aickin at paragraph 12 where there is – dealing with this concept of knowing excess:

three distinct grounds upon which an exercise of an administrative power might be attacked. One was the existence of a corrupt purpose-

Another was:

the presence of an improper purpose outside the scope of the power –

Then the third one is:

where the act done was beyond the power conferred irrespective of the motive –

Now, what is being dealt with in conscious maladministration is the second, improper purpose, where the decision-maker is acting on facts known to be untrue and the like and where that is satisfied – or where that is met there is conscious maladministration and the protection is not an assessment of the provisions – protective provisions of the assessment do not apply. The only other point about conscious maladministration is at paragraph 60, where the judgment proceeds that:

Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld.

Now, with that framework, can I take your Honours to the reasoning of the Court of Appeal, dealing first with paragraph 2 of our oral outline - dealing with the finding that there was no tax paid. If your Honours turn to paragraph 191 at page 455, now the Court is here dealing with the restitutionary claim but it gets to this point in the mandamus claim on the basis that it might be necessary for the taxpayer to establish some anterior liability but I take the Court to it now because it is critical to the reasoning of the whole judgment of the Court of Appeal. At paragraph 90, the Court concluded there was an operative mistake when it made payments. Their Honours say:

No liability for land tax in fact existed in respect of ‘65 Albany Road’ as a duplicated landholding –

GORDON J: You say that is an error?

MR NIALL: Yes, your Honour, we do. The words “in fact” are perhaps the wrong question. The question is not whether it is a liability in fact; it is a question of whether it is a liability in law. The liability attached in respect because there was an assessment of the owner of the land in an assessable amount. Their Honours say no liability for land tax existed:

for the simple reason that this landholding was already included within the square metres of land –

So, accepting the duplication error - - -

GORDON J: There seems to be a temporal confusion. If one is looking at it at the time of the assessment, as I understand your argument, the duplication error is not known.

MR NIALL: That is so.

GORDON J: What is issued is an assessment in accordance with the scheme which attaches to it certain legal consequences. That is the argument?

MR NIALL: That is the argument.

GORDON J: The fact of the duplication error arises a decade later.

MR NIALL: Even a decade later, it only goes to the question of whether the assessment was excessive or not. It does not go to whether the assessment created a liability.

GORDON J: Consistent with the express provisions set out in 19 itself.

MR NIALL: Section 19 and 38, the express recognition in the case of where there is an objection. Your Honours will see at 195:

we consider that the belief held by ACN –

and I will take your Honours to the mistake in a moment:

was not correct . . . In particular, the excess amount was paid by ACN under a mistaken belief that there was a legal liability to make those payments on the basis that the assessments for those years accurately identified ACN’s landholding.

That is the second sentence of 195. Liability to pay did not depend upon accurate identification either by the Commissioner or by the taxpayer. It turned on the existence of the assessment as to those matters. The critical error at this point – and it is an error of construction – emerges at 196:

It is clear that the power to amend under s 19 gives the Commissioner no authority to retain payments without authority –

We will deal with that, but their Honours go on to say:

as we explain below –

which is in the next paragraph:

the Commissioner’s duplication error deprived the payments of the character of ‘a sum payable for tax’ within the meaning of s 39 of the Act. No reliance can be placed on the conclusive evidence provision under s 20 –

Now, as was made clear in Futuris, the conclusive evidence certificates are just evidence certificates. The liability and the protection of the liability emerges from the assessment and the concluding words of section 19 which preserves an assessment even though provisions of the Act have not been complied with. So, the conclusive evidence was a complete irrelevancy and your Honours will see in Futuris – perhaps I should have dealt with it but I do not need to take you to it. It is paragraph 64 through to 67 in Futuris where it is made clear that 177 is simply giving evidentiary effect to 175. That is paragraph 67, by reference to Justice Dawson’s judgment in Richard Walter.

The critical point in that passage between 64 and 70 is that conclusive evidence is simply that, evidence provision, but the liability exists in the assessment as protected by 177. So, just returning to 196, if I may, your Honours? Their Honours say:

In any event, it is not the issuing of assessments . . . which gives rise to a statutory debt; it is s 39, which we consider not to apply here.

So, their Honours appear to reason that one can have a disconnect between an amount assessed and the tax payable and, in our submission, one cannot have disconnect between the amount assessed and the tax payable because the amount assessed is the amount that is payable. So, that is, with respect, a complete misunderstanding of the role of section 39 and then their Honours go on to say:

The fact that the excess amount –

This is in 197:

was paid cannot convert it into ‘a sum payable for tax’ within the meaning of s 39 -

Excess amount, of course, is no more than a statement that it had exceeded the liability properly claimable under the Act, but as Justice Brennan in Richard Walter makes clear, that is a natural consequence of the Act, that you can have a disconnect between those two things and the remedy for it is in the objection regime. Their Honours go on to say:

The payment of the excess amount was never a ‘tax’ payment given that the Commissioner never had the authority to demand it –

The Commissioner’s authority to demand it was founded in section 17. He had an obligation or a power to assess. The fact that it was based on an error was irrelevant to the power unless, of course, you are in Futuris territory, but we were not in Futuris territory at the time as Justice Gordon observed in discussion; we are not at that time of the assessment. And then their Honours go on to say in 197:

Furthermore, as mentioned, the Act does not generate a statutory debt from the issuing of an assessment; the debt depends upon the payment being properly characterised as ‘a sum payable for tax’. The Commissioner having no authority under the Act to demand the excess amount, it was never ‘land tax’ –

Your Honour will see that theme when the court came to 90AA and your Honours will see that while I have got your Honours at this point of the judgment at 212. This is where their Honours give reasons for disengaging 90AA, in answer to your Honour Justice Kiefel’s question:

ACN submits that, nevertheless, s 90AA does not apply because the proceedings are not ‘for the refund or recovery of tax . . . In short, the submission is that because the operative mistake ultimately deprived the Commissioner of authority to take, and retain, the excess amount, the excess amount could not be aptly described as a payment made ‘under, or purportedly paid under’ the Act.

It is important when one is looking at mistake in this area that the mistake has to exist at time of payment, not subsequent. I will take your Honour to David where it establishes that. So the retention point is a red herring here on the mistake point. What was the authority to take and the authority to take was assessed and their Honours are disengaging section 90AA because of this construction to amount due. Your Honours will see their conclusion at 213 that 90AA is “not applicable”. In the same vein at 217, line 19, their Honours say:

While in truth the excess amount was not lawfully demanded as land tax, it nevertheless had the character of an amount that is ‘attributable to . . . [a] purported tax’ payment.

I will explain how they got to that conclusion when I come to section 20A but only note that there again the court is saying that there was no lawful demand.

Now, it is clear, in our submission, that this part of the reasons were heavily influenced by two factors: one, the misconstruction of the Act by reference to section 39, and the other was its understanding of mistake and how a party can recover for payments made by mistake. In our submission, the first point, 39, is a construction one; the second point is an error of principle.

So can I turn now to how the court dealt with the mistake which is paragraph 3 of our outline? To deal with this first, can I firstly identify for the Court the evidence as to mistake? It appears at appeal book 164 in paragraphs 39 and 40 of the affidavit of Mr Davis. There was no cross-examination and this is the sum total of the evidence on mistake and, of course, it said:

The plaintiff, in the belief that these demands were lawful and proper . . . paid the land tax assessments . . .

The plaintiff paid these land tax assessments in the belief that it was legally obliged to make these payments -

Well, in our short submission, it was:

and in the mistaken belief that the landholdings listed for the plaintiff in the assessments issued by the defendant for these years were accurate.

Our submission in relation to that second sentence is that it was legally irrelevant because liability did not turn on or depend upon the state of mind of the taxpayer, nor did it turn on the state of mind of the Commissioner. It turned on the Commissioner exercising the power in section 17. That is the sum total of the evidence. The Court of Appeal deals with it at 185 – starting at 185 on page 453, deal with the mistake, and particularly at paragraph 187, line 28:

The duplication error rendered the assessments inaccurate; it thus rendered the belief under which ACN made the payments it did a mistaken belief.

In our submission, that is not right. Again, there is a confusion of concepts, in our respectful submission. To describe the assessment as inaccurate is of no moment in answering the question of whether it imposed a liability to pay.

GORDON J: I wonder if it is overstated, in this sense. It is not irrelevant. If it is overstated, then there is an objection process.

MR NIALL: I am sorry, your Honour, yes.

GORDON J: So, the whole scheme is that you have an assessment of liability which becomes payable, as I understand it, by reference to the issue of the assessment, consistent with the scheme of the Act, and if there is a problem at that time, identified by either the taxpayer or the Commissioner, for that matter, then there is a process of (a) objection for the taxpayer and amendment for the Commissioner.

MR NIALL: That is so, but irrelevant and perhaps – but irrelevant in the sense that it did not affect the liability to pay.

GORDON J: No, that is my point. My point is - the scheme of the Act is this. The liability is established and the mechanisms for then adjusting it are different depending upon who you are.

MR NIALL: From that mistake, the Court of Appeal carried through it on the basis of restitutionary principle both as to the tax payable and also as to the section 90AA. In terms of error of principle, in our submission the Court of Appeal misunderstood, with respect, the principles explained by this Court in David Securities [1992] HCA 48; 175 CLR 353.

The first point we make is to define or put the principle in its relevant framework which is the decision of course established that it is permissible under restitutionary principles to have recovery from mistake of law, that is, mistake of law could be an unjust factor relevant to restitution. At page 376 in the joint judgment the members of the Court identify what is meant by a mistake in this context. Your Honours will see, at about 2 of the page:

In referring to moneys paid under a mistake of law, we intend to refer to circumstances where the plaintiff pays moneys to a recipient who is not legally entitled to receive them. It would not, for example, extend to a case where the moneys were paid under a mistaken belief that they were legally due and owing under a particular clause of a particular contract when in fact they were legally due and owing to the recipient under another clause or contract.

So the critical point is that there is a payment and the person who makes the payment is mistaken as to the obligation to pay and the person who received them is not legally entitled to receive them. The other element or other two important elements are in the middle of the page – there is a reference to the mistake must have been causative. The other important aspect of the principle is the time and your Honours will see that at 385, the time at which this is to be assessed, 385 point 5:

From the point of view of the person making the payment, what happens after he or she has mistakenly paid over the money is irrelevant, for it is at that moment that the defendant is unjustly enriched.

Now, the crucial factor is that the recipient has been enriched and, of course, this is in the context of unjust enrichment but the concept of unjust enrichment is not a normative exercise as to whether or not the recipient – it was fair to the recipient to receive the money. It is not unjust in that sense. It is unjust in the sense that the recipient had no legal entitlement to receive it and, therefore, restitution would work.

Justice Brennan makes similar points, in our respectful submission. Firstly, at 389, his Honour identifies that the critical time is at the moment of receipt. Your Honours will see that at point 7 of the page. The payer’s right to recover the amount accrues at the moment when the payee received the money. So, here the taxpayer would have to say on mistake that at the time of payment they had an entitlement to recover. His Honour Justice Brennan returns to the concept of unjust enrichment at page 392 at the first full paragraph, in essence to say that a defendant who has been unjustly enriched by the receipt of a payment is to say that the defendant has no right to receive it. Now, down the bottom of that page, there is a sentence:

If the payer would not have paid the money had the payer known all the relevant circumstances, both legal and factual, the defendant is unjustly enriched by the receipt.

That is relied on by the Court of Appeal here at 195 but, in our respectful submission, taken out of context because the critical element is that there was no obligation to make the payment, no entitled to receive the payment. Once we put that in the statutory regime for so long as the assessment remained on foot there was an obligation to pay and when the Commissioner received the money he had a legal entitlement to receive it. It was not unjust.

So the concept of the application of the mistake and the restitution has the two errors which I have identified and it infected section 90AA. I have already taken the Court to 212, where it was the operative mistake that denied it the character of payment. That is what I wanted to say about paragraph 3 in proposition 1.

Can I now deal with section 90AA. I have probably already said most things that I wanted to say about it. Firstly, this was a proceeding for the recovery of tax paid at least in form for both proceedings. If your Honours look at how the proceedings were constituted, firstly with the originating motion, which is relevantly at appeal book page 4, the prayer for relief as a first item for the mandamus was:

directing the defendant:

(a) to issue amended land tax assessments . . . and

(b) to refund to the plaintiff the land tax which was overpaid -

So in form it was a claim for tax overpaid. Your Honours will also see that in the restitution proceeding, which was commenced by writ, supported by a statement of claim. Your Honours will see in the prayer for relief at page 24:

The sum of $363,680, or such other amount as represents the amount overpaid on account of land tax for the years 1990 to 2002 inclusive.

Section 90AA is exhaustive in its terms and plainly, in our submission, applied. There is an argument against us not considered by the Court of Appeal which appears to be based on a contention that section 90AA has a narrow operation; it does not intersect with the amended assessment and it only operates where there is a single assessment and relies on a decision of this Court in Trustees, Executors and Agency Co Ltd v Commissioner of Land Tax (1915) CLR 21.

The question in issue in this proceeding was whether there could be more than one amendment of assessments in relation to land tax, and the Court held that there could be. One of the arguments that was made was that the power of amendment, which was limited by sections 59 and 60, which were effectively refund adjustment provisions - your Honours will see sections 59 and 60 on page 34 of the report in the judgment of the Chief Justice.

Section 59 is in similar form to section 90. Section 60 is in similar form to section 90(2) as enacted, but the 1958 Act also had subsection (3), which I will come to. What was said in this case by Justice Isaacs was that sections 59 and 60 had a very limited operation. Your Honours will see that at page 37 of the report. The view Justice Isaacs took – it is about point 8 on the page:

the view I take is that secs. 59 and 60 are adjustment sections only. Clerical and accountancy errors, not perceived before payment, may be set right within three years after payment, the taxpayer, if he alleges overpayment from such a cause, being bound to satisfy the Commissioner that it is so. But the accuracy of the basic –

value of the assessment is assumed. The Chief Justice at page 35 observed, at about point 5 of the page:

sections relate only to matters of account and payment.

As I understood from that starting point, it is said that section 90A is only an amount by reference to clerical error. If you have an assessment for $10,000 and you put the decimal point in the wrong place and paid $100,000, sections 59 and 60 would recover it, but the liability remains the same as that dealt by the assessment. Whatever the position was in the Land Tax Act 1910, when the 1958 Act was introduced, it was introduced in a different form.

Your Honours should have section 90 as enacted. Your Honours will see subsection (1) and (2) are very similar to 59 and 60 of the Act considered by the court, but subsection (3) is very different because it says:

No application for a refund of an overpayment shall be entertained by the Commissioner unless made within three years after such overpayment was made, or if there has been an objection then within three months after the date of the decision on such objection.

So subsection (3) did not have the limited operation that subsection (2) might have had on the basis of the authority of trustees. It made it clear that section 90 was going to deal with overpayments not limited to the sort of clerical overpayments that had been considered in Trustees.

Now, what then happened was that in 1974 – and I will try to do this as neatly as I can – subsection (3) was repealed and subsection (2) was replaced and broadened, and that was done in 1974 by Act No 8538 and in the second reading speech, which your Honours should have, to the amendment of 1974, the Premier who moved the Bill – this is on 6 March 1974 at page 3743 – the Premier noted that subsection (3):

limits the time for the application by a taxpayer to the commissioner for a refund to within three years after the overpayment was made. The time limit has on occasions led to the unfortunate situation –

There is a reference on the next page to a matter arising recently where a company “had been paying land tax on land it had not owned for six years” and subsection 90(3) was seen to be a problem for the taxpayer and it was removed. Your Honours will see that a bit lower down that paragraph:

enables the commissioner to refund tax overpaid without any time limit.

So that is important, in our submission, to the context. Subsection 90(2) was expanded. It is broader than considered by the court in Trustees because it says:

Where the Commissioner finds in any case that tax has been overpaid he may refund.

So there was a significant change in 1974. In 1992, the time limit was reimposed and your Honours will see that in Act No 76 of 1992, where section 90(2) was amended dealing with receiving application for refund, finding tax being overpaid, must overpay but there is a time limit for an application within three years. That was, as the second reading speech – I will not take your Honours to it – made clear, was for certainty of the revenue.

In 1993, the certainty of the revenue was further enhanced because section 90(2) and (3) were repealed and section 90AA was introduced, and 90AA is very comprehensive in its terms. I should have noted when one – perhaps I will do that now - when one turns to 90AA(6) it provides that if:

an application for a refund is lodged with the Commissioner in accordance with subsection (2); and

there is a finding of an overpayment, the Commissioner “must refund”. So, there is a duty currently imposed in the Act of 1958 and must apply a running balance. In subsection (7) your Honours will note that there is an express appropriation from the consolidated fund in relation to the amounts overpaid. So, in our submission, just on its terms and given its context and purpose and its legislative history, section 90A clearly covers the amounts that were paid by the taxpayer.

Can I now turn to the finding, proposition 3, in relation to conscious maladministration? Now, as I submitted earlier to your Honours, conscious maladministration was not pleaded as an aspect of the cause – either cause of action, but your Honours will see in paragraph 50 of the judgment of the Court of Appeal that the allegation of conscious maladministration - paragraph 50 of the Court of Appeal, appeal book page 391 – the Court records that the submission:

was developed below into the allegation of conscious maladministration. It is a serious and important allegation in the circumstances of the case.

The Court of Appeal returned to it at paragraph 150. Now, in the immediately preceding passages to 150, the Court of Appeal had held that there was a duty to refund on the basis of an excess amount. But the Court identified at paragraph 150:

The difficulty for ACN is that s 19 not only confers on the Commissioner a power to amend but it also contains by its closing words –

Now, this appears to have directed the Court of Appeal’s attention to Futuris which, in our respectful submission, was completely irrelevant to the issues that were before the Court.

The Court of Appeal appears, in our respectful submission, to have concluded that because of the concluding words in section 19, the mandamus action could not succeed without conscious maladministration and that is why their Honours then set out in 151, an analysis of Futuris and the critical findings at 155:

the actual refusal of the Commissioner on 15 August 2013 –

and your Honours, that is at appeal book 210:

to amend the assessments to make them accurate, in the circumstances . . . amounted to conscious maladministration. The decision not to amend . . . was deliberate.

Well, it was considered and it was deliberate:

It was taken in the light of the knowledge of the duplication error –

That may be accepted. And their Honours go on to say at 156 - I beg your Honours’ pardon, there is one passage that I should draw your Honours’ attention to, this is at the bottom of 437, paragraph 155:

The context was one where the evidence was overwhelming that the duplication error was operative and enduring throughout the 1990-2002 land tax years. The decision not to amend was taken after the Commissioner allowed objections based on the duplication error for the 2006 and 2007 –

and amended the references:

by deleting the duplicate property –

Just pausing there, if I may, your Honours. 2006 and 2007 was not done under the 1958 Act. It was done under the 2005 Act together with the 1997 Taxation Administration Act which had an express power to extend the time for an objection and that was a factor that the Court of Appeal misapprehended which I will take your Honours to in a moment. Their Honours go on at 156, the last sentence:

at the time of his refusal on 15 August 2013, he was aware that the assessments did ‘not reflect any rational assessment of the taxpayer’s liability to tax’.

And again that brings up the sequencing point that your Honour Justice Gordon raised with me. And the last sentence of 157:

In our view, the Commissioner’s refusal to amend amounted to a deliberate disregard by the Commissioner of the scope of his powers without good reason or justification.

Then over at 159:

in the particular circumstances of this case, the decision of the Commissioner not to amend the assessments constituted a deliberate failure of due administration. It amounted to a wilful refusal of the Commissioner to perform his duty without good reason . . . Such a claim clearly falls outside of the objection and refund regimes. We have already concluded that the power under s 19 was here enlivened –

So, that was on the basis of an excess, which I will take your Honours to:

because the Commissioner had knowledge that the assessments . . . were inaccurate –

So, to encapsulate the point, section 19 was enlivened on knowledge, nothing else:

he had, therefore, a duty to exercise the power to amend . . . We consider that the decision of the Commissioner not to amend the assessments when his power . . . was enlivened amounted to conscious maladministration for which mandamus is available.

And their Honours go on in 160:

With great respect to the judge, we consider that she erred in failing to view s 19 as an integral part . . . give rise to a duty –

this is important:

and failing to find that there was conscious maladministration of the Act sufficient to found an action for mandamus to compel an exercise of the power under s 19.

Your Honours will see it repeated at 162:

and he has deliberately refused to do so.

The submission we put, firstly, is that there was no basis for a finding of conscious maladministration, regardless of the construction of the Act which the court arrives at. There could be no suggestion that the Commissioner knew that 90AA was not available, but relied on it wilfully in disregard of his duty to refund the money. The court seems to have regarded it as critical to its order for mandamus in paragraphs 159 and 160. It is not clear why and our submission on that point is that it misunderstood Futuris and section 19.

It is a finding, in our respectful submission, that not only should not have been made but could not have been made on the material. In our submission, it was a material error in relation to the mandamus claim. It featured there as an aspect of the mandamus and it also features – while I have got your Honours on conscious maladministration – at 241, to compound interest. It was the only basis for rewarding compound interest, at paragraph 241.

Can I now turn to section 19 and our construction of section 19. At paragraph 162 the court concluded that mandamus would issue under section 19 without regard to the reasoning in Royal Insurance – in other words, in our submission, mandamus issued without regard for any restitutionary claims supporting the duty to refund.

How it arrived at that conclusion starts at paragraph 122. In our submission, the construction adopted by the Court of Appeal started as its point of origin that the purpose was to ensure completeness and accuracy. Your Honours will see that at 123. That is reinforced at the last sentence in 123:

The language of s 19 makes it plain that it is one of the integrity mechanisms of the Act . . . for ensuring that the Commissioner collects the correct amount of tax and only the correct amount of tax.

What is informing, in our submission, the construction is a starting point that if there is any departure from the correct amount of tax the scheme has somehow failed, but of course the correct amount of tax is the amount assessed as varied by objection. The Act does not pursue completeness and accuracy as an end in itself without regard to any of the other considerations that are mediated within this scheme including time limits, process and certainty.

The concept of integrity mechanism is repeated in 124, the last sentence. Their Honours then have regard to cases such as Finance Facilities where it may - can give rise to an obligation. They are not controversial propositions. The reasoning on section 19 commences – the critical reasoning is paragraph 139 – if I can take your Honours to that, please. There is a reference to Justice Hunt and earlier cases including the expectation the Commissioner will take a high position. That is not controversial. But at 139 the court identifies circumstances which would be:

improper for the Commissioner to continue to claim the tax identified in an original assessment –

for example, where the Commissioner knows that:

assessment is necessary to ensure the accurate assessment of land tax –

Of course, knowledge that the assessment is not excessive might occur in a range of circumstances. It might occur after the objection period has expired in which the taxpayer knew the point and declined or sat on his or her hands to bring the objection. But their Honours go on to say at 139:

We consider that it would be equally improper for the Commissioner to continue to claim to be entitled to an amount he knows to have been overpaid in response to an inaccurate assessment in the same way as it is improper for the Commissioner to continue to claim the tax identified in an original assessment –

In our submission, there is just no tethering to the scheme for that concept. In our view, the nature of the power and the conditions that must be satisfied before it is enlivened mean that once the Commissioner has knowledge that an assessment is inaccurate he has a duty to exercise. Immediately, the objection regime and the time limit imposed is rendered otiose or significantly undermined, the refund and recovery provisions in section 90AA are rendered otiose or bypassed and you have an entirely parallel and unstable system of collection of tax. Then, in our submission, in another significant constructional error, the Court in 141 says:

the Commissioner must have the power to do everything that is necessary and convenient for the achievement of the purpose of s 19 -

Calling in aid the statutory construction of conferral of a duty will carry the power, or conferral of a power might – and their Honours refer to:

‘every power and every control the denial of which would render the grant itself ineffective’.

There is no inefficacy in section 19 by limiting it to an assessment or an amended assessment. It does not become ineffective because the Commissioner cannot refund the money. In circumstances where in two express places the Act deals with refund – one in the amendment regime and one in section 90AA:

In our view, the power to refund an overpaid amount is a necessary incident of the power to amend.

Their Honours go on to say there is “an implied appropriation” and their Honours rely, at footnote 153, to Royal Insurance and Justice Brennan, but Royal Insurance was a power to refund.

KIEFEL J: An express power.

MR NIALL: The duty was the power to refund which necessarily carried with it the obligation to meet the power out of the consolidated fund. So that simple error of construction, there was simply no need to infer or imply, I should say, the duty of refund and appropriation – no principle of statutory construction which would permit it and it would obviate all the restrictions that exist on the express powers of refund.

Now, I should draw your Honours’ attention to 142 and 143 because they look somewhat out of place with my submissions. Their Honours say “the Commissioner relied upon a power to refund” in 2006 and 2007. “He relied upon the same power” for 2008 to 2011 and issued the refund of $300,000.

GORDON J: Was that not under the 2005 Act?

MR NIALL: It was, your Honour, and your Honours will see:

The Commissioner paid these refunds . . . the refunds must have been paid as an incident of the power under s 19 to ensure that the assessments of tax for the 2006-2011 land tax years were complete and accurate.

In paragraph 143, their Honours say:

The power he has already exercised under section 19 with respect to the 2006-2011 –

Your Honours will see at appeal book 95 that the objections for 2006 and 2007 were expressed to be under the 2005 Act, as they could only be, I hasten to add, and of the Administration Act, sections 96 and 100. Section 100 of the Taxation Administration Act, which your Honours do not need to go to, allows the Commissioner to lodge an objection after the 60-day period so there is an express power for 2006 onwards and the gap between 2002 and 2006 which was met through ex gratia payment by the Treasurer, and your Honours will see that at page 152, and that reflected the three-year time limit.

Now, we have set out in writing in some detail the construction of section 19. Could I just make a couple of points by way of oral amplification? It is important firstly that section 19 only deals with assessments, so the consequences are to be found elsewhere. Secondly, it is imposed in discretionary terms. Thirdly, objections can only be challenged by way of objection within time and limited to grounds.

So if the duty – if the discretion in 19 was converted into a duty based on knowledge, it would completely remove the time limit for objection because the knowledge could be obtained. The taxpayer could, in effect, run a parallel system of objection by arming the Commissioner with knowledge and once the knowledge is obtained the duty is enlivened, and the Commissioner would not be entitled to say, well, you had as a matter of discretion a deliberate decision not to exercise your objection rights, or alternatively, as a matter of discretion, the time is too long or for some other reason.

GAGELER J: So do you say there are no circumstances in which the discretion can become a duty compellable by mandamus?

MR NIALL: We do, your Honour, but in the alternative we would – that is, that the – it is effectively a code within the objection regime as to duty and that if it was done within the objection regime the Commissioner would not be under a duty but would - the taxpayer’s rights would be protected by way of objection. After the objection regime has expired there is no duty. It is a discretion of which that would be a powerful factor, in our respectful submission.

Royal Insurance [1994] HCA 61; (1993) 182 CLR 51, on which the Court of Appeal spent some time, is a very different case but can I take your Honour to just a couple of passages in it? Your Honours will be familiar with the case and I will not dwell on it but there it was an express power to refund. The Commissioner may refund, so we do not have the same assessment problems or issues that currently arise. Your Honour will see the statute at bottom of page 62 of the report:

“Where the [Commissioner] finds in any case that duty has been overpaid, whether before or after the commencement of the Stamps Act 1978 he may refund to the company –

The circumstances in which there was an occasion for refund are slightly complicated but they involve in part some amounts as premiums which should never have been paid, they would have been subject to some adjustments, and in another part which were liable to be paid under the Act but which retrospectively the obligation to pay was removed.

For present purposes, in the judgment of the Chief Justice at page 65, point 4 on the page, point 5, his Honour having noted – perhaps I should take your Honours to page 64, bearing in mind that this was entirely a question of construction, his Honour says – the Chief Justice says:

in terms it confers no authority upon the Commissioner to levy, demand or retain any moneys otherwise than in payment of duties and charges imposed by or pursuant to the Act.

That proposition needs to be seen in its context where the statutory obligation to tax or to charge the stamp duty was removed entirely. There was a statutory provision which says that these premiums are subject to duty. That was removed. The insurer continued to pay. There was a period of a gap where the Commissioner continued to pay but, in fact, although there was an attempt to exclude this other policy from stamp duty liability, the legislature misfired and there continued to be some compensation premiums which were subject to stamp duty. That obligation was removed retrospectively. So, there are different categories.

But in our case, the issues that his Honour was there dealing with as a matter of construction do not arise, because we are not dealing with moneys which are not imposed pursuant to the Act. His Honour the Chief Justice refers to that in part of the context of construction. If your Honours go over to 65, his Honour says:

I cannot accept the proposition that, once overpayment has been found to have been made, the discretion must be exercised by making a refund.

His Honour goes down, at about point 8:

It would be surprising, to say the least of it, if the conferral of a discretion to make a refund was intended to exclude power to refuse a refund when in the circumstances the taxpayer was not entitled to recover under the general law. An action which is time barred is another illustration of circumstances in which refusal to make a refund would be justified.

His Honour goes on to consider whether recovery would be available under the general law by way of restitution. On this point, Justice Brennan, with whom Justices Toohey and McHugh agreed, concluded that there was no liability to pay – at page 87, right in the middle of the page. There is a sentence right in the middle of the page where it is said:

But no enforceable obligation to make the refund arises merely
from a finding that there has been an overpayment.

What his Honour concluded was that you had to find an antecedent liability. Your Honours will see that in the last part of that paragraph:

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 –

That is why Royal is all about restitutionary principles and, more particularly, the defences and, more particularly again, what happens in relation to passing on of the moneys received. What we get out of Royal Insurance, in our respectful submission, is that section 19 would not impose any duty simply on a finding of overpayment. That first limb of the Court of Appeal’s judgment is wrong. Secondly, to the extent they need to establish a restitutionary liability, they fail because there was no operative mistake.

I do not wish to say anything further by way of oral submissions in relation to compound interest. Unless I can be of any further assistance to the Court, they are the submissions.

KIEFEL J: Yes, thank you, Mr Solicitor. Yes, Mr Young.

MR YOUNG: If the Court pleases. The principal issue in this case is the one that your Honour the presiding Judge identified to my learned friend, namely the essential question concerns an alleged interaction between section 90AA and section 19. What the Court of Appeal found was that section 90AA had no application in the circumstances where an amendment was made.

Now, our learned friend has presented a set of submissions in this Court much like the submissions below that do not really address the central, factual and legal issues of the case which concerned the actual decision that was made on 15 August 2013.

This was not a case where there was an unexercised discretion and the debate was confined to the question whether there was a duty to exercise the discretion. The Commissioner confronted the nature of the error and decided that he would proceed to make an actual decision. Therefore, the first and indeed the central issue that the Court of Appeal found decisive was whether that actual decision was made according to law. The reasons extract the letter of 15 August in paragraph 49 - - -

BELL J: Do you have a page number?

MR YOUNG: I am sorry, I am working from a different document, your Honour. It is page 417.

BELL J: Thank you.

GORDON J: That is not right.

MR YOUNG: It is paragraph 49 of the Court of Appeal judgment. The letter is extracted. I am told it is appeal book 390. The Commissioner states that the Commissioner has proceeded to make a decision:

The decision of the Commissioner is not to make any amendment to the assessments.

A single operative reason is given for that decision. The last three lines of that extract:

your client would not be entitled to the consequential relief sought; that is, pursuant to section 90AA of the Act, your client would still not be entitled to the refund it seeks.

So the question is this: in circumstances where an amendment is made, would there be power either for the Commissioner to act on the amendment of his own motion to effect the repayment or could the amended assessment be enforced under the provisions of the Act? That was the question that the Court of Appeal found to be decisive. Our learned friend’s submissions avoid addressing the question.

Your Honour Justice Gordon was also right in saying that there is a temporal issue. That is very relevant here because the context in the first place for assessing the intersection of section 90A and the actual decision that was made is the state of knowledge that existed as found by the Court of Appeal in unchallenged findings as to the state of knowledge at the time that decision was made on 15 August. It is that matter – and I will come to this in more detail – that the Court of Appeal addresses that issue at some length between 155 and 162 and finds that the decision was not made according to law, it was infected by a jurisdictional error and therefore mandamus would go. That is perfectly orthodox and accords with recent decisions of this Court in the chain of migration cases concerned with section 46A.

Once the decision-maker embarks on making a decision, the decision must be made according to law. So, our case was that the breach of duty unfolded in two stages, effectively. There was a constructive failure to perform what we allege to be a duty to amend from our request in December 2012, running up until August 2013. Then, there was an actual decision not to amend based on an erroneous legal ground on 15 August.

Now, what that means is that the first question, in a way, is whether that decision was legally erroneous and, therefore, needs to be made according to law. Mandamus would go in that event, regardless of any debate as to whether there was a pre-existing duty to proceed to make the decision, the decision having been made. But, we do not shy away from saying that the existence of the duty is very relevant because it practically determines the shape and reach of the mandamus remedy.

If the duty were only exercisable in one way, given the state of knowledge that the Commissioner held on 15 August, then the appropriate form of mandamus would be that granted by the High Court in Royal Insurance. It would be mandamus to amend the assessments, to eliminate the excess amounts and to give effect to the assessments by repaying those excess amounts to the taxpayer. That was the form that mandamus took in Royal Insurance.

That is the essential question and the context first and foremost to address it is the context that prevailed on 15 August 2013 when the decision was made. I will deal with and meet the arguments that have been advanced but it is important to deal with the basis upon which the Court of Appeal decided the matter in the first place.

Can I start with the scheme of the Act as the Court of Appeal did and my learned friend did? In his set of propositions in the outline, he started with a proposition that the relevant amounts – so long as the assessments are on foot amount of the tax paid – and section 90AA had a particular application while those assessments stood. But, once those assessments were amended, then the question is, what is the proper analysis of the intersection between section 90AA and section 19? I want to say a few brief things about the scheme of the Act without retracing my learned friend’s steps. I want to, at the same time, address the proper construction and reach of section 19.

I should observe that the Court of Appeal adopted a perfectly orthodox approach to its construction of the Act. It reviewed all of the provisions of the Act and their intersection but, given the nature of the case before it, it obviously needed to construe section 19 in the context of the wider Act, which is exactly what it did.

Now, can I make some remarks about section 19? Section 19 has stood in the form that the Court sees it in the 1958 Act from 1910 and also, effectively, after 2005 for reasons I will explain, but section 19 is a power that is expressly exercisable from time to time. That means at any time, and as this Court held in the unanimous decision in Trustees, as often and as radically as necessary to make an assessment complete and accurate.

Now, section 19 is an adjunct to section 17, which is the power of assessment in the first place. Both provisions are directed to the same objective, namely, the accurate identification of the assessable value of land owned by a landowner and the assessment to tax in the light of that assessment. I say that because of section 6 and 8 to which the Court of Appeal drew attention: land tax is “a duty of land tax” according to section 6 “upon land for every dollar of the unimproved value thereof”. So it is an objective tax assessed at a specified rate on the unimproved value of the land.

Section 8 confirms that in subsection 8(1) and section 39 makes every sum payable for tax a debt due to the Crown. Now, as Justice Isaacs pointed out in the Trustees Case, land tax is in those respects something of an exceptional tax because it has an objective foundation. Perhaps that is why the power of amendment in the Land Tax Act has always been unlimited in point of time, unlike other taxing statutes where powers of amendment have always been time limited.

In the Income Tax Assessment Act, the power to amend in section 170 has always been limited to three years and now there are much more complicated formulas but it is still time limited. The same is true of other State taxes in Victoria but not the Land Tax Act. Section 19, before I go on, it has been repealed but the position that obtains under the 2005 Act is substantially the same. The power of amendment is not limited in point of time.

We provided in supplementary materials to the Court the relevant provisions of the Land Tax Act 2005 and the Taxation Administration Act 1997. The picture is this; all State taxes and their administrative processes are now captured under the Taxation Administration Act and the Court should have a few extracts from the Taxation Administration Act 1997. Instead of a power of amending an assessment, it is now called “reassessment” in section 9. Under section 9(3) the power of reassessment is limited. It is now “5 years after the initial assessment” with certain exceptions that operate essentially in favour of the Commissioner. While the first operates generally, it is post “objection, review or appeal”, but the second is where there has been lack of full disclosure.

Now, the Taxation Administration Act also has the equivalent of section 90AA and section 18, so it is section 18 that replicates section 90AA going forward after 2005, but what is immediately noticeable is that there is a separate time limit for refunds under section 18 and a time limit differently expressed with different exceptions under section 9 in respect of reassessments.

KIEFEL J: What do we draw from this, Mr Young?

MR YOUNG: I am pointing out that the scheme has always been the same but there has been a power of assessment and separately a power of refund and the view taken by this Court and adhered to since 1915 has been the time limits on the power of refund do not apply across and limit the power of amendment. What I am pointing out is that that structure has continued. Now, they are the general provisions of the Taxation Administration Act but section 51 of the Land Tax Act 2005 carves out the Land Tax Act as an exception. Despite the general five-year limitation on reassessments, it has no application to the Land Tax Act. That is going forward.

BELL J: I think you explained a little earlier why you say that is so but I missed it, what is the rationale?

MR YOUNG: The foundation of land tax is an objective assessment of the value of the land held by a landowner. Perhaps – I am not saying there is any support for this in the authority but that may mark it out from some other pieces of taxation legislation. But, at all events, land tax has always been treated exceptionally in terms of the power of amendment not being limited in point of time.

GAGELER J: But that is really not put against you, is it?

MR YOUNG: Well, I understood it was insofar as it was said that what the Commissioner did in respect of the years 2006, 2007 and 2008 to 2011 was different because the provisions of the Land Tax Act 2005 were different. They are not relevantly different. Let me take what the - - -

GORDON J: I think the point that was being made, and I may have misunderstood the solicitor, but I thought there were two points. One was it was just under a different Act, i.e. the 2005 Act. Second, to the extent to which the Court of Appeal relied upon what had been done in those years in construing section 19, it was an error.

MR YOUNG: Well, I think it was said to be an error because the Full Court assumed that the provisions continued.

GORDON J: No, that it had been done under section 19 rather than under the 2005 Act; that was the complaint.

KIEFEL J: That went in some way to the question of the deliberate nature of the decision underlying the maladministration point.

MR YOUNG: Can I make this point? Factually, what the Commissioner did - and it appears at appeal book 75 and 76 - was that in respect of 2008 and 2011 of his own motion, the Commissioner issued reassessments by deleting 65 Albany Road and then of his own motion again at page 77 sent a refund cheque for $300,000.

Now, there was no power to take those steps if the Commissioner’s argument in this Court is correct, because the only power that could be exercised was the power of reassessment which, under section 51, was time unlimited. That was a reassessment to correct the known error and, using an incidental power associated with the power to reassess, to pay the excess amount back to the taxpayer.

That could not be done on our learned friend’s construction of the Act. There is, for instance, he contended, no incidental power associated with a power to amend to give effect to the amendment by paying the amount declared to be excess by that amended assessment back to the taxpayer. That is precisely what occurred in 2008 to 2011.

Can I then come back to some other features of section 19? Under section 19, it is quite clear, we would say, that the power to amend can be exercised either to diminish or to increase the amount of the tax assessed. The Commissioner in writing made a half-hearted submission to the contrary that it could only be increased adversely to the taxpayer under section 19. That cannot be right, on the language of the provision, because it is:

such alterations or additions to it as he thinks necessary to ensure its completeness and accuracy –

which might go one way or the other. Moreover, there is a long line of cases, including cases in this Court, holding that it can operate either to the debit or the credit side of the account. That is Trautwein’s Case. Hoffnung is to the same effect, so is Trustees and so is Ex parte Hooper.

Then I come to an important matter; what is the legal effect of an amended assessment issued under section 19? What effect does it have on the prior assessment and the assertion that there was a tax debt under the prior assessment, only challengeable in certain ways? The cases make it clear an amended assessment displaces the previous assessment. It stands as the complete assessment of the taxpayer’s liability to land tax in lieu of the previous assessment. To the extent of any amendment or alteration, it eliminates the past tax debt. It is wiped from the record:

the assessment henceforth exists [only] as altered or added to –

by the amendment, and I paraphrase Justice Isaacs in the Hoffnung Case 42 CLR at page 54.

Now, these matters were addressed in Trustees, Executors and Agency. Can I go to that case? I appreciate my learned friend went there, but I am going to go to different passages. The main issue in the case was whether the general language of section 20, the then equivalent of section 19, was to be read down in light of the rebate provisions in sections 59 and 60.

Section 20 was unlimited in point of time and, I think, either entirely or substantially identical to our section 19. It is extracted at page 32 in the bottom half of the page. The argument the Court was addressing is identified at the top of page 33 in the Chief Justice’s judgment:

The suggested limitation of the power of the Commissioner . . . [is contended for from] secs. 59 and 60 –

Those provisions applied over the time limit, whereas section 20 did not, the three-year time limit. The form of sections 59 and 60 my learned friend pointed to at page 34. The amendment in the event of too much having been paid is section 60. The Court sees it is a three-year time limit, so the argument they were dealing with was similar to the argument the Commissioner advances here. The three-year time limit and the rebate provision applies across and delimits the power to amend. The High Court unanimously rejected that argument. First, the Chief Justice, in the middle of page 35, about point 5:

I do not think that these arguments are sufficient to justify the Court in holding that the power –

is cut down. Then the last paragraph on the page:

sec 21 . . . either by way of increase or diminution . . . if he has paid more, he is entitled to a refundment of the excess –

That is at the bottom of the page. So the power of amendment carried with it a power to refund in the view of the Chief Justice. Then if I can go to Justice Isaacs. They made several important points. At 37, point 7 on the page, the passage beginning “Shortly stated” –

GORDON J: Just before you leave that passage, what are we to do with the summary at the bottom of that page by Chief Justice Griffith, in particular the last sentence?

MR YOUNG: The last sentence “this is construing”?

GORDON J: Yes.

MR YOUNG: His Honour is construing the identical provision that we have at issue in this case, section 19. His Honour’s construction was it authorises amendment that results in an increase or a diminution and if there is an excess payment the taxpayer is entitled to a refundment of the excess upon the amendment being made.

KEANE J: Subject to section 60.

MR YOUNG: Yes, I understand that.

GORDON J: Subject to section 60; that is my point.

MR YOUNG: I am coming to that, your Honour. I can only do this in steps. I will come to section 90. In the earlier passage his Honour rejects the contention that section 60 imposes any limitation. That is what his Honour says in the middle of that same page, 35.

Justice Isaacs, at page 37, construed the rebate provisions as provisions that assume the continuance of the assessment under which the payments were made. That appears at page 37, point 8, where his Honour says that those provisions assume the value of the land as per the previous assessment. Then at page 39, the middle paragraph, and then his Honour continues in the next paragraph:

secs. 59 and 60 . . . do not, on a proper reading, place any limitation whatever on the comprehensive language of sec. 20.

BELL J: This was on a view that they were, as it were, for accounting errors.

MR YOUNG: His Honour considered that they were addressed to different issues. Section 20, the equivalent of our section 19, was addressed to the amendment to ensure accuracy and completeness; whereas 59 and section 60 were addressed to a refund in circumstances where the previous assessment that called for the payment is continuing in force. It has not been displaced by an amended assessment. His Honour makes that clear at page 40. The first complete paragraph, particularly about 10 lines in:

on the basis of an existing assessment.

Justice Higgins - - -

KEANE J: And, at the end of that paragraph, his Honour says:

Assuming, therefore, the repayment could be taken to have been lawfully made under the powers given by sec. 60, the Commissioner’s powers of alteration would not be affected.

The repayment, however, in my opinion, cannot be lawfully referred to sec. 60 –

So the express provision of section 60 is being identified as a limitation on the power to refund and, indeed, by Justice Isaacs, as bearing upon the question of amendment.

MR YOUNG: No, with respect. His Honour is addressing there the facts. Here there were two stages. There was a refund to the taxpayer which the taxpayer received. The factual circumstances surrounding the case were to this effect – notwithstanding having paid a refund, could the Commissioner now make an assessment, an amended assessment that reimposed the tax and, effectively, under cover of the amended assessment recover that first refund. His Honour there is addressing that circumstance. He is not qualifying what his Honour has earlier said that, as a matter of construction, sections 59 and 60 do not cut down section 20.

His Honour treats them as addressing different purposes, different spheres and different situations. One is creating a new charter, a new set of rights of liabilities by amending an assessment. The other is assuming the continuance of the valid assessment under which the payments were made authorising the Commissioner nonetheless to make a refund or to recover an increment within time as per sections 59 and 60.

BELL J: Upon a view that those provisions are adjustment sections only and that clerical and accountancy errors not perceived before payment being set right.

MR YOUNG: Right.

BELL J: It is to the legislative history that Mr Niall took us. What answer is there to that?

MR YOUNG: Your Honour, I am not shying away from those words. But what those words point out is that 59 and 60, the rebate provision there as here, is concerned to address adjustments that are going to be made notwithstanding the continuation of the existing assessment. That is what Justice Higgins points out at the foot of page 43:

I am inclined to the view that these latter sections refer to mistakes made in carrying out a given assessment.

They are not addressed to remaking the assessment which is going to displace the assessment under which adjustments might be sought by a different process. They are establishing a new set of rights as between the Commissioner and the taxpayer.

BELL J: I think the point that was being made by Mr Niall was 59 and 60 are in radically different terms to 90AA and then to take us to the nature of each claim that was made being for the recovery of tax that has been overpaid and then to the terms of 90AA which one does not find.

MR YOUNG: Your Honour, I would respond to that in this way. The verbiage has changed in relation to the rebate provisions, clearly so. But the substance has not changed. If your Honour goes back to 59 and 60 where they are extracted at page 34, Trustees, the essence is that it is a rebate provision that allows recovery of an additional amount within three years or, within three years, a rebate if too much has been paid. The essence of section 90AA is to allow an application and recovery of a rebate within three years.

KIEFEL J: Despite assessment.

MR YOUNG: Despite assessment. The substance of the rebate provision has not changed through the legislative history. The verbiage has but basically it is a three-year time limit, now five years, but originally three years and it always has assumed the continuation of the existing assessment under which those payments were extracted.

BELL J: It remains that these were proceedings for the recovery of tax paid and then one comes to the terms of subsection (8).

MR YOUNG: Our proceedings, your Honour, sorry, our - - -

BELL J: Then one comes to the terms of subsection (8) in 90AA. You say it is a matter of mere verbiage but the verbiage does sometimes matter and there is significant difference in the provisions that were being considered in Trustees in these provisions.

MR YOUNG: Yes, but, as in Trustees and as in section 90 when it was first enacted in the 1958 Act, it is always presupposed it is a set of proceedings for the refund or recovery of tax paid and that assumes the continuation of the existing assessment but characterised the amounts in question as tax and a tax debt and your Honour referred me to subsection (8). Well, it does extend the proceedings in the nature of mandamus but they have to be proceedings for the refund or recovery of tax.

BELL J: I think the point was made - the short point is each of these sets of proceedings are expressed to be just that.

MR YOUNG: No, our mandamus proceeding is a proceeding to require an amendment and - - -

GORDON J: And refund.

MR YOUNG: Yes, but we made it clear at all points of time, as the Court of Appeal records, that the second limb was consequential on amendment, that we are seeking mandamus to require an amendment and consequentially on the amendment, to require payment of the amount found to be excess by that amendment. In other words, the second limb is to give effect to the amendment in the same way as this Court did in Royal Insurance.

KIEFEL J: Well, is that to recognise then that here 90AA requires an amendment of the assessment for the claim to be made, whereas the section 60 that was dealt with in Trustees, Executors Case, did not.

MR YOUNG: No, section 90AA does not require an amendment to give effect to a refund. It carves out of the existing efficacy of the assessment which is continuing a special power to effect a refund.

KIEFEL J: But if tax has been paid, 90AA is concerned with tax that has been paid.

MR YOUNG: Yes.

KIEFEL J: If it has been paid under an assessment that it is paid in recognition of the liability created by the Act, would not there have to be a change in the liability for the claim then to be - for a refund to be made because the debt is said - you have to make the debt otherwise, do you not?

MR YOUNG: Well, that is not the way in which section 90AA has been administered. It has been administered as specifically authorising a rebate, notwithstanding that the assessment declared the amount in question to be a tax, a tax debt.

GORDON J: But that is not the way the Commissioner administers the section 90AA. He issues a fresh assessment, an amended assessment using his section 19 power.

MR YOUNG: Well, let us assume he does. All that means is that the amount that is the subject of the rebate application at the time of the rebate application was part of an extant tax debt under an extant assessment. It is only on payment of the refund that the record is brought into order by exercising the power of amendment to record that a rebate has been granted under section 90AA.

GORDON J: Can I ask you about the breadth of 90AA?

MR YOUNG: Yes.

GORDON J: It is clear that one of the preconditions or, in a sense, matters that has to exist, it says “tax paid” as the presiding judge identified, but it is:

tax paid under, or purportedly paid under, this Act –

so it would be tax paid in response to an assessment. But if you had a Futuris-type situation where you alleged arguably that there had been that sort of – no assessment had been issued by reason of a set of circumstances, then 90AA would still provide limitation in respect of recovery for a refund in those circumstances, would it not?

MR YOUNG: No, the High Court decided to the contrary in Royal Insurance. The High Court considered section 20A, which used identical words, “tax paid or purportedly paid” under the Act, and considered that it would not extend to payments that were made believing they were required by the Act, and as it transpired they were not, either because of retrospective amendments that displaced the original tax debt, or because the Act never applied.

But what the High Court said is that those words, “tax paid or purportedly paid” would not apply in circumstances where there was no extant tax debt, either because it had been displaced by a subsequent legislative change or because it was never a tax debt in the first place. That is important because our case of an amended assessment displaces the current assessment in the same way that the retrospective amendments in Royal Insurance displaced the prior tax debt.

The critical passages in Royal Insurance concern the situation where you are dealing with that category of retrospectively affected payments. They were due, they were tax debts when they were paid, a retrospective amendment came along declaring that the Commissioner had no entitlement to retain them and the effect of that was that a remedy and restitution was available and section 90AA whose language, or the equivalent language was set out in section 20A, was no barrier.

KEANE J: The liability in Royal Insurance did not arise by way of assessment, is that right?

MR YOUNG: No, it was self-assessment but - - -

KEANE J: Right, and so the liability depended upon the objective facts, one might say.

MR YOUNG: Yes.

KEANE J: And on the objective facts, as they were, there was no liability.

MR YOUNG: But there were three or four categories, your Honour.

KEANE J: But in relation to each category, there was simply no liability to tax, objectively speaking.

MR YOUNG: For different reasons. Can I just explain the reasons?

KEANE J: For different reasons, but is it not significant that here the liability arises upon the assessment?

MR YOUNG: Well, I am not shying away from that. Yes, but our case was that an amended assessment would displace that liability in the same way as the retrospective amendments in the third class of payment in Royal Insurance displaced what was previously a tax debt. There was a tax debt for the third category, I recall, in Royal Insurance.

Now, at the time it was paid, it was paid pursuant to a legal obligation. In 1987, many years later, an amendment was passed displacing that liability and it had retrospective effect. In those circumstances, the Court said there was no entitlement to retain those moneys. Even though there was a tax debt at the time they were paid there was a right of restitution and there was a statutory obligation to repay the amounts. So, the existence of a tax debt at the time of payment in Royal Insurance was no answer to the claim that was made.

So, our case here has always been that an amendment will displace the previous tax debt. If there is a duty to make an amendment or an amendment was wrongly determined against by the decision of 15 August and we are entitled to an amendment, the amendment will displace the tax debt and, in those circumstances, there will be a right of refundment - to use the language of the Chief Justice in Trustees. Section 90AA in those circumstances of an assumed amendment does not stand in the way, in our way, because we would simply be claiming that we want to enforce the amendment.

GORDON J: It is based upon an assumed amendment. You have got to establish, do you not, that there is a duty to exercise the power or the decision was made contrary to law.

MR YOUNG: Yes, your Honour is right.

GORDON J: But we need to get to that.

MR YOUNG: Yes, we do. There are two limbs. The decision was made contrary to law so we are entitled to a legal decision and/or there was a duty to make the amendment.

GORDON J: I put both to you.

MR YOUNG: Your Honour did. Your Honour is right.

GAGELER J: And, as I understand it, the critical point here is that the amendment under section 90, you say, displaces the original assessment retrospectively.

MR YOUNG: Yes. Well, it displaces it for all purposes. Justice Isaacs uses the expression “ab initio”. I do not know if “retrospective” is the right characterisation. Justice Isaacs at page 41 – if I can go back to Trustees for a moment to answer your Honour - it is the second-last paragraph on that page. There are similar statements in other cases and I will not go to them, but in Hoffnung the expression was:

When an alteration or addition is made the assessment henceforth exists as altered or added to –

In Ex parte King 43 CLR 577 in the judgment of Sir Owen Dixon:

When an alteration or addition is made the assessment henceforth exists as altered or added to, and not as previously existing –

GAGELER J: “Henceforth” is different from “retrospectively”.

MR YOUNG: It is, but all we need for our purposes on the mandamus case is that an amendment at that point of time would displace the previous assessment because the order we seek for consequential relief is payment or giving effect to the amended assessment by payment. And, if we are right that the amended assessment will declare the new tax debt – a replacement tax debt – that will not include these excess amounts. There will be no authority to retain them and there must be power, we would say, inherent in, or implicit in, section 19 to repay amounts that the Commissioner has no authority to hold.

GORDON J: Would they not still fall within the opening words of 90AA being tax paid under the Act? Under this Act, not under any other – under a particular section, paid under this Act?

MR YOUNG: As your Honour said before, if we are entitled to an amended assessment that displaces the previous assessment, the answer is no. Our proceedings will seek to enforce the obligation to make a decision according to law and upon that decision being made to require the consequential payment. Our proceedings relating to the payment will be the product of the amendment. So, proceedings to achieve an amendment, to enforce a legal right to have the amendment made are not proceedings of the kind referred to in section 90AA.

KIEFEL J: So, what you are saying is the effect of an amendment to the assessment is that there never was a debt?

MR YOUNG: Well, there is no debt standing in our way when we commence these proceedings following the decision of 15 August.

KIEFEL J: But there never was a debt to which section 90AA referred at any point given that there was a mistake?

MR YOUNG: We do say that, your Honour, but that is the alternative way in which it was addressed both by ourselves and by the Court of Appeal which is if you need to find aliunde a right or a duty to amend in a restitutionary right then we need to say there was no authority to levy these amounts as tax in the first place which is the Futuris point.

GORDON J: That is the proposition you need to address.

MR YOUNG: Not in the first way in which we put the case. I will address it, your Honour, but the first way we put the case is that there was a decision that was made on 15 August. That decision was not made according to law for reasons I will immediately turn to but can I just make one other point about the scope of section 19 before I do? It will be simpler to make it now than come back. We contend that a power to amend – this power to amend necessarily carries with it an incidental power to give effect to the amended assessment aided, if necessary, by the general power of administration in section 4.

GAGELER J: That is absolutely critical to your argument, is it not, the implied power to refund?

MR YOUNG: It is critical to the second limb of our relief, but we would be entitled to relief regardless of that point by mandamus requiring the Commissioner to make the decision according to law which would require him to make a decision if we are right about section 90AA in the manner required by section 19, that is, to produce an accurate assessment.

BELL J: But such proceedings would be inutile unless you sought the relief that you claim in the mandamus proceeding in paragraph B – this is on application book 4 – to refund the tax that was overpaid.

MR YOUNG: No, your Honour, that does not follow. That was the Commissioner’s view that we would have to rely upon a consequential right of relief. We do not. If the Commissioner exercises his power properly under section 19, we contend he will have regard to the explicit purpose set out in the section to ensure the accuracy and completeness of the assessment. He knows that a piece of land has been assessed to tax twice through his own error. If he were to adhere to that purpose, he would make a reassessment, unblocked by section 90AA, that correctly reflected the tax liability of the taxpayer and declared these amounts to be excess amounts. If he were to make that assessment, he could give effect to it of his own motion or, in the light of that assessment, we might be able to take some other proceedings.

BELL J: Accepting for the present purpose that he might act on that assessment of his own motion, looking at the proceedings as they are constituted they do include – this is the mandamus proceedings – a claim to refund to the plaintiff the land tax which was overpaid, do I understand – it may be a formal point – that on your argument that claim for relief should not be pressed, should it?

MR YOUNG: No, we are not making any such concession, your Honour. What I am saying is that there are, at the very least and regardless of the existence of any duty and regardless of the point about the implicit or implied power, we are entitled to an order for mandamus giving us the first limb of the relief, if we are right that the decision was not made according to law.

The second limb of our relief requires us to demonstrate either that there was a duty to amend in a particular way that would produce that repayment and/or that there is an implied power upon such an amendment to effect repayment.

BELL J: I think I understand that, Mr Young. My point is just a simpler point. As the proceedings are constituted, I am having some difficulty seeing why they do not fall within the terms of 90AA(1).

MR YOUNG: I will come to that immediately.

KIEFEL J: While you are paused there, the Court will sit on until one o’clock and resume at two.

MR YOUNG: Thank you, your Honour. I am sorry if I am being obtuse, your Honour; I am trying to grapple with the points. Can I go to section 90AA and its language? The foundational requirement is that it only applies to proceedings for the refund or recovery of tax paid under or purportedly paid under this Act. There is no issue about purportedly paying. Payments were made in the circumstances described in the evidence – that is, believing that the land holdings, valuations and assessment were correct.

BELL J: They were payments made under an assessment for land tax. Surely the belief is neither here nor there.

MR YOUNG: Yes.

KEANE J: So they were purportedly paid under the Act?

MR YOUNG: Yes, but they were not tax purportedly paid under the Act. The payments were made in the circumstances I have described. They were responding to assessments that were believed to be accurate in all their details, including the land holdings and the valuations.

GORDON J: They were land tax payments; payments for land tax.

MR YOUNG: Yes, they were.

GORDON J: So it is tax paid under - - -

MR YOUNG: Yes, your Honour, but the question is this: when the Commissioner said I will make a decision on 15 August and my decision is not to exercise the relevant power, that decision was made for one reason only – section 90AA would deny consequential relief. The context in which section 90AA has to be considered is that reason advanced by the Commissioner; would section 90AA deny consequential relief in the event of an amended assessment that removed these items as tax?

KIEFEL J: But that raises the question that Justice Gageler pointed to; that is, is not your argument about the incidental power to give effect to the amendment critical to the question of whether there was an error in the Commissioner’s approach saying that there was no utility in an exercise of discretion?

MR YOUNG: No, we do not think so, but I will address the point, your Honour.

KIEFEL J: Just before you do, while I have interrupted you, your argument is that there must be an implied or incidental power arising under section 19 to give effect to the amendment. Is there an alternative view, and that is that there is an implied power to refund tax under section 90AA itself where there are proceedings issued or about to issue on the basis of an amended assessment; that is, a power or discretion arising in the context where the Commissioner would in any such proceedings be entitled to settle them. The Commissioner could do so either when proceedings had issued, or in advance of proceedings where it was acknowledged that proceedings could be brought, and that is the context in which you consider how it could be given effect to.

MR YOUNG: The point your Honour makes is a good one.

KIEFEL J: Thank you for that.

MR YOUNG: There are cases about compromises of that kind but they tie the power back to section 4, not section 90AA, which is the general power of administration, and that was the second source of statutory power we pointed to, in addition to an incidental power within section 19.

KIEFEL J: But subsection (4) would provide the answer to the Commissioner exercising any implied power to settle proceedings in advance, would it not, because in a way the Commissioner could not exercise that – well, not in a way – the Commissioner, if the power arises under 90AA, cannot settle the proceedings because the proceedings would be not properly constituted, either as assessed - - -

MR YOUNG: I think your Honour is probably right. I mean, we have not sought to rely upon the back end of section 90AA to provide power because our case is that in the context of assuming an amended assessment, eliminating these amounts as part of the tax debt, our case is that section 90AA has no application in those circumstances because the tax debt has been restated by the amended assessment and any consequential relief we were to seek to enforce an amended assessment is, we would say, plainly not within section 90AA because it is seeking to recover an amount that the new assessment declares not to be tax and which, as Sir Anthony Mason observed in Royal Insurance, there would be no statutory authority to retain that amount in the face of what was declared to be the position by the amended assessment.

In those circumstances, we point to an incidental power in section 19 or the general power in section 4 concerned with the administration of the Act and there are cases holding that the power of administration can be used, for instance, to enter into an agreement in respect of a return of an amount of money found to be excessive. There is no reason why the general power of administration would not support it. The case to which I refer, and I will give the reference, Precision Pools v Commissioner [1992] FCA 445; 37 FCR 554 at 567 - this was an agreement to repay moneys once it was established the Commonwealth had no entitlement to the moneys. The amended assessment, ex hypothesi, would declare the Commissioner has no entitlement to the moneys and so an agreement or an exercise of power to repay would be within section 4.

I will make one other point about incidental powers. The Court will be familiar with the line of income tax cases dealing with alternative assessments. They start with Richardson and they run to DFCT and Walter. Futuris is something of that kind. But it has been well established that the Commissioner of Taxation under the Income Tax Act can issue alternative assessments and they both cannot be correct. The income is either the income of A or B.

Those cases proceed on the footing that when it is established that the correct assessment is against A there will be an amended assessment eliminating the assessment against B and also that any payment of tax by B will be restored. That is Richardson v Federal Commissioner of Taxation [1932] HCA 67; 48 CLR 192 at 206 to 207 of the judgment Sir Owen Dixon. That was dealing with a power of an amendment in identical terms to section 19 relevantly. So, what the Court was concerned to point out is that there must be a way at the end of the day when you have got alternative assessments of ensuring that amounts that are unlawfully retained under one of those assessments that has fallen away can be restored. How can it be done?

The same situation could arise under the Land Tax Act, where you have lack of certainty about who was the landowner of a piece of land, you could have alternative assessments. If the Commissioner is right, there would be no power to repay one of those two assessments. Indeed, no power to amend - - -

KEANE J: Well, there would be power to pay but it would be within limited times.

MR YOUNG: Yes, within limited times, but those - - -

KEANE J: And is that not the problem? The question is not whether mistakes cannot be fixed. The question is, in circumstances where there has been this lapse of time, is a remedy available? Section 90AA does not apply in this case. It is rather difficult to see that it has any operation at all.

MR YOUNG: Well, it will always apply when you are seeking a refund and there is a continuing notice of assessment that continues to declare the tax debt and what you are seeking to have refunded is part of that tax debt.

GORDON J: Which is the position here because you do not have an amended assessment; you have got to establish an obligation to issue an amended assessment.

MR YOUNG: Yes, I understand that, your Honour, I will come to that, but I am trying to answer Justice Keane. In the circumstance your Honour gives me, section 90A will apply exactly in accordance with its terms. It will apply the three-year limitation where what you are trying to recover is a payment and the assessment is continuing, but it is a very different issue and a different sphere of discourse to say, what is the position if we can get an amended assessment?

Upon issue of that amended assessment, more than three years after the original assessment, why should that matter? Our rights are now declared by the amended assessment. Section 90AA is, as Justice Gordon says, addressed to refund of what was still a declared tax debt. Our argument does not impugn the efficacy of section 90AA in the sphere of operation it was intended to have – that is, as a power to relax and repay amounts notwithstanding the continuation of the assessment.

KIEFEL J: In what circumstances could that arise – where there could be a proceeding brought under 90AA, where the assessment continues? Because the proceedings are, with respect, to tax paid and tax paid would be paid under the Act and, therefore, under the assessment, would they not?

MR YOUNG: Yes. But, that is why I said that section 90AA carves out an exception to the review and appeal procedures – it must – because its predicate is the continuing assessment and notwithstanding the continuing assessment, the provision says you can make an application provided it is within three years and if the Commissioner finds that the amount has been overpaid, he must refund.

GORDON J: There is a problem, I think, with that argument. I just want to make sure I understand it. If you go section 19, it identifies the power of assessment by reference to the issue of an amended assessment and it recognises, as I understand, occurs often. You will have an original assessment. You will have an increase by the addition of either a fresh liability – the original assessment will stand and the amended assessment will stand to the extent of either the increase and that an alteration or addition will be the subject of review and objection powers – to the extent only of the alteration or the addition.

MR YOUNG: Yes, your Honour.

GORDON J: Section 90AA must then apply both in respect of the original assessment and the amended assessment.

MR YOUNG: Yes, but if your Honour takes the opposite case of a reduction in liability, a reduction in liability is not referred to as being the subject of an objection process and obviously enough the reason is that it is in favour of the taxpayer, but where there is a reduction in liability section 19 is silent as to how effect is given to that reduction in liability. You do not need objection and review.

GORDON J: No, you do not need objection and review and the purpose for the notification says nothing about effect for either notification, alteration by increase or decrease. All it does is provide expressly for the fact that you have the continuation of an assessment and the amended assessment and it imposes one obligation on the Commissioner to notify and gives the taxpayer a right to object.

MR YOUNG: Your Honour, in the case of an increment in liability, the concluding part of section 19 requires notification.

GORDON J: That is what I said. So there is an obligation on the Commissioner to notify and it gives the taxpayer a right to objection and review in relation to the alteration or addition, but that does not itself address the question I am putting to you, that it says nothing about taking away 90AA in respect of refunds generally.

MR YOUNG: Well, section 19 does not address refunds under existing assessments because it is concerned with a different issue. Section 19 is time unlimited and section 19 permits a reduction in the assessment, and where there is a reduction in the assessment there is no requirement for notification and no provision of a right of objection. The obvious reason is that if it is a reduction in favour of the taxpayer, Parliament have made the assumption that the Commissioner will act on the amended assessment to refund the amount in question to the taxpayer.

There is no specific provision for how a beneficial assessment is to be implemented. It must be assumed that it can be implemented, otherwise you render this power nugatory in relation to beneficial reductions in assessments.

GORDON J: But the way in which it sits with 90AA is it cuts across your argument about the effect of an amended assessment on the original assessment.

MR YOUNG: No, your Honour, because those passages focus only on the fact that you have a limited right to object to the extent of the increment. You do not get a wholesale refreshing of your right to object to the whole of the assessment. That says nothing about section 90AA, and it says nothing to suggest that section 19 in its beneficial operation is limited or affected by section 90AA.

Now, there is a case that explains the matters I have just explained as to why there is no reference to the beneficial aspects of it. I think it is Hoffnung – I will find the reference for the Court and I will provide it, but I have summarised its effect.

Can I turn to the court’s findings concerning the actual decision, in the Court of Appeal’s reasons? The court addresses the actual reasons for refusal in paragraph 155. The Court of Appeal concluded that at that point in time, the Commissioner had full knowledge of the duplication error, and the fact that it affected the 1990 to 2002 assessments – that is paragraph 156.

In paragraph 156 the court records that there was no suggestion that the Commissioner was acting otherwise than bona fide, but the court added at the time of his refusal on 15 August he was aware that the assessments did not “reflect any rational assessment of the taxpayer’s liability to tax”. Those words come from Justice Nettle’s judgment in Gas Ban where his Honour is identifying the kind of error that amounts to a jurisdictional error.

Their Honours then in paragraph 157 at the top – 157 towards the end, they address the Commissioner’s reliance on the limitation provision in section 90AA, relying upon the limitation provisions of the Act as he saw them. The paragraph continues by pointing out that if an amendment were made the Commissioner could act of his own motion to give effect to the amendment:

Relief was not dependent on any further step being taken by the taxpayer. Reliance on the limitation provisions of the Act was not to the point –

Then in paragraph 158, the court considered that the Commissioner having determined to proceed to make a decision that impliedly admitted that the Commissioner accepted that the assessments could only be rendered complete and accurate by making an amendment. In paragraph 159, the court concluded that the refusal to amend for the reason given amounted to a jurisdictional error. So that was the issue. Was there a jurisdictional error by relying upon the fact that you could not get consequential relief because of section 90AA? At the end of paragraph 159, the Court of Appeal made it clear that they understood that the relief that was being sought by way of mandamus was a direction to amend and to give effect to the amended assessments.

Now, their Honours went on to point out in paragraph 162 that the conclusion about jurisdictional error and their view about the nature of the power in section 19 in the circumstances of the case meant that there was a statutory duty to amend and at this point their Honours were not relying upon any restitution-based duty, that was not their primary ground. Restitution only arose as an alternative if you needed to find some other obligation to amend other than the statutory one.

KIEFEL J: If that is a convenient point, Mr Young.

MR YOUNG: It is, your Honour.

KIEFEL J: The Court will now adjourn until 2 pm.

AT 1.00 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.00 PM:

KIEFEL J: Yes, Mr Young.

MR YOUNG: If your Honours please, can I go back to the Court of Appeal’s judgment at paragraph 162?

KIEFEL J: Just before we go back to that, it is a little difficult following where we are in terms of your argument. Could you give us some idea?

MR YOUNG: Yes. What I have endeavoured to put so far are submissions concerning the fundamental issue, which is the legal correctness of the decision on 15 August.

KIEFEL J: Yes.

MR YOUNG: I have also explained the nature and scope of section 19 in the context of the scheme of the Act and the history of the Act. I have also addressed generally its relationship with section 90AA, and the predecessors of section 90AA. What I need to address now are the precise reasons why there was a duty to exercise the power that section 19 conferred; secondly, why the Commissioner’s decision on 15 August was not made according to law, because the reason given for not exercising the power is an irrelevant and legally erroneous reason. If that is correct, then there was a jurisdictional error in making the decision on 15 August.

What I am about to go on and point out is that the Court of Appeal found that not only was there an error, but there was at that time, 15 August, a statutory duty to exercise the power; the Commissioner having found that the error persisted throughout and that the amendments were necessary to bring about a complete and accurate assessment.

That was found to be a statutory duty. It was only in the alternative at that point that the Court of Appeal looked to see if there was an alternative basis for saying a duty existed and it said it did in a restitutionary basis and I need to refer to that. I am going to also deal with the operation of section 20A as the limitation provision associated with section 27. I will also address my learned friend’s argument that restitution was not available because of the good consideration theory, which we say is a misunderstanding of the relevant legal principles. So that is where I have been and where I have headed, if your Honours please.

KIEFEL J: I should point out that the shorter luncheon adjournment was not to extend time but to allow us some more time after Court. Do you think there is going to be any difficulty in concluding by about a quarter to four?

MR YOUNG: I do not think so. I will move as efficiently as I can, your Honours.

KIEFEL J: Thank you. Yes, Mr Young.

MR YOUNG: I was taking the Court back to paragraph 162. That concludes the passages where the Court set out its findings as to the existence of a jurisdictional error in making the decision on 15 August. In paragraph 162 the Court of Appeal then added that in its view the Commissioner was at that time under a duty to amend and the Commissioner had deliberately refused to do so. The court then observed that that finding was not based on any restitution basis and that is deferred. So it was a statutory duty that the Court of Appeal perceived. That is what they had earlier said when they were reviewing the Act at paragraphs 139 and 140.

I can flip back to paragraph 139 for a moment. What the court there said was that it is the nature of the power and the preconditions that must be satisfied before it is enlivened, meaning that once the Commissioner had knowledge that an assessment was inaccurate and that an amended assessment was necessary, the Commissioner had a duty.

That is coupled with a finding that the Court of Appeal found that the course of conduct on the 15th disclosed that the Commissioner must be taken to have considered that it was necessary to make an accurate reassessment on the15th but held his hand solely because of the obstacle that was perceived in that section 90AA would preclude any consequential relief, to use the Commissioner’s language. Those last matters are found in paragraphs 157 and 158 of the Court of Appeal’s reasons.

Now, in finding that in the circumstances that prevailed on 15 August there was a duty and a breach of duty, the court was applying longstanding authorities on virtually identical provisions. Can I ask the Court to go to Richardson v Federal Commissioner of Taxation, which was in our supplementary submissions? The relevant decision is that of Sir Owen Dixon. It addressed a provision in virtually identical terms which at that time was found in the Income Tax Assessment Act. The relevant passage starts at 206 but the principal part is at 207. There is a relevant part just above halfway at page 206. It is the sentence:

At the same time it is clear that if the Commissioner reduced these assessments by excluding the income now ascribed to the taxpayer, he would be bound to refund the overpayments of tax to the nominee, not to the taxpayer.

These were alternative assessments. Then at page 207, it is the passage commencing six lines in:

What affects the taxpayer is the withholding of his money –

I will not read it all but the critical part is another 10 lines down:

The nominee’s liability arose only upon a false state of facts. No doubt, when and if the Commissioner arrived at the clear conclusion that to ensure the completeness and accuracy of the nominee’s assessments the exclusion of the income he returned was requisite, it became his duty to exercise his power under sec. 37.

Section 37 at the time was a mirror image of section 19 save that it did go on to include an express power to make a payment to give effect to the adjustment, rather than being implicit, as we say, is the case in section 19, but otherwise section 37 was indistinguishable from section 19.

There are like cases in the High Court to the same effect on the same substantially identical provision. The Court does not have these - I will just give a brief reference. One is a case called Ex parte The Carpathia Tin Mining Company Limited [1924] ArgusLawRp 103; 35 CLR 552 at page 184. Sorry, the reference must be wrong - it is in the judgment of Justice Rich where his Honour expressed the same view that if the Commissioner formed the opinion that the alterations were necessary to ensure completeness and accuracy, then he is bound to make the proper alteration or addition and the language of the provision, section 37 of the then Income Tax Act, was identical to our section 19.

Now, as Richardson and Carpathia point out, and as the Court of Appeal assessed, this case falls within that category of case where the duty is exercisable where the stipulated conditions in the provision are made out. Here the stipulated conditions are that the Commissioner thinks it is necessary to ensure completeness and accuracy. That reflects the purpose of the provision and the provision is to be construed so as to give effect to its purpose.

We gave another case to the Court in the supplementary authorities - Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651. The passages are at 6 and 33 – that is paragraph 6 and paragraph 33. It is an illustration of the principle in the context of section 50 of the Federal Court Act. We refer to it simply as an illustration. Section 50 is extracted in paragraph 6. There is a similar set of conditions for the exercise of the power as appears to the Court to be necessary to prevent prejudice to the administration of justice or the security of the Commonwealth. The joint judgment or the judgment of the plurality, relevantly, is at paragraph 33, page 664. Their Honours observe that:

Once the Court has reached the requisite stage of satisfaction, it would be a misreading of s 50 to treat it as empowering the Court nevertheless to refuse to make the order, or to leave in operation the now impugned order.

Here the Court of Appeal found that the Commissioner found that the requisite conditions, that is, ensuring completeness and accuracy could only be achieved by making an amendment but the Commissioner held his hand solely because of the perception he had about an obstacle presented by section 90AA.

I will come and deal with section 90AA. But for that, this case, and the language of thinking necessary, brings it squarely within Hogan. If, on the facts, it was necessary to make the amendment so that the assessment correctly reflected the tax position, it eliminated the duplicated assessment then a duty would arise to exercise the power.

GAGELER J: Is that as a matter of pure construction or is it a matter of saying there is a discretion but in particular circumstances the discretion can only reasonably and lawfully be exercised one way?

MR YOUNG: I think it is the latter, your Honour. That is the way it is put in Ward v Williams explaining the Julius v Bishop of Oxford principle – Ward v Williams [1955] HCA 4; 92 CLR 496 at 505 to 506. The way I just put it, your Honour, is the way in which Sir Anthony Mason put it in Royal Insurance.

GAGELER J: Yes.

MR YOUNG: It is the circumstances that arise within which you must construe the provision including the explicit statement of the purpose or conditions that attract the power in the section that all come together to give rise to the duty.

GAGELER J: So, if you put it the Ward v Williams way, if the Commissioner’s construction of section 90AA was correct, then that would be an answer to your argument, would it not?

MR YOUNG: But it is unclear what the Commissioner’s construction is, other than that on its face it is discretionary and it can never give rise – or there can never be circumstances in which a duty attaches to it. That cannot be right on the line of authority that runs from the Julius v Bishop Case.

GAGELER J: No, I mean the Commissioner’s construction being this – all right, I have a discretion but the discretion would only, in these circumstances, be preliminary to a refund claim and the only way to get a refund is through section 90AA and you cannot do that because the three years have expired.

MR YOUNG: Yes, I understand that, your Honour, but there are two steps. First, the Commissioner decides that the circumstances call for a reassessment, and the circumstances are such that but for section 90AA, he would exercise the power to amend pursuant to the duty to ensure completeness and accuracy. But then it is at that point that the Commissioner stops short and says “No, I am precluded from doing so because you would need consequential relief, and it is foreclosed by section 90AA”.

Now, the premise that you would need consequential relief is a fallacy, in the first place because, as the Court of Appeal pointed out, the Commissioner having amended can then act on the amendment of his own motion. There does not need to be an action of the kind that falls within 90AA to provide effective relief. The Commissioner can deliver it once he has recognised that an amendment is required pursuant to his duty in the otherwise prevailing circumstances.

Now, the Court of Appeal pointed out that that itself made the decision erroneous. But deeper than that, we would say, there is a misperception of the way in which section 90AA is capable of operating at that point on the assumption – which is the assumption the Commissioner made – that I make an amended assessment. What the Commissioner said was “On the assumption I make a reassessment, it will not do you any good because you cannot get consequential relief because of section 90AA”.

That is in error because on the assumption that there is a reassessment, it will restate the tax liability so as to exclude these excess payments. You will have amended assessments exactly in the form that he issued in 2006 to 2011, revising the land holdings and stating that the assessment in respect of 65 Albany Road is reduced to nil. The assessment will declare that nil tax is payable; therefore, again applying Sir Anthony Mason’s analysis, those amounts that are then held post-amended assessment are held without authority. They are not held as tax; they are required to be refunded.

GAGELER J: I must say I just have a lot of difficulty with the notion of the Commissioner holding anything that has been paid into consolidated revenue.

MR YOUNG: That was the finding in Royal Insurance.

KEANE J: But in Royal Insurance, there was express provision for repayment.

MR YOUNG: There was a provision for repayment, yes.

KEANE J: The Commissioner had express authority to make the payment of public moneys.

MR YOUNG: Yes, I understand.

KEANE J: Here, the Commissioner is in a position where, because of the lateness of the claim, there is on one view the absence of authority to refund the money; on another view, an express indication of legislative intention that it not be paid.

MR YOUNG: Yes. Can I deal with each of those limbs, your Honour? I understood Justice Gageler to ask me about the situation that obtained prior to the amendment, when the Commissioner is holding moneys – prior to the amendment, he is initially holding them pursuant to the past assessments, but when the assessments restate the legal position, at that point in time, those moneys are not held and cannot be retained as and for tax. That was the answer I was giving.

But to address your Honour, in Richardson – well, in the present case, section 19 contemplates adjustments by way of amendment either way. There is no explicit power in section 19 to restore moneys to the taxpayer when the amended assessment is in his favour. To say that there is no incidental power would be to render that provision in that respect ineffective. There must be implicitly, either by force of section 4 or incidentally to section 19 and the D’Emden v Pedder sense, an incidental power to give effect to the assessment. Otherwise the whole process of empowering the Commissioner to make a reassessment in favour of the taxpayer is a wholly ineffectual exercise.

So, as to the absence of an explicit power, we say there is a statutory power and it is to be found in section 4 and in section 19, and if that is right, that implicit statutory power, or the power of general administration under section 4, carries with it the necessary power of appropriation because a power is given to give effect to the assessments, otherwise we are squarely in D’Emden v Pedder. Any other interpretation would render the provision in its beneficial operation, where an assessment is made in favour of the taxpayer, wholly nugatory because there is no power of repayment.

It is not in section 90AA because that is concerned with repayments of amounts that are still taxed at the time of repayment. That is not what we are dealing with when we have an amended assessment that says these amounts are not taxed, they are just amounts that were previously paid to the Commissioner under an assessment that, when you compare it to the amended assessment, is now perceived to be erroneous.

GAGELER J: Let me just understand this.

MR YOUNG: Yes.

GAGELER J: In the year say 1998, payment was made and it answered the description of tax paid under the Act.

MR YOUNG: Yes, let me accept that.

GAGELER J: Then by virtue of the amended assessment, if it were made, what answered that description in 1998 would no longer answer that description.

MR YOUNG: It would not do so at the time we commenced the proceeding to enforce an amended assessment because at that point of time the amended assessment would represent the only valid statement of tax liability. It would say, as per the reassessments here, “nil payable”, thereby conveying that the previous amounts are held by the Commonwealth without authority, and you would be in the same position as in Royal Insurance for reasons I will explain now. Can I go to Royal Insurance, and it is convenient to do that now.

The critical category of payment for comparison purposes is what I earlier called the third category. It is basically the category of payments that were affected by the retrospective amendment. Now, the Chief Justice addresses that category at page 80 in the context of applying or rejecting the application of section 20A.

Section 20A was the limitation provision then in force. It is extracted at, if we go back to page 79. It was concerned with tax paid under the authority or purported authority of any Act. I have dropped out a few words, “fee, charge or other impost”. But tax “paid under the authority or purported authority of any Act” – those words, that phrase, is identical to section 90AA. Yet it did not apply. The reason given by the Chief Justice at 80, point 5 appears in the last large paragraph of his judgment. His Honour is addressing that phrase said that:

The effect of the 1987 amendment was to abrogate any requirement to make a payment –

Hence the payment was not under the authority or purported authority of any Act. His Honour concluded:

It is not possible to read the words “under the authority or purported authority” as denoting “under a mistaken belief as to authority”.

That is notwithstanding the fact that at the time when the payments were made they were due and payable as tax. That becomes even clearer in the judgment of Justice Brennan at 92, point 2, again dealing with this - his Honour is addressing the same provision, section 20A, and his Honour deals with the retrospectively affected category from the first paragraph at 92. His Honour points out that it was:

due and owing under the Act at the time when it was paid.

But his Honour goes on to say but it was different at the time when the action was commenced because:

s. 20A was excluded by the retrospective operation of the 1987 amendment.

So, at the time the action was commenced the amounts in question were not tax paid. Their status as tax paid had been removed by the retrospective amendment.

GAGELER J: Do we have the terms of the 1987 retrospective amendment in the judgment?

MR YOUNG: I think it may be there. It is a little bit – can I find it and - - -

GORDON J: The position, though, here was it was an amendment to, in effect, alter the statutory basis retrospectively. It was not dealing with the situation we have here. It was saying for the relevant purposes we are going to alter the underlying basis for assessment, the underlying manner in which the liability can be imposed. It is not this case.

MR YOUNG: It does not matter, your Honour, because - - -

GORDON J: Why does it not matter?

MR YOUNG: Because the amended assessment - - -

GORDON J: We are not dealing with an amended assessment here. We are dealing here with an amended retrospective legislative operation.

MR YOUNG: I am comparing the two. The decision that the Commissioner made was that he could not exercise the power that he was otherwise duty bound to make to exercise because of section 90AA. The premise of his decision was that if I make an amended assessment and you start an action post-amendment to seek to recover, you will not be able to get any relief because at that point of time you will be barred by section 90AA.

So necessarily this analysis applies to the world in which there is an amendment excising these excessive payments. In that world those payments at that stage will not have the status of tax paid or purportedly paid. That status will have been eliminated by the amended assessment, just as the past status of the tax payments in Royal Insurance was eliminated by the retrospective amendment.

At the time it was paid it was due and owing under the Stamps Act but at the time the action was commenced that amount could not be described as tax paid or purportedly paid under an Act. Just so, post-amendment, the amounts that we seek to recover by this action, the amounts that the Commissioner thought that he could not address because no consequential relief was available, there was no problem with any consequential relief.

KIEFEL J: I think the 1987 amendments are referred to at least in part in Royal Insurance at page 62 in the first complete paragraph.

MR YOUNG: Thank you, your Honour. Just to complete the references, can I give the reference to Justice Dawson, who arrived at the same result. The relevant passage is at page 100 initially, just above the quotation of Metwally, and then at 102 to 103 where his Honour turns to section 20A. It is at the very bottom of page 102 and across to the top of 103, and it is the same reasoning.

So the same phrase has been interpreted and, in our submission, that interpretation applies with equal force to the world assumed by the Commissioner when he gave his reason for refusing to exercise his power. That is a world in which the amended assessment would eliminate these amounts as tax. They would be declared by the amended assessment not to be tax.

GAGELER J: And never to have been - - -

MR YOUNG: Sorry?

GAGELER J: Your case has to be that they are declared by the amended assessment never to have been taxed.

MR YOUNG: Well, that is the effect of it because they are declared to be amounts not due and payable under the Act and that is declared to be the correct legal position.

KEANE J: After the amended assessment.

MR YOUNG: After the amended assessment, yes, your Honour.

KEANE J: Henceforth.

MR YOUNG: Henceforth.

KEANE J: Whereas what their Honours are saying in Royal Insurance is that by virtue of the retrospective operation of the statute, there never was a liability to make those payments.

MR YOUNG: Let me accept that, and just for the purposes of argument because for reasons I will mention we do not entirely agree, but that misses the point of the application of section 90AA. If you look at the provision, it is a limitation provision. It is aimed at the institution of proceedings to recover. The question is what is the relevant state of affairs at the date of institution of proceedings?

If you institute proceedings post-amendment, can they properly be characterised as proceedings for the recovery of tax? At that point of time, in our submission, the answer is, plainly, no. They are not, at that point of time, proceedings for the recovery of tax. They are proceedings to enforce the amended assessment by recovering amounts that are declared not to be tax. There is a passage in Justice Brennan’s judgment in Royal Insurance where he is addressing the limitation provision where he says, essentially, that – namely, that the mandamus provisions his Honour was concerned with in that case, they were not proceedings of that character. They were rather proceedings by way of mandamus to enforce the duty to refund. That is the last paragraph of his Honour’s judgment at page 92.

KIEFEL J: I realise you are dealing with inquiries from the Bench but has that taken us back to where we were before the luncheon adjournment?

MR YOUNG: It has – 90AA.

KIEFEL J: We need to get back to the argument about duty to exercise the power.

MR YOUNG: Yes. One sentence – by way of observation of Royal Insurance – both Justice Brennan and Justice Dawson concluded, in line with the Court of Appeal here, that they were dealing with a statutory duty and it was unnecessary in respect of the retrospectively affected category to have recourse to restitution.

Now, coming back to where your Honour has invited me to go, there are reasons that I can summarise for why section 90AA was a false barrier as identified by the Commissioner to the exercise of his duty. In the first place, to treat section 90AA as affecting the power to amend and to give effect to the amendment in that situation, as at 15 August, would completely obliterate the central aspect of section 19 that is, to operate from time to time.

KIEFEL J: Well, your argument here, is it, is that section 90AA is completely irrelevant to the exercise of the discretion - - -

MR YOUNG: It is.

KIEFEL J: - - - once the error has been found, the Commissioner is duty-bound to correct it.

MR YOUNG: Yes, and if he makes an amended assessment, section 90AA is no barrier to consequential relief because we are dealing with a new set of rights.

KIEFEL J: Yes.

MR YOUNG: Now, but what I was going on to address was our learned friend’s argument that, even in that scenario, section 90AA somehow extends across and cuts back the scope of the power to amend. To read section 90AA in that way would be to defeat both the express provision in section 19 that it is to operate from time to time, effectively as circumstances require to give effect to an accurate assessment, and it will also defeat the purpose of the power which is to ensure complete and accurate assessments.

Secondly, there is the point I made earlier this morning by reference to Trustees, that they are directed to different universes. Section 19 to amendment, section 90AA is predicated on an assessment but remains on foot and a tax debt that remains a continuing tax debt and it is an exceptional power to give back to the taxpayer part of that continuing tax debt.

GORDON J: Could you clarify just one aspect, when you say a continuing tax debt, if the tax debt is live by the issue of the assessment and it is paid, there is no longer any tax debt. That is why it talks about tax paid.

MR YOUNG: Yes, but once the amended - - -

GORDON J: What is the continuing tax debt that 90AA is only applicable to?

MR YOUNG: Well, the continuing circumstance that an amount was paid in respect of the tax debt and that tax debt remains as stated in the amended assessment because that amended assessment is continuing to have force and effect under the Act. I foreshortened what I said but that is the sense in which we use it. That is to be contradistinguished from the position stated in an amended assessment when it says “amount payable by taxpayer, nil”.

There must be a means of giving effect to that reassessment that says “tax payable, nil”. How can it be that the Commissioner can keep that amount of money unless there is some provision that authorises the retention of the money, and there is none and none is to be inferred which was Chief Justice Mason’s point in Royal Insurance.

Now, the other point is section 90AA operates by reference to a time limit. In the circumstances that prevailed here, through no fault of the taxpayer, those time limits have elapsed. The fault rested with the Commissioner. The Commissioner made an obvious duplication error. It was apparent on the face of his internal records that he had used a valuation that covered two properties, and he treated it as covering one.

KIEFEL J: That is a fairness question, but there is a statutory scheme which has been held by the primary judge to require there to be certainty of revenue.

MR YOUNG: Yes, I understand those findings, but when you get to the position of where the parties arrived at on 15 August, it is a known error, a known excessive assessment, a means of correcting it in section 19. Correction would achieve the purpose of the provision, and then the only question was whether there was any barrier if an amendment were made that prevented consequential relief being obtained.

KIEFEL J: What it really and perhaps overstatedly simply comes down to is whether there was that barrier, and whether section 90AA operates in the way that it is said. It is really of a much narrower compass when it boils down to it, is it not?

MR YOUNG: That is why I started by saying your Honour had correctly identified the essential question - - -

KIEFEL J: Mr Niall did not agree with that.

MR YOUNG: No, he did not, but he declined to accept that you assess that question in the context of the 15 August decision.

KIEFEL J: But that is really the - - -

MR YOUNG: That is the critical issue; we agree, your Honour. But we go back to Trustees and we basically say the same view has been taken of the relationship between section 19 and section 90AA since 1915, that is, one is a refund in relation to continuing assessments and the other is a distinct power to create a new assessment. They have different purposes and different spheres of operation.

The point I was making about the fairness, the error point, was really an incontestability point. Given the date at which the Commissioner revealed the error, the position is incontestable unless we are correct concerning the construction of section 19. If there is a choice to be made – constructional choices about section 19 and section 90AA – and it is open on the face of section 19 to construe it as unlimited in time, having a purpose of ensuring correct assessments and dealing with a different subject matter compared to 90AA, then that choice is to be made in favour of the taxpayer, because otherwise you produce a situation of incontestability. There are cases that basically say that if you have a choice about constructions, you ought not to choose the choice that produces the result that the tax operates unfairly and incontestably.

Can I go back to Royal Insurance for one matter? Several of your Honours have asked me a question about the status of the moneys in the hands of the Commonwealth in circumstances where at the time the money was paid there was a tax liability recorded in an assessment that was then on foot and not yet amended or set aside. That of course was the position that applied in Royal Insurance in that payments were made, and one of them pursuant to provisions of the Stamps Act that imposed liabilities.

Sir Anthony Mason said at page 64 in the second half of the page something of relevance. On the question as to whether the circumstances were such as to throw up a duty, his Honour says:

the first and foremost consideration is that the Act is a taxing Act and that in terms it confers no authority upon the Commissioner to levy, demand or retain any moneys otherwise than in payment of duties and charges imposed by or pursuant to the Act.

His Honour goes on to observe that “Nothing short of very clear words” would provide an authority to retain moneys otherwise than in payment of duties imposed by or pursuant to the Act. Now, upon the hypothesis that an amended assessment would be made but for the barrier to consequential relief, the Commissioner’s construction produces the result that that effectively treats section 19 or section 90AA as a source of authority to retain moneys otherwise than in payment of duties and charges.

I say that because the new amended assessment will declare those matters not to be tax. So where is the source of the authority to retain the money? That is the consequence of arguing that there is no incidental power in section 19. Moneys can be retained even though an amended assessment issues and declares it not to be tax. That cannot be right.

KEANE J: Well, it can be right if there are circumstances that disentitle the payer from recovery, as Sir Anthony Mason says in the paragraph you are reading to us.

MR YOUNG: Yes.

KEANE J: So the question is whether there are circumstances that disentitle the payer from recovery. It comes back to whether section 90AA disentitles the payer from recovery.

MR YOUNG: It does, your Honour, and I will not go over that. Now, can I turn then to the alternative – before I do that there is one submission from the Commissioner I should address. The Commissioner relies on the objection and refund provisions and their alleged exclusivity and draws an analogy with the Income Tax Assessment Act.

In our submission, that analysis is flawed and it breaks down. First of all, that was the exercise that the trial judge embarked upon but only by ignoring the role that section 19 played in the scheme of the Act. Section 19 is as much a part of the scheme of the Act as objection, review and appeal processes. If section 19 is an important adjunct to section 17, the assessment power, and it is an important part of the Act, as the High Court felt in Richardson, there is no reason to exclude it from your assessment of the scheme of the Act in the way in which it was done in my learned friend’s submissions and at trial.

Secondly, the analogy with the Income Tax Act breaks down because, as I pointed out at the outset, section 19 is not limited in time. It could have been, but it is not. It has been studiously retained in a form even after 2005 that is not subject to any time constraints. That is not accidental; that is deliberate. You compare it to the Income Tax Assessment Act. There is a power of amendment, but it is confined to three years other than in exceptional circumstances; likewise other State taxes.

So to suggest that the objection process is the exclusive thing to look at in the income tax context really misses the point. The income tax context deals with the power of amendment differently from the Land Tax Assessment Act. It has always been subject to a time limitation, but a different time limitation from the one that applies to rebates or returns or refunds. That is why the Income Tax Assessment Act operates differently, and so too the other State taxes.

The income tax provision used to be unlimited as to time in relation to amendment. That is why you have Richardson and cases like it giving the old section 37 of the Income Tax Assessment Act an unlimited operation that imposes a duty to correct an assessment when it is apparent that it is necessary to ensure correctness.

So if there is any analogy to be made it is the analogy with the Income Tax Act in the form in which it was considered by this Court in Richardson. In that context it did not impinge upon the power to grant amendment. It was consistent with the imposition of a duty.

The next point is that section 20, the conclusive evidence provision, was not invoked here. It is the equivalent of section 177 in the Income Tax Assessment Act. If you go through the cases about the Income Tax Act scheme – that is, Richard Walter, Bloemen and Broadbeach – they are primarily founded upon the application of section 177 as the reason for treating the objection and appeal processes exclusive. Even then it is not exclusive because it does not preclude actions for jurisdictional error. But section 177 is critical to the analysis by the High Court. It is not available here.

Then can I turn to the second half of section 175 which our learned friends say finds some reflex in the last words of section 19? It is best if we go to those words in section 19. They differ a bit from section 175 in two ways. You do not find those words in a section dealing with assessments. You do not find it in a freestanding section. Those words are an appendix to a provision concerned only with amended assessments.

So when the provision goes on to say “but the validity of an assessment shall not be affected by reason only” et cetera, is that directed only to amended assessments? Prima facie we submit so and, therefore, there is no issue under those words because there is no issue about the validity of an amended assessment. But let me go on and assume that they are capable of applying to any assessment despite their location. The words differ from section 175. Section 175 says:

The validity of any assessment shall not be affected by reason that –

The word “only” appears only in this provision, and it is not without purpose. Those words, it has been held – I will start again, the words in section 175 of the Income Tax Act have been held not to reach circumstances of jurisdictional error. That is the line of cases which culminates in Futuris, but it is not an issue concerned just with bad faith. Jurisdictional error, even of a bona fide kind, is not immunised by section 175.

GAGELER J: You do not say that the original assessments were affected by jurisdictional error?

MR YOUNG: No, we never have.

GAGELER J: So why are we examining this question?

MR YOUNG: Because we are examining the situation that exists as at 15 August. You see, the way in which the Court of Appeal looked in the first place to restitution was as an alternative way of satisfying an antecedent liability to, in that case, refund. The primary view of the Court in Royal Insurance in the retrospective case, it was a statutory obligation to refund, not restitutionary, but restitutionary was an alternative but was also found to be available. Now, the situation is not dissimilar because at the time the payments were made there was a payment made pursuant to a liability. It was only afterwards when you had the retrospective legislation that it was clear that there was no tax liability.

That, by the way, shows that our learned friend’s analysis of David Securities is wrong because restitution was available in Royal Insurance not because of the perception at the time the payment was made but it was liable to be paid and would discharge an obligation but because of the later events the legislation obliterated that liability.

So restitution is available even if it is – the unjustness of retention is the product of later legislation or here a later amendment. But the reason I am going to jurisdictional error is to say that as at 15 August, as the Court of Appeal found, it found there was a statutory duty to amend. There was a refusal to amend because of the jurisdictional error.

The question that arises is, in that circumstance, is there a restitutionary claim as well as a statutory claim that a duty attaches? Quite correctly, in our submission, the Court of Appeal said yes. There was a restitutionary basis for saying that in those circumstances on 15 August, there would be no right to retain the money because a duty had arisen to issue amended assessments. Those amended assessments would eliminate the tax.

The false barrier was perceived to be in section 90AA but that was a legal mistake to view it that way. In those circumstances, we would say there is a restitutionary basis for saying a duty arises. That is what we understand the Court of Appeal did in its alternative ground. Basically, they said we do not need to go to restitution, we found a statutory duty for the reasons I have been through.

But, if we need to go to restitution, we can find in the circumstances that prevailed on 15 August, a jurisdictional error and a restitutionary basis for claiming a return of the money notwithstanding section 175 because that is no shield against jurisdictional error. So, further, even if you assume the old assessment is still on foot and is not subject to a duty to set it aside on 14/15 August, section 175 is no shield from a challenge that it is a jurisdictional error that founded this assessment.

GAGELER J: The original assessment?

MR YOUNG: Yes, even the original assessment. It does not have to be an error of bona fides. It simply has to be an assessment that is made without authority.

KIEFEL J: But the restitutionary claim depends upon the same point that has been agitated quite a lot and that is whether or not there was a payment of a debt arising from the assessment. Because if the payment was made by way of a statutory liability with respect to a debt, there is no claim in restitution, is there?

MR YOUNG: There is if you can demonstrate jurisdictional error underpinning the assessment. I am not there speaking about the bona fides of the Commissioner at the time of the assessment. I am speaking about the absence of statutory authority to ground the assessment – notwithstanding that he has issued a notice of assessment.

GAGELER J: I do not want to keep going over this, but the precise jurisdictional error in the original assessment is what?

MR YOUNG: That this land in question had already been assessed for tax within the first category of taxation and that the second duplicate assessment of taxation in respect of this parcel of land had no statutory authority for it. This is not in the language of the latter part of section 19 a challenge that arises only by reason – “by reason only that . . . provisions of this Act have not been complied with”.

GAGELER J: I understand.

MR YOUNG: This goes to the fundamental nature of the error that this land in that year has been assessed to tax once. There is no statutory authority that permits it to be assessed twice.

KIEFEL J: Therefore no liability to pay.

MR YOUNG: Therefore no liability to pay, so there was a restitutionary right, and for the same reason section 90AA could have no application. There is an old land tax case we wanted to hand to the Court. I apologise that it is not in the folder of authorities. It is a case called Mooney [1905] HCA 61; 3 CLR 221. The land tax provisions were in much the same form. Can I organise for copies to be handed to the Court. The passage is at 242. My learned juniors helped me mark the passage.

MR NIALL: In my submission, this goes outside the proceeding that is being run from first instance. There is no notice of contention. It has never been suggested that there is any invalidity in relation to the assessment. That is expressly said in the reply submission, in our submission. The Court should not entertain the attack on the original assessments.

KIEFEL J: Is this an attack on the original assessment?

MR YOUNG: Well, it says that the assessments are supported – well, that there is no authority for the assessments in the jurisdictional sense found by the Court of Appeal at those passages. I am not putting any submission that has not, to my understanding, been put before.

GORDON J: Sorry, where are we, Mr Young, in the Court of Appeal?

MR YOUNG: Paragraph 159.

GORDON J: I thought that was an attack on the decision not to amend. It is not an attack on the original assessment.

MR YOUNG: No, but it is built upon - - -

KEANE J: That is why they are invoking Futuris. They are talking about Futuris here.

MR YOUNG: Yes, but - - -

KEANE J: The conscious maladministration which is about the decision not to amend. It has got nothing to do with the original assessments.

MR YOUNG: Your Honour is right. I refer to this because that was a finding about the nature of the error. It is built on a finding about the nature of the error that is recounted in paragraph 155 and 156, but then can I go to paragraphs 196 and 197. In the middle of 196:

the Commissioner’s duplication error deprived the payments of the character of ‘a sum payable for tax’ within the meaning of s 39 –

Then over the page, that it is not:

‘a sum payable for tax’.

And the conclusion of 197:

the Act does not generate a statutory debt from the issuing of an assessment; the debt depends upon the payment being properly characterised as ‘a sum payable for tax’.

We have always alleged that there was a jurisdictional error in that this assessment was never in respect of a sum payable for tax. It was not authorised by the statute because of the fundamental nature of the error. Now, that has been contended for throughout. We are not enlarging anything in making this submission.

KIEFEL J: Well, are you saying you are not challenging the original assessment itself but you are saying that as a matter of statutory construction that because of the discretion which could be exercised – I am sorry, it does not work. We are back at the original assessment.

MR YOUNG: No. This only relates to the subsidiary line of argument - - -

KIEFEL J: Yes.

MR YOUNG: - - - concerned with restitution. Can I make that clear firstly, and the argument there was - - -

KIEFEL J: It is to get around the problem of payments made when there is legal liability.

MR YOUNG: Yes, and the argument there was that section 90AA is no barrier to a restitutionary claim because the amount in question is not an authorised tax debt. It was not at the date of institution of our proceedings and, as those submissions made clear, it never was because of the fundamental nature of the error.

BELL J: Whenever the Commissioner assesses to tax on a basis that is later discovered to be an incorrect basis, it flows that there is a fundamental error of the kind you rely on.

MR YOUNG: No. I mean, there are errors and errors.

BELL J: Yes, but any error based on a fundamental misconception would attract – would be an error that meant, contrary to one would think perhaps a deal of understanding, that the assessment did not give rise to a debt.

MR YOUNG: No, that, with respect, your Honour, is too wide.

BELL J: Yes.

MR YOUNG: Our contention is simply that this error – this particular error, assessing land to tax a second time when in the same year it had already been assessed to tax, went beyond the authority conferred by the Act. It was not a question of compliance only with particular “provisions of the Act” which is the language at the end of section 19. This was a question of the fundamental authority to impose tax. The same position would arise and that is why I was about to mention Mooney’s Case. If you assessed somebody – sorry, your Honour.

KIEFEL J: Well, your argument does not go outside paragraphs 196 and 197 of the Court of Appeal.

MR YOUNG: No, your Honour, no. I was explaining the reasons why we characterise that error as a fundamental error outside any protective shield in the last words of section 19, and that is because it goes to the fundamental authority to impose the tax.

KIEFEL J: This in turn depends upon the statutory scheme and how it operates.

MR YOUNG: Well, it depends on the nature of the tax in section 6 and section 8 and the provisions of sections 17, 19 and 39 basically.

KIEFEL J: Well, perhaps I should put that another way. You say the appellants have addressed this question by their argument in relation to the operation of the statutory scheme.

MR YOUNG: They addressed it at length this morning by putting arguments about the status of tax debt and about the unavailability of restitution in respect of that tax debt. My learned friend went to these very passages. I was about – sorry, your Honour.

GAGELER J: The basis of your distinction from section 175 as considered in Futuris is the word “only”.

MR YOUNG: Yes, but even Futuris, your Honour, accepted that section 175 would not immunise against a fundamental absence of authority. My learned friend went to – there is a passage - - -

GORDON J: There is this temporal problem though, again, is there not, in this sense? At the time that the assessment was issued it was an error, which you describe as a fundamental error, to impose tax. The property that was identified was properly identified; it is just that the amount that was assessed against that property was incorrect. It was, as you say, taxed twice within the one assessment.

MR YOUNG: There were two lines of the assessment, effectively - 2 Ottawa Road, that, unbeknown to the Commissioner, included both lots, and then there was separately something listed as “65 Albany Road”, which was one of those two lots, and it was assessed again. The material that the Commissioner had, as shown by the Cockburn affidavit and the internal reports that Mr Ngo exhibited, demonstrated that the Commissioner had the material in front of him at all times to know that the valuation from the council he had was a valuation in respect of the two blocks. The Commissioner assumed it was a valuation for one block, and created a second valuation by adjusting that valuation for the second block.

GORDON J: That kind of error may not be common, but it is an error that is assessed and dealt with by way of objection and dealt with by way of the processes set out in the Act. Why is it a jurisdictional error when it is the very kind of errors that – I will ask a different question; what is different about it in the context of making a mathematical calculation?

MR YOUNG: Because the only authority conferred by the Act is to levy tax on a landowner, firstly, and then once in that year, on the value of the land owned by that person.

GORDON J: That is a taken – that is what the Act says. But every time someone makes a mathematical miscalculation, on your construction, you would have a jurisdictional error.

MR YOUNG: Your Honour, errors of that kind have been treated in this Court as jurisdictional errors. In the Mooney Case I was about to go to, that is what the Court said of an assessment directed to somebody who was not relevantly a landowner. It is at the bottom of 242. This is the mistake of an equally fundamental kind – perhaps, in a way, even more fundamental than assessing somebody who is not a landowner. They have assessed the same piece of property twice in ways that could not be discovered.

KIEFEL J: That is probably right; it is more fundamental, is it not?

MR YOUNG: Yes.

KIEFEL J: There is no statutory power at all to assess these people to tax. There is power here; there is the land, but an error is made, and there is a process allowed for under the Act for objections to these kinds of errors if they are discovered, but it was not. It is perhaps not your strongest point.

MR YOUNG: One more try at it, your Honour. Can I just – my learned friend referred to Futuris and there was a passage from Justice Aickin’s judgment in an earlier case that he went to. The third category Justice Aickin identified at paragraphs 12 and 13 of Futuris was an act that was done beyond power irrespective of motive or intention. Now, that is the category in which we put this error here. It was beyond power to assess this piece of land to a duplicated assessment in the way in which it was done.

GORDON J: But it was not a duplicated assessment, it was a wrong amount in the assessment by reference to the wrong – a misunderstanding of the facts. It was not two assessments. There was one assessment to a landowner in respect of a property where they made a mistake about the facts.

MR YOUNG: But there were two assessments of that property within that single notice. That is what the Court of Appeal found and that is how the Commissioner described the error in his original disclosure letter. That is at appeal book 75. But the restitution argument arises at two levels and there is a temporal difference between the two. The Court of Appeal relied upon restitution vis-à-vis the 15 August decision. They said that restitution would have provided an alternative reason for finding a duty. Quite aside from that we had a full-blown restitution case that was a complete alternative to the mandamus case, not a thread in the mandamus case.

KIEFEL J: But it was not decided on that basis.

MR YOUNG: It was not, no. That was not decided on that basis. But what our learned friend did this morning was to refer to matters like the tax debt issue that were part of the chain of reasoning about restitution as if they were relevant to the mandamus case.

Can I deal with just the consideration point my learned friend made this morning orally? As we understood the argument, the argument was that there was a mistake – that is not challenged and their written submissions say so. But it was not a relevant mistake because in the end good consideration was obtained for the payment and the payment was made pursuant to, at that time, an extant tax debt and a discharge was obtained by that payment. So, therefore, there was good consideration.

The argument is a confusion of fields of discourse. It relies upon authorities drawn from the contractual field – David Securities and the cases it cites which are concerned with contractual payments and whether in the context of the contract, the payments were voluntary or discharged a contractual obligation.

KIEFEL J: With respect to which of the propositions, can you remind me, was this argument put?

MR YOUNG: Yes, definitely. It is at the bottom – it is proposition 5. Sorry, I have got the wrong one. Proposition – paragraph 3 of proposition 1 at the top of page 2. The way in which the same point is put in their full written submissions is that the reason why this does not afford a basis for restitution is that good consideration was obtained by the payer relying on a whole series of contract cases and, of course, David is a contract case.

KEANE J: Yes, but was not his point though that this is not a restitutionary claim because insofar as it is said the payments were made by mistake, there was no mistake. Payments were made to discharge a liability that did exist.

KIEFEL J: Yes, that is how it appears in paragraphs 56 to 59.

MR YOUNG: Yes, that is not how the Court of Appeal decided it and that is not how this argument is put in their written submissions. What the Court of Appeal concluded was that the relevant mistake was a mistake that included a mistaken belief as to the correct identification of the landholdings and the valuations in the notices of assessment. That is to say that the first entry, 2 Ottawa Road, was in fact one property and the next entry was a different property and each was assessed once.

KIEFEL J: But would that be a correct approach in restitutionary theory because it is not every mistake that gives to a restitutionary claim. It is the mistake which causes the payment.

MR YOUNG: Yes, but the payment here was caused by a mistake that included the mistaken identification of the land and the valuation of the land. That was the evidence.

KIEFEL J: I think that is to take the broader view of causation. On the Commissioner’s argument, the payments were made under a legal liability.

MR YOUNG: To discharge the - - -

KIEFEL J: To discharge the debt.

MR YOUNG: Yes. That is what I wanted to address on that assumption, but that is not the basis on which the Court of Appeal approached it. But be that as it may, the proposition that you cannot get restitution for payment of a tax amount because the payment of tax will be to discharge a tax debt or a legal liability does not run. The reason is that it attempts to lift from the field of contractual discourse statements about restitution and good consideration in a contractual context and apply it across to the tax field.

KIEFEL J: I am not sure that that is right. As I read the written submissions, the discharge that is being spoken of is a discharge of the debt created by the statute by payment. The point there made is that there is no mistake involved in that process. You are trying to say that the Court of Appeal said that there was a mistake in the generation of the original assessment.

MR YOUNG: As they did.

KIEFEL J: And that continues to apply.

MR YOUNG: Yes. They certainly did that, your Honour. But can I come back to your Honour’s point. The case law accepts in England that if you make a payment of a tax amount pursuant to an obligation which exists at that time to pay that amount and it subsequently transpires that that tax liability is invalid or it is set aside by retrospective legislation or the like then you have a right in restitution to recover the amount, notwithstanding that at the time you paid it you were discharging an extant liability. Why is that so? These cases of Woolwich, Deutsche Morgan Grenfell - - -

KIEFEL J: There is Lipkin Gorman and that line.

MR YOUNG: Yes, cases like that. Why have they reached that conclusion? Because they treat a payment in discharge of a statutory obligation as not attracting this concept of obtaining a good.....obtaining consideration. It is a different field of discourse because you are making the payment under compulsion. You are compelled to make the tax payment. It is not a voluntary payment. It is not a payment in discharge of a debt for the sake of discharging a debt for which you get some benefit. It is payment pursuant to statutory obligation.

KIEFEL J: But that is not how the Court of Appeal approached it in this case. There is none of this jurisprudential goings over restitutionary theory, is there?

MR YOUNG: They rejected the notion. It was put below in terms of getting good consideration and the Court of Appeal did reject that on the basis that you did not get consideration for this payment. They went on to refer to the taxing provisions I earlier mentioned. They did deal with it, but the argument was put at the level of consideration.

GAGELER J: It is better put now.

MR YOUNG: It is probably better put now, yes, but the answer to it is that in the field of restitution if the tax debt is infected by jurisdictional error, or if it is overtaken by a duty to amend, then in those circumstances the fact that at the time he made the payment there was a tax debt is no barrier to restitution. If at the time you bring your claim for restitution you can demonstrate that that tax debt was not authorised by the Act, or it has been overtaken by a duty to amend and the amendment will declare that that amount is not a tax debt.

GAGELER J: What are the elements of this cause of action?

MR YOUNG: It is the same elements as any restitutionary claim. It is basically unjust enrichment arising from a relevant causative mistake.

GAGELER J: It is unjust enrichment gauged not at the time of the payment but at some subsequent time, is it?

MR YOUNG: Yes, exactly as in Royal Insurance. Their Honours considered that there was an unjust enrichment produced by the retrospective amendment even though at the time of payment there was at that time an extant liability to make the payment. All their Honours in Royal Insurance accepted that restitution was available even though there was no mistaken payment in the sense that there was a tax liability at the time of the payment. It was subsequent events that made it clear there was no tax liability and non constat there was still a right of restitution as the Chief Justice and the other Justices found.

GORDON J: The difficulty in that case was that the retrospective amendment brought about a change in the law at the time of the payment.

MR YOUNG: Yes. Well, in our submission, an amended assessment will do likewise and if that is – because it will declare that this amount is not taxable. Then when we bring the proceeding for restitution at that point of time, what is the status of that amount? It is quite clearly declared by the amended assessment not to be a tax debt. That cannot be operative only for the future. It must be a full and accurate statement of the law under the tax legislation. That is perhaps why Justice Isaacs said it operates ab initio.

KIEFEL J: Are you going to deal with the maladministration claim?

MR YOUNG: Well, the maladministration claim was nothing more than the allegation of jurisdictional error.

KIEFEL J: Yes. You do not put it any higher than that?

MR YOUNG: No. Their Honours recorded that it was not put any higher than that. It was always a claim of jurisdictional error for the reasons that the assessments were not authorised, given the nature of the error, and secondly that the Commissioner confronted that situation and determined himself that he would go on and exercise his power. It is simply that the actual exercise of the power miscarried.

KIEFEL J: Do you concede that the finding was not necessary?

MR YOUNG: The finding?

KIEFEL J: By the Court of Appeal.

MR YOUNG: No, it was necessary because what the court found was that the reliance on section 90AA as a denial of relief was a legal error of a jurisdictional kind. It led the Commissioner to decline to exercise – to refuse to exercise jurisdiction because of a misconception about section 90AA. That is a jurisdictional error. It is an error that Futuris was the one – was the case that brought it under the umbrella of the language of conscious maladministration. But that is not how – we did not put it in terms of a lack of bona fides on the part of the Commissioner.

KIEFEL J: No, I understand that.

MR YOUNG: Their Honours record that. Now, I have explained why section 90AA does not operate at all and that includes the proposition that it does not operate relevantly as a limitation period in respect of our claims. Now, in relation to limitation periods can I say this. The mandamus claim is not affected by any limitation period because of the breach of duty we alleged postdated December 2012.

We alleged there was a constructive refusal to perform a duty and then there was an actual refusal to perform a duty on 15 August. We instituted the mandamus claim within a short period of those breaches of duty. We were bringing an action to enforce statutory duties just like Royal Insurance where Justice Brennan rightly said that when you are trying to enforce statutory duties the only relevant time period is section 5(1)(d) an action brought to enforce a statutory duty. So, we were clearly within the six years allowed by section 5.

KIEFEL J: Is the appellant contending that the mandamus claim is statute barred?

MR YOUNG: I do not believe so – well, it is unclear. From their oral submissions it would seem not.

KIEFEL J: So why are we discussing it?

MR YOUNG: If it is not pressed, I can desist. I understood from their written submissions it was pressed.

KIEFEL J: Where would we find that?

KEANE J: I suppose 90AA operates in respect of proceedings for the refund or recovery of tax paid, purportedly paid, and in section 90AA(8) “proceedings” is defined to include proceedings seeking the grant of mandamus so that it might be said that in relation to 90AA(1), on the face of things, of course, proceedings for mandamus, just ordering discretion to be exercised might be thought to stand apart. But given the context in which proceedings are defined to include mandamus for the purpose of 90AA(1), it would be said, I suppose, that insofar as these proceedings include a claim for mandamus that is necessary for you to succeed, 90AA denies you the right to bringing the proceedings.

MR YOUNG: Yes. I had apprehended that the argument was run. Looking at their written submissions, it is not apparent that it is.

KIEFEL J: Well, it might be in paragraph 50.

MR YOUNG: Yes.

KIEFEL J: I remind myself that Mr Niall directed attention to the definition of “proceedings” this morning.

MR YOUNG: Yes.

KIEFEL J: So you may well be correct.

MR YOUNG: Your Honour Justice Keane, can I respond? If that use is sought to be made of 90AA, it only goes, in our submission, to demonstrate that the construction applied to it must be wrong. A conclusion would be that we complain about breaches of duty post-2012. The action we bring is mandamus to require compliance with those duties and mandamus to require the decision of 15 August to be made according to law.

Now, we have that second limb of our relief. But as I explained that is by way of giving effect to the amended assessment that would issue pursuant to the mandamus we seek. If the reading of section 90AA says that we cannot even bring a mandamus claim in respect of a decision that was made in 2013 to refuse to exercise a power for a fallacious reason, then there is something wrong with the construction of section 90AA that throws up that result.

We could never comply with section 90AA in relation to our mandamus complaint. We did not have a cause of action until 2012/2013, yet we could not give the notice required by section 90AA on their construction. It is a rather perverse result that suggests there is something wrong with the basic construction.

KEANE J: But is it not all just about the timing?

MR YOUNG: No, your Honour.

KEANE J: If you had made your demand on them at some earlier point in time, you would not have a 90AA problem. Why is it not all just about the time?

MR YOUNG: Your Honour, we had no opportunity to make a demand earlier, but further, the decision was not made by the Commissioner to address the question of amendments pre-2002 until December. He chose that timing. He only made a decision to address the possibility of making an amendment in 2002, as in the migration cases concerned with section 46A.

If the Minister embarks there on a process of making a decision, he has to make the decision according to law. It is not a question of timing. He chose the timing about that decision. We have a mandamus complaint, but it needs to be made according to law, and to say that we are time barred because we did not do something back in 1994 or something is counterintuitive at best.

It is not about time. Section 90AA is concerned to impose time limits on a completely different exercise on the mandamus complaint we have. It is an exercise of giving a refund in respect of a continuing assessment where there is no other process challenging the assessment, and certainly no amended assessment.

Can I deal with one other point? Again, I do not know if it is still contended for, but if there is any reliance on limitation periods, then there is another issue, which is that section 20A is the later, more specific provision, and it applies directly to recovery proceedings based on a mistake. I believe the Court has the Victorian Limitation Act. This provision was amended later than the introduction of 90AA. It applies generally to actions in Victoria. It applies to all kinds of actions, as defined in 5(a), the definition of “proceeding”. It applies where a proceeding is:

for the recovery of money paid by way of tax or purported tax –

which is like 90AA:

or by way of an amount that is attributable to tax or purported tax under a mistake . . . or under colour of authority –

I have given reasons why 90AA does not apply, and the same reasons explain why the first limb of 20A(1)(a) might not apply. But the second limb is wider. If any limitation provision applied, it was the later, more specific 20A. In any event, it adopted in (1)(b), for the purposes of the Limitation Act, any longer limitation period in any other Act which would include the three years in 90A.

Why did it adopt those provisions, so as to apply section 27 to them? Section 27 postpones the period of limitation until the plaintiff could have discovered the mistake with a reasonable diligence. It is accepted we could not discover the mistake, so any relevant limitation period was extended by section 27.

GAGELER J: So, was this point dealt with by the Court of Appeal?

MR YOUNG: It is dealt with by the Court of Appeal, yes. Now, it has not been dealt with in argument by our learned friend. Section 90AA, in our submission, has no application at all for the reasons we have described, whether as a barrier to section 19 or as a limitation period. Now, finally interest - - -

KIEFEL J: That just follows the conscious maladministration finding?

MR YOUNG: It runs from 15 August. Our learned friend - it is not as if that award of compound interest was based upon any finding of lack of good faith or the like. It was simply founded on the fact that the Court of Appeal found that on 15 August, there was a wrongful refusal to exercise the power to amend and the duty to amend and there should have been an amendment from 15 August returning the money. So, we had a simple Hungerfords claim that the money, not having been returned on 15 August, we should have interest from that date.

KIEFEL J: As I understand the appellant’s arguments, it is that it goes with the findings in relation to the failure to exercise duty and maladministration in that sense.

MR YOUNG: Well, it certainly goes with the former. I do not know whether they intend to try and extend the former by the adjectives in the latter.

KIEFEL J: Well, they only refer to paragraph 241 of the Court of Appeal.

MR YOUNG: Yes, but it simply was a finding that flowed from the finding of failure to exercise, perform the duty on 15 August. So, interest at a compensatory rate, and we led evidence of the Hungerfords compensation rate, should run from 15 August. I said I would give a reference to the case that described section 19 and explain why notification and objection was only mentioned in the context of an increase in the assessment and it was silent about decreases, for obvious reasons, that the benefit would flow to the taxpayer. The case is Ex parte Hooper, a High Court decision. The case was reported in volume [1926] HCA 3; 37 CLR 368 and the relevant passage is at 374. I also said I would give a reference to the migration case that I referred to

about needing to exercise the power according to law once you embark upon the decision-making process. The relevant case is M61 and I did have the reference somewhere.

KIEFEL J: I am sure we could find it.

MR YOUNG: I do have it - [2010] HCA 41; 243 CLR 319 and the passage is at paragraph 70.

KIEFEL J: Thank you.

MR YOUNG: If the Court pleases, those are our submissions.

KIEFEL J: Thank you, Mr Young. Yes, Mr Solicitor.

MR NIALL: A couple of points by way of reply. In my learned friend’s submissions, he referred to Royal Insurance and the application of the relevant time limit in section 20A. If your Honours turn to page 92 of Royal Insurance in Justice Brennan’s decision, the critical aspect there – perhaps if your Honours turn to page 91 where your Honours will see the statute of section 20A and your Honours will see that the fee was – the impost was paid “under the authority or purported authority of any Act”.

The Chief Justice said that does not include one as to mistake as a matter of construction. Justice Brennan, with whom two other members of the Court took a different approach, as your Honours will see about line 7, having identified an action for the recovery amount of paid under the Act, so that was the amount that was retrospectively removed, his Honour says on that account:

an action to recover the amount in item (ii)(a) answers the description of an action falling within s 20A.

So his Honour said it falls within the text of section 20A but that there was an implied amendment by the retrospective removal of liability which meant the two could not sit together. So we do not have that problem here. When one looks at section 90AA one has recovery of tax paid under or purportedly paid under the Act. It would include as a matter of text, as Justice Brennan – even in circumstances where the liability was retrospectively amended.

In our submission, 90AA, to answer your Honour Justice Gordon’s question, would include a Futuris-type error so that if it was tax that was paid under an invalid assessment it includes an accounting error where you have an assessment and simply paid too much and it would include where there is an amended assessment.

The premise, of course, is refund or recovery of tax paid, so there has to be a disconnect between what you have paid and a current assessment. If you have the same amount, the revenue keeps the money. So you have to have that disconnect, and the disconnect can occur in a number of respects. It could occur for the invalid assessment, it could occur from an amended assessment or it could occur by way of simply an administrative error, as occurred in – and so it is broader than in Trustees.

The only exclusion is that in subsection (5), which provides the 90AA provisions do not apply if the tax is paid under an invalid provision of the Act. So there is an express carve-out in subsection (5) and the reason for that is that where the payment is made under an invalid Act, most particularly in an excise setting more likely than in a land tax setting, section 20A of the Limitation of Actions Act applies. The two sections were introduced in almost exactly the same time – Act No 102 and Act No 104 of 1993.

The point was that with invalid Acts, you get one year. With other excesses, you go to the relevant Taxing Act. In this case it is 90AA, which is three years, so it is more advantageous. So it is not our submission that 20A of the Limitation Act applied; it was in effect the taxpayers, because they wanted to get advantage of the mistake extension. Our case is that 90AA is a code in relation to the requirements for a refund and it is more than a limitation period because it conditions the circumstances in which you can make a claim. It conditions the obligation of the Commissioner and imposes a duty in subsection (6).

Just two other final points. My learned friend put a submission that section 19 has to be read as implying a duty because otherwise the section 19 amendment would fail. In our submission, that is not sustainable because provided it comes within the time and in the conditions met by section 90AA, there is power to refund. There is no failure of the refund power. In fact, not only is there power to refund, there is a duty to refund in 90AA(6)(c) which provides, provided the circumstances are met, the Commissioner:

must refund the overpaid amount –

So, it is not an empowering problem, it is a mandatory duty, conditioned on the satisfaction of the terms of 90AA.

The last point by way of reply, if the Court pleases, in answer to your Honour Justice Gordon’s question about section 94. In our submission, section 94 only applies where something must occur under the Act and then within a time limit. So, it does not apply to objections which

do not have to occur, but they may, there is a facility for them to occur, or an application for a refund under section 90AA.

Of course, no issue has been taken in relation to section 94 and it is not a power that rests with the Commissioner. In terms of interest, we have put some brief written submissions. We seek to put no other submissions by way of reply. Unless there is anything I can assist the Court with, they are the submissions.

KIEFEL J: Thank you. The Court reserves it decision in this matter and adjourns until 9.30 am tomorrow in Canberra.

AT 3.46 PM THE MATTER WAS ADJOURNED