HIGH COURT OF AUSTRALIA

                                   Commissioner of State Revenue (Victoria)

                                                           Vs.

                                        Royal Insurance Australia Limited

                                        (Mason C.J. Toohey Mchugh JJ.)

                                                      07.12.1994

                                                    JUDGMENT

MASON C.J.

This appeal arises out of proceedings brought by the respondent ("Royal") to secure a refund of
$1,907,908.10 representing the amount of stamp duty overpaid by Royal to the appellant
Commissioner. Royal commenced proceedings by way of originating motion in the Supreme Court
of Victoria seeking:

1. an order that the Commissioner refund to Royal in accordance with s.111 of the Stamps Act 1958
(Vict.) ("the Act") the amount mentioned;
or

2. alternatively, an order that the Commissioner refund such sum as may be found to have been
overpaid by Royal to the Commissioner in respect of premiums for workers' compensation
insurance received after 30 June 1985 in respect of liabilities incurred before 1 October 1985; or 3.
alternatively, a declaration that Royal has, since 1 July 1985, overpaid the amount mentioned in
respect of such premiums received after 30 June 1985 and is entitled to a refund of that amount.

2. At first instance, Beach J. dismissed the summons with costs, holding that the Commissioner was
entitled as a matter of discretion under s.111 of the Act to refuse to make a refund. It was and is
common ground between the parties that there was an overpayment in the amount claimed by
Royal. On appeal, the Appeal Division of the Supreme Court (Brooking, Marks and Hedigan JJ.)
came to a different conclusion, allowing the appeal and making an order by way of mandamus
directing the Commissioner to refund the amount. Background facts and statutory provisions

3. Throughout the 1980s Royal carried on assurance and insurance business, including workers'
compensation insurance. Royal was registered as a company carrying on such a business, pursuant
to s.96 of the Act. Being registered as such a company, Royal was required by the provisions of
Subdiv.11 of Div.3 of Pt II of the Act (ss.95-111) to lodge monthly returns of premiums, including
workers' compensation premiums, received in the preceding calendar month and to pay stamp
duty on the return in an amount equal to 7 per cent of the amount of all premiums chargeable with
stamp duty (1 s.97(2)) , except in the case of workers' compensation premiums in respect of which
duty was
subsequently reduced to 3.5 per cent.

4. Prior to 1985, private insurers, of whom Royal was one, had conducted workers' compensation
business as approved insurers under the Workers Compensation Act 1958 (Vict.). As approved
insurers, private insurers had insured employers against their liability to workers' compensation
under that Act and in respect of employers' liability for common law claims for damages arising
from breach of duty to employees. The imposition of stamp duty on the returns of insurers
registered under the Act was a consequence of the regime of approved private insurers.

5. This regime was replaced by a different regime, called WorkCare, which came into operation on
1 September 1985. The Accident Compensation Act 1985 (Vict.) introduced and implemented the
new scheme. By that Act, the Accident Compensation Commission was constituted as the sole
insurer in respect of workers' compensation liabilities. Because the Commission, a statutory
authority, was the sole insurer, it was decided to discontinue the imposition of stamp
duty on workers' compensation insurance.

6. With a view to giving effect to this policy, s.99 of the Act was amended by s.276 of the Accident
Compensation Act. A number of sub-sections were added to s.99, including sub-s.(3), which was in
these terms:

"For the purposes of section 97, premiums for workers of policies that take effect at or after four
o'clock in the afternoon on 30 June 1985 or the extension of which takes effect from that time are
not chargeable with stamp duty."

At the same time the definition of "Workers compensation insurance" in s.95 was replaced by a new
definition so that s.99(3), when read with the new definition, would exempt workers' compensation
insurance business from the operation of Subdiv.11 of Div.3 of Pt II of the Act.

7. Section 99(4) provided for the payment of stamp duty on a pro rata basis where a premium was
payable after 4 o'clock in the afternoon on 30 June 1985 for workers' compensation insurance in
respect of the issue, renewal, taking out or extension of a policy for a period commencing before
and expiring after that date. Sub-section (5) provided for the making of an application for a refund
in such a case where the insurer had paid stamp duty at the full rate previously chargeable. Sub-
section (7) went on to provide that, when an application for a refund was duly made, "the
(Commissioner) ... shall make a refund to the applicant accordingly".

8. Sub-sections (5), (6) and (7) of s.99 were replaced when s.11 of the Stamps and Business
Franchises (Tobacco) (Amendment) Act 1985 (Vict.) came into operation. Section 11 introduced a
new sub-s.(5) and a new sub-s.(7). The new sub-s.(5) replaced the old sub-ss.(5) and (6). The new
sub-s.(5) took account of the fact that stamp duty may have been paid at the rate of 7 per cent or 3.5
per cent of the premium and provided for a rebate or refund of duty accordingly,
whereas the old sub-s.(5) did not take account of the fact that stamp duty may have been paid at the
higher rate. The new sub-s.(7) provided:

"Where an application is made in accordance with sub-section (5) -

(a) if the application is for a rebate, the amount of the rebate shall be deducted from the amount
payable as stamp duty on a return lodged ... under section 97(2) or, if the amount of the rebate
exceeds that amount of stamp duty, from the amount so payable on two or more returns; and

(b) if the application is for a refund, the (Commissioner of State Revenue) shall make a refund to
the applicant accordingly."

9. In 1987, it was realized for the first time that the exemption granted in 1985 did not extend to the
liability to pay stamp duty on a particular class of premium income, namely, premiums received by
insurers after 30 June 1985 when the WorkCare scheme came into operation in respect of "cost-
plus" policies. Under a cost-plus policy, the annual premium was recalculated after the close of the
relevant period of insurance so that the insurer was reimbursed for the whole of the costs of the
claims made and paid during the antecedent period, those costs including the costs of handling the
claims. This class of policy was to be distinguished from the ordinary policy in respect of which a
premium was calculated on the basis of the employer's estimate of wages to be paid during the
ensuing year with an adjustment made at the end of the year by reference to the amount of wages
actually paid during the year. That latter form of policy was sanctioned by the Workers
Compensation Act and Regulations; the form of it was prescribed in a schedule to that Act.

10. In order to extend the exemption to cover the cost-plus policies, s.8 of the Taxation Acts
Amendment Act 1987 (Vict.) ("the 1987 Act") was enacted. That section amended s.99(3) of the
Act by inserting after the words "from that time" the words "or received after that time in respect of
liabilities incurred before 1 October 1985". Section 2(4) of the 1987 Act provided that s.8 should be
deemed to have come into force on 30 June 1985, thereby making the operation of s.8 retrospective
to that date.

11. Strange as it may seem, Royal remained unaware of the 1985 amendments for some years and of
the 1987 amendments for about two years. It continued to include in its monthly returns the
amounts of premiums which it received in respect of workers' compensation insurance policies
issued or received after 30 June 1985 and paid stamp duty on that part of the premiums included in
the returns. It seems that, as a result of advice from the Commissioner in 1989, Royal ceased to pay
stamp duty on exempted premium income.

12. On 19 September 1990, Royal made a demand for repayment of the amount of stamp duty
overpaid. The Commissioner did not make a refund with the result that, on 17 October 1990, Royal
commenced the proceedings by way of originating motion. The proceedings related to s.111(1) of
the Act. That sub-section provided:

"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, person or firm of persons which or who paid the duty the amount of duty found to be
overpaid."

It is common ground that Royal's demand for a refund is governed by s.111(1), not by s.99(7).

The Commissioner's decision

13. On 19 October 1990, two days after the proceedings were commenced, the Commissioner found
that duty had been overpaid in the amounts mentioned below and decided not to make a refund of
any part of the amounts under s.111. The Commissioner did not give reasons for her decision.

The categories of overpayment
14. According to a document prepared by the Commissioner, the overpaid duty falls into three
categories. First, an amount of $1,674,301.94 which is divisible into two further categories, (a) and
(b). The amount was paid as duty on premiums received by Royal after 4.00 p.m. on 30 June 1985
in respect of liabilities incurred before 1 October 1985. The amount comprised duty on premiums
received by the Commissioner for the cost-plus policies. Category (a), amounting to $1,370,000
approximately, consists of duty on premiums received by Royal during the period from 30 June
1985 to 12 November 1987 being the commencement date of the 1987 Act. Category (b),
amounting to $300,000 approximately, consists of duty on premiums received by Royal from 12
November 1987 to 21 August 1989 in ignorance of the exemption from duty on premiums in respect
of cost-plus policies.

15. The second main category is an amount of $95,426.95 overpaid by Royal by reason of its own
over-estimates of premium income (from cost-plus policies) received by it before 1 July 1985 in
respect of liabilities incurred before 1 October 1985. The third category is an amount of
$138,179.21, being duty paid on premiums received by Royal for extensions after 4.00 p.m. on 30
June 1985 of policies (other than cost-plus policies) taken out before that date.

The scope and purpose of the discretion conferred by s.111

16. The Commissioner contends that the presence of the word "may" in s.111(1) attracts a prima
facie presumption that the word is to be understood in its natural and ordinary sense, that sense
being permissive or facultative only. That submission is in accord with the principle as expressed by
the judgment of this Court in Ward v. Williams (2 [1955] HCA 4; (1955) 92 CLR 496 at 505) .
What is more, the legislative history supports the Commissioner's submission. Section 111, before it
was amended in 1978, provided that, if the Commissioner was satisfied that overpayment of duty
had been made, on application made within twelve months after such payment, the Treasurer "shall
without further or other authority than this Act refund the amount" to the person by whom the
overpayment was made. The change from the mandatory "shall ... refund" to the facultative "may
refund" disposes of any suggestions that s.111 as amended was mandatory and not facultative. But,
as the Court went on to point out in Ward v. Williams, the question whether a public officer, to
whom a power is given by facultative words, is bound to exercise that power upon any particular
occasion, or in any particular manner, is to be solved from the context, from the particular
provisions, or from the general scope and objects of the enactment conferring the power (3 ibid) .

17. The Commissioner argues that there is nothing in the context or the scope and objects of the Act
which requires or indicates that the discretion to make a refund must be exercised on any particular
occasion. Indeed, the Commissioner points to the use of the word "may" again in s.111(2) and (3)
and the contrasting use of the word "shall" in s.111(4) (4 "The duty paid on a return ... shall be
denoted on the return by a cash register receipt imprint.) . But these provisions do no more than
support the presumption that in s.111(1) the words "may refund" are facultative. They do not
establish that the discretion is in any sense absolute or unfettered. Nor do they bear upon the
question whether the discretion must be exercised in a particular way or upon a particular occasion.

18. In approaching that question, 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. In that
context, there is no persuasive
reason why the grant of a positive discretionary power to make a refund, once an overpayment of
duty has been found by the Commissioner to have taken place, should be treated as a source of
authority in the Commissioner to retain the overpayment in the absence of circumstances
disentitling the payer from recovery. Nothing short of very clear words is sufficient to achieve such
a remarkable result. The Court should be extremely reluctant to adopt any construction of s.111
which would enable the Commissioner by an exercise of discretionary power to defeat a taxpayer's
entitlement to recover an overpayment of duty. No reason emerges for thinking that the purpose of
the provisions was other than to confer legal authority upon the Commissioner to refund an
overpayment found by her to have taken place.

19. In Reg. v. Tower Hamlets London Borough Council, Ex parte Chetnik Developments Ltd. (5
(1988) AC 858) , the House of Lords dealt with a discretionary power to refund in particular
circumstances rates paid when not payable and not recoverable otherwise than by means of an
exercise of the discretionary power. Lord Bridge of Harwich expressed the principle invoked by the
House of Lords in these terms (6 ibid. at 877) :

"Parliament must have intended rating authorities to act in the same high principled way expected
by the court of its own officers and not to retain rates paid under a mistake of law ... unless there
were, as Parliament must have contemplated there might be in some cases, special circumstances in
which a particular overpayment was made such as to justify retention of the whole or part of the
amount overpaid".

Much the same comment may be made about s.111.

20. At the same time, I cannot accept the proposition that, once overpayment has been found to have
been made, the discretion must be exercised by making a refund. Assume the State has in good faith
changed its position for the worse acting in reliance on the fact that the payment was made and
received for duty apparently due and payable under the Act, the regime of monthly returns and
payments being one of self-assessment, it could scarcely be suggested that a refusal to make a
refund in such a situation could be an erroneous exercise of discretion. In David Securities Pty. Ltd.
v. Commonwealth Bank of Australia (7 [1992] HCA 48; (1992) 175 CLR 353 at 384-386) , it was
recognized that, according to the principles of the law of restitution, such a change of position
would constitute a good "defence" to an action for recovery of money paid under a mistake of fact
or law. 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.

21. Royal sought to answer this difficulty by submitting that under s.111 the Commissioner was
under a duty to investigate whether there had been an overpayment and that, in the context of a duty
to investigate, there was a duty to refund once overpayment was found to have taken place. On the
assumption that the section creates a duty to investigate, I do not consider that the existence of such
a duty leads to the existence of an obligation to refund once overpayment is established. No doubt
there will be circumstances in which it will be a proper response, indeed the only proper response,
to refund the overpayment but that will not always be the case. The primary judge's finding that a
refund might result in a windfall to Royal

22. In argument, much attention was directed to the question whether the Commissioner could
properly refuse to make a refund on the ground that Royal had charged the duty to its insured and
that, as a consequence, the duty had been paid by the insured so that recovery by Royal would result
in a windfall to Royal. Here, it seems that Royal charged the duty to its insured, believing it to be
payable. Whether the duty formed the subject of a separate charge in addition to the
premium does not appear from the materials. Generally, insurers charge duty separately to the
insured in premium notices. The insured paid to Royal the duty as well as the premium. Royal then
paid the duty to the Commissioner.

23. According to the Commissioner's counsel, one of the reasons why the Commissioner refused to
make a refund was that, if the duty was refunded to Royal, in all probability it would be a windfall
because difficulties Royal would face in seeking to refund the duty to its policy holders would be so
great as to make it unlikely that it would seek to take that course. The primary judge did not make a
finding that these difficulties existed or that it was unlikely that Royal would seek to take that
course. Instead, his Honour regarded the possibility that such a situation could arise as a reason for
rejecting the proposition that there was an obligation to make a efund whenever an overpayment
took place or was found by the Commissioner to have taken place. According to his Honour, the
discretion could be exercised adversely to Royal by reference to the possible existence of that
situation. I should mention that at no stage of the proceedings did counsel for Royal suggest that
Royal was suing for the benefit of the insured who bore the burden of the tax or that it would seek
to pass on a refund, if obtained, to them.

Recovery according to restitutionary principles

24. As I have already indicated, the grant of the discretionary power to refund an overpayment
should not be regarded as authority to refuse a refund which a taxpayer is entitled to recover
according to the principles of the general law. It is necessary then to ascertain how Royal's claim to
recover stands under the law of restitution. We begin with the proposition, accepted in David
Securities, that mistake of law is no bar to recovery, and in this case there is no question but that
Royal made the relevant payments in the mistaken belief that in law it was bound to do so. In one
respect, Royal's belief at the time of payment was not mistaken: in the case of the cost-plus policies,
payments were made when there was a legal liability to pay them. Only subsequently and
retrospectively was an exemption granted.
But the retrospective operation of s.2(4) of the 1987 Act enables one to say that, in the light of the
law as it was enacted with retrospective effect in 1987, the payments of duty were made under a
mistake as to the legal liability to pay them. In David Securities it was accepted that (8 ibid. at 378)
:

"the payer will be entitled prima facie to recover moneys paid under a mistake if it appears that the
moneys were paid by the payer in the mistaken belief that he or she was under a legal obligation to
pay the moneys or that the payee was legally entitled to payment of the moneys. Such a mistake
would be causative of the payment".

And, prima facie, that is all that is required where, as here, the recipient has no legal entitlement to
receive or retain the moneys. The recipient has been unjustly enriched. Indeed, it is perhaps possible
that the absence of any legitimate basis for retention of the money by the Commissioner might itself
ground a claim for unjust
enrichment without the need to show any causative mistake on the part of Royal (9 Air Canada v.
British Columbia (1989) 59 DLR (4th) 161 at 169-170 per Wilson J. (dissenting)) . But there is no
occasion to pursue this aspect of the case further.

25. The belated recognition in David Securities that moneys paid away as a result of a causative
mistake of law are recoverable enables us to discard some of the complications associated with the
old law governing the recovery of moneys paid as and for taxes which were not due and payable
because causative mistake of law was not thought to be a sufficient basis of recovery. Recovery was
permitted only in cases in which money was exacted under an unlawful demand by a public
authority where the payment was made under a mistake of fact or under compulsion of some kind.
The relevant principles have been examined by this Court in Sargood Brothers v. The
Commonwealth (10 [1910] HCA 45; (1910) 11 CLR 258) and Mason v. New South Wales (11
[1959] HCA 5; (1959) 102 CLR 108) , and, very recently, by the House of Lords in Woolwich
Building Society v. I.R.C. (12 (1993) AC 70) In Woolwich, the House of Lords, though unwilling to
acknowledge that causative mistake of law is a basis for recovery, reformulated the principles so as
to recognize a prima facie right of recovery based solely on payment of money pursuant to an ultra
vires demand by a public authority. With that development in the law of restitution in England we
are not presently concerned because, as I have explained, Royal made the relevant payments as a
result of a causative mistake of law. In conformity with David Securities, payment in these
circumstances opens the gateway to recovery where the payment results in the enrichment of the
defendant at the expense of the plaintiff.

Disruption of public finances as a possible defence to a
restitutionary claim

26. The Commissioner did not argue that an exception from recovery
should be acknowledged in order to protect public finances from
disruption and the necessity of re-imposing taxes invalidly imposed.
That proposition was accepted by La Forest J. in Air Canada v. British
Columbia (13 (1989) 59 DLR (4th) at 197) but it was repudiated by
Wilson J. (14 ibid. at 169) , in her dissenting judgment, for reasons
which, to my mind, are compelling (15 In Woolwich (1993) AC at 176,
Lord Goff of Chieveley found Wilson J.'s reasons on this point "most
attractive") . Those reasons centre upon the unfairness of requiring
the innocent individual taxpayer, as opposed to taxpayers as a whole,
to bear the burden of the government's mistake (16 (1989) 59 DLR (4th)
at 169) . Wilson J.'s exposition gives emphasis to the "innocence" of
the taxpayer and the "mistake" of the government, factors which were
present in Air Canada. These elements are not essential to the making
out of a restitutionary claim for the recovery of money paid as and for
tax as a result of a causative mistake and I do not see why the absence
of these elements should justify the recognition of a vague and
amorphous defence based on the notion of avoiding disruption of public
finances. The remedy for any disruption of public finances occasioned
by the recovery of money in conformity with the law of restitution lies
in the hands of the legislature. It can determine who is to bear the
burden of making up any shortfall in public funds.

27. That only brings us to what is a crucial question in this case:
was the Commissioner unjustly enriched at the expense of Royal (17
Birks, "The English Recognition of Unjust Enrichment", (1991) Lloyds
Maritime and Commercial Law Quarterly 473 at 507) ? That the
Commissioner was unjustly enriched there can be no doubt. The
Commissioner received payments to which the State revenue was not
entitled under the Act. The question remains whether the enrichment
was at the expense of Royal. And here the fact that Royal charged the
duty to its insured again becomes significant. The suggestion is that
the enrichment of the Commissioner has taken place not at the expense
of Royal but at the expense of its policy holders. They are the
persons who have suffered a detriment; Royal has suffered no detriment
and, if it recovers, it will make a windfall gain (18 See Burrows,
"Public Authorities, Ultra Vires and Restitution", in Burrows (ed.),
Essays on the Law of Restitution, (1991) at 59-60) . Indeed, it might
be said that, if Royal recovers, it will be unjustly enriched. But
such an enrichment, if it be unjust, would be at the expense of the
policy holders, not at the expense of the Commissioner. The source of
any windfall, if windfall there be, was in the excessive charges made
by Royal to its policy holders, and the payments which they made to
Royal.

Is passing on a good defence to a restitutionary claim?

28. Whether a passing on "defence" should be recognized must be
considered at two levels: the levels of public law and restitutionary
law. There is the fundamental principle of public law that no tax can
be levied by the executive government without parliamentary authority,
a principle which traces back to the Bill of Rights (19 (1688) 1 Will.
and Mar., Sess.2, c.2, ("That levying Money for or to the Use of the
Crowne by pretence of Prerogative without Grant of Parlyament for
longer time or in other manner than the same is or shall be granted is
Illegal.")) . In accordance with that principle, the Crown cannot
assert an entitlement to retain money paid by way of causative mistake
as and for tax that is not payable in the absence of circumstances
which disentitle the payer from recovery. It would be subversive of an
important constitutional value if this Court were to endorse a
principle of law which, in the absence of such circumstances,
authorized the retention by the executive of payments which it lacked
authority to receive and which were paid as a result of causative
mistake.

29. From the perspective of the law of restitution, there is some
support for the view that, if the payer has passed on the burden of a
tax which is found not to be payable, the payer will not be entitled
to recover payments made to the public authority as and for tax. The
suggestion is that, in these circumstances, the defendant's enrichment
is not at the expense of the plaintiff. In Air Canada, the plaintiff
airlines had passed on an unconstitutional gasoline tax in the form of
fares charged to their passengers. Four justices considered the
question whether the airlines could recover the payments which they
had made as and for the tax. La Forest J. (with whom Lamer and
L'Heureux-Dub JJ. concurred) decided that question against the
airlines. La Forest J. cited (20 (1989) 59 DLR (4th) at 193) the
comments of Professor Palmer in his work The Law of Restitution (21
1986 Supplement at 255) :
"There is no doubt that if the tax authority retains a payment to
which it was not entitled it has been unjustly enriched. It has not
been enriched at the taxpayer's expense, however, if he has shifted
the economic burden of the tax to others. Unless restitution for
their benefit can be worked out, it seems preferable to leave the
enrichment with the tax authority instead of putting the judicial
machinery in motion for the purpose of shifting the same enrichment to
the taxpayer."

30. La Forest J. expressed his agreement with the comment and went
on to say (22 (1989) 59 DLR (4th) at 193-194) :

"The law of restitution is not intended to provide windfalls to
plaintiffs who have suffered no loss. Its function is to ensure that
where a plaintiff has been deprived of wealth that is either in his
possession or would have accrued for his benefit, it is restored to
him. The measure of restitutionary recovery is the gain the province
made at the airlines' expense."

Wilson J. did not agree, concluding that to deny recovery in such a
situation would be tantamount to allowing the legislature to impose
illegal burdens and would be inconsistent with restitutionary
principles (23 ibid. at 169-170) . The levying of an unconstitutional
tax is an imposition of an illegal burden, but there was no such
imposition in the present case.

31. The approach taken by La Forest J. in Air Canada accords with
that adopted in the United States in Shannon v. Hughes and Co. (24
(1937) 109 SW (2d) 1174) There, the plaintiff failed to recover
payments of an unconstitutional tax on its ice cream operations because
it had passed on the tax to its customers and had shifted to them the
burden of the imposition. The Court invoked Lord Mansfield's
proposition in Moses v. Macferlan (25 [1760] EngR 713; (1760) 2 Burr 1005 at 1010 [1760] EngR
713; (97
ER 676 at 679)) that, in the common law action for money had and
received, the defendant "may defend himself by every thing which shews
that the plaintiff, ex aequo et bono, is not intitled to the whole of
his demand, or to any part of it". In Shannon v. Hughes and Co. (26
(1937) 109 SW (2d) at 1175-1176) , the Court concluded that to hold
otherwise would result in unjust enrichment of the plaintiff, despite
the fact that the imposition of the tax and its passing on to customers
caused the plaintiff's ice cream sales to drop sharply and the
plaintiff's profits to collapse. By denying relief on the ground that
the plaintiff would unjustly be enriched by a windfall, the Court left
the plaintiff without a remedy even though it had suffered significant
loss and damage.

32. The argument that a plaintiff who passes on a tax or charge will
receive a windfall or will unjustly be enriched if recovery from a
public authority is permitted rests at bottom upon the economic view
that the plaintiff should not recover if the burden of the imposition
of the tax or charge has been shifted to third parties. In the
context of the law of restitution, this economic view encounters major
difficulties. The first is that to deny recovery when the plaintiff
shifts the burden of the imposition of the tax or charge to third
parties will often leave a plaintiff who suffers loss or damage
without a remedy. That consequence suggests that, if the economic
argument is to be converted into a legal proposition, the proposition
must be that the plaintiff's recovery should be limited to compensation
for loss or damage sustained. The third is that an inquiry into and a
determination of the loss or damage sustained by a plaintiff who
passes on a tax or charge is a very complex undertaking. And, finally,
it has long been thought that, despite Lord Mansfield's statement in
Moses v. Macferlan, the basis of restitutionary relief is not
compensation for loss or damage sustained but restoration to the
plaintiff of what has been taken or received from the plaintiff without
justification (27 Mason v. New South Wales (1959) 102 CLR at 146 per
Windeyer J) .

33. Shannon v. Hughes and Co. illustrates the first problem. Because
passing on the tax or charge increases the price or cost of the goods
or service to the customer or consumer it may have an adverse economic
impact upon demand and, accordingly, upon the profitability of the
plaintiff's activities. That means that passing on should not be
accepted as a universal defence to a restitutionary claim unless it is
related and limited to denying recovery except for loss or damage
sustained. And that requires a consideration of practical and legal
objections inherent in the third and fourth objections mentioned
above.

34. In the United States, the Supreme Court has rejected the passing
on defence in the context of treble-damages claims under anti-trust
laws by plaintiffs who have passed on overpayments to their
customers (28 Hanover Shoe Inc. v. United Shoe Machinery Corp. [1968] USSC 185; (1968)
392 US 481; Illinois Brick Co. v. Illinois [1977] USSC 168; (1977) 431 US 720; see also
McKesson Corporation v. Division of Alcoholic Beverages and Tobacco
[1990] USSC 95; (1990) 110 L Ed 2d 17 at 42-43) . Though the context is different, the
reasons given for that rejection are relevant to the present case.
They include the difficulty of determining the economic impact upon the
plaintiff's business of passing on the overpayment (29 (1968) 392 US
at 492-493) , the practical problems which availability of the defence
would generate involving "massive evidence and complicated theories"
(30 ibid. at 493) to demonstrate the occurrence or non-occurrence of
passing on. Further, the defence would probably apply all the way down
the chain of distribution to the ultimate consumer who would have
little interest to sue (31 ibid. at 494) . In Illinois Brick Co. v.
Illinois, the Supreme Court confirmed these grounds of objection and
pointed to the problems of multiple litigation if both direct and
indirect purchasers could sue for anti-trust damages. The Court also
noted that economic theories rely upon assumptions that do not operate
in the real world, thereby making the proof of passing on extremely
difficult (32 (1977) 431 US at 741-742) .

35. A similar approach was taken in the opinion of Advocate-General
Mancini in Amministrazione delle Finanze dello Stato v. San Giorgio
SpA (33 (1985) 2 CMLR 658) . San Giorgio was required to pay health
inspection charges under an Italian decree and regulations. They were
held to be invalid. An Italian court ordered repayment to San Giorgio,
notwithstanding another law which denied recovery when the charge is
presumed to have been passed on. The Advocate-General considered that
the nature of a free market is such that one cannot isolate any portion
of the price and link it causally to a particular cost (34 ibid. at
673) . However, the European Court concluded (35 ibid. at 688-689) :

"Community law does not prevent a national legal system from
disallowing the repayment of charges which have been unduly levied
where to do so would entail unjust enrichment of the recipients.
There is nothing in Community law therefore to prevent courts from
taking account, under their national law, of the fact that the unduly
levied charges have been incorporated in the price of the goods and
thus passed on to the purchasers."

The Court has also decided that it is inconsistent with Community law
for a State to impose on a taxpayer the burden of establishing that
unduly paid charges have not been passed on (36 Les Fils de Jules
Bianco SA v. Directeur Gnral des Douanes (1989) 3 CMLR 36) . Thus, in
European law it is accepted that the defence of passing on, though
difficult to establish, does not infringe Community law when made
available by the statute of a member State.

36. The United States and European decisions demonstrate that any
acceptance of the defence of passing on is fraught with both practical
and theoretical difficulties (37 See also Rudden and Bishop, "Gritz
and Quellmehl: Pass it on", (1981) 6 European Law Review 243 esp. at
253-256) . Indeed, the difficulties are so great that, in my view, the
defence should not succeed unless it is established that the
defendant's enrichment is not at the expense of the plaintiff but at
the expense of some other person or persons (38 There is limited
support from the textwriters for the view that passing on is not a
defence: see Birks, Restitution - The Future, (1992) at 75, fn.55;
Burrows, The Law of Restitution, (1993) at 475-476 (though he favours a
mitigation of loss defence in some cases where it is established that
the charge has been passed on); but others consider it is a defence:
see Jones, Restitution in Public and Private Law, (1991) at 46; Palmer,
The Law of Restitution, 1986 Supplement at 255; see also Goff and
Jones, The Law of Restitution, 4th ed. (1993) at 553 where it is
suggested that "(t)he burden should, in principle, be on the defendant
to show that the plaintiff has suffered no loss." In Woolwich, Lord
Goff of Chieveley commented: "(T)he point is not without its
difficulties; and the availability of the defence may depend upon the
nature of the tax": (1993) AC at 178) . In that event, the plaintiff
fails, not because it has passed on the tax or charge, but because the
defendant has been enriched by receiving moneys which belonged to or
proceeded from someone other than the plaintiff. Take, for example,
the case where there is an overpayment of a tax levied on someone other
than the plaintiff who collects the tax and pays it to the public
authority. In such a case, the plaintiff should not recover unless it
is established that the plaintiff will distribute the proceeds to the
true taxpayers.

37. Historically, as I have already noted, the basis of
restitutionary relief in English law was not compensation for loss or
damage but restoration of what had been taken or received. The
requirement that the defendant be unjustly enriched "at the expense
of" the plaintiff can mean that the enrichment is "by doing wrong to"
or "by subtraction from" the plaintiff (39 Birks, An Introduction to
the Law of Restitution, (1985) at 23-24) . Hence, a plaintiff can
succeed by showing that he or she was the victim of a wrong which
enriched the defendant - this is not such a case - or that the
defendant was enriched by receiving the plaintiff's money or property.

38. When the plaintiff succeeds in a restitutionary claim, the court
awards the plaintiff the monetary equivalent of what the defendant has
taken or received, except in those cases in which the plaintiff is
entitled to specific proprietary relief. Because the object of
restitutionary relief is to divest the defendant of what the defendant
is not entitled to retain, the court does not assess the amount of its
award by reference to the actual loss which the plaintiff has
sustained. That is what Windeyer J. was saying in Mason v. New South
Wales (40 (1959) 102 CLR at 146) when he rejected the notion that
impoverishment of the plaintiff is a correlative of the defendant's
unjust enrichment (41 But cf. Air Canada v. British Columbia (1989) 59
DLR (4th) at 193-194 per La Forest J. (with whom Lamer and
L'Heureux-Dub JJ. concurred); Wilson J. contra. See also Beatson,
"Restitution of Taxes, Levies and Other Imposts: Defining the extent
of the Woolwich Principle", (1993) 109 Law Quarterly Review 401 at
427-428; The Law Commission, Restitution of Payments Made Under a
Mistake of Law, (1991) Consultation Paper No.120, pars 3.83-3.85) .

39. Windeyer J. did not regard the fact that the plaintiffs had
"passed on" to their customers the amounts unlawfully charged for
permits as a reason for denying recovery. His Honour said (42 (1959)
102 CLR at 146; see also at 136 per Menzies J) :
"If the defendant be improperly enriched on what legal principle can
it claim to retain its ill-gotten gains merely because the plaintiffs
have not, it is said, been correspondingly impoverished? The concept
of impoverishment as a correlative of enrichment may have some place
in some fields of continental law. It is foreign to our law. Even if
there were any equity in favour of third parties attaching to the
fruits of any judgment the plaintiffs might recover ... this
circumstance would be quite irrelevant to the present proceedings.
Certainly it would not enable the defendant to refuse to return moneys
which it was not in law entitled to collect and which ex hypothesi it
got by extortion."

40. Windeyer J. was directing his remarks to a case in which, as in
Air Canada, the State was asserting its entitlement to payment of the
charge. In the present case, there never was a demand or claim by the
State or the Commissioner that tax was payable in respect of premiums
received under the relevant policies. Here overpayment occurred
simply because Royal made a mistake in the process of self-assessment.
But I do not consider that this difference touches the question
whether passing on the tax or duty is relevant to restitutionary
recovery. Once it is accepted that causative mistake of law is a basis
for recovery, the making of an unlawful demand for payment, though
material to the making of a causative mistake, is no longer of
critical importance.

41. Restitutionary relief, as it has developed to this point in our
law, does not seek to provide compensation for loss. Instead, it
operates to restore to the plaintiff what has been transferred from
the plaintiff to the defendant whereby the defendant has been unjustly
enriched. As in the action for money had and received, the defendant
comes under an obligation to account to the plaintiff for money which
the defendant has received for the use of the plaintiff. The
subtraction from the plaintiff's wealth enables one to say that the
defendant's unjust enrichment has been "at the expense of the
plaintiff" (43 Birks, (1985), op.cit. at 23-24) , notwithstanding that
the plaintiff may recoup the outgoing by means of transactions with
third parties.

42. On this approach, it would not matter that the plaintiff is or
will be over-compensated because he or she has passed on the tax or
charge to someone else. And it seems that there is no recorded
instance of a court engaging in the daunting exercise of working out
the actual loss sustained by the plaintiff and restricting the amount
of an award to that measure.

43. Nonetheless, in the United States, relief has been denied, on
equitable amongst other grounds, to a plaintiff who has passed on the
tax or charge, reference being made to coming to court with unclean
hands (44 Standard Oil Co. v. Bollinger (1929) 169 NE 236; see also
Richardson Lubricating Co. v. Kinney (1929) 168 NE 886) . Why, as
between the plaintiff and the defendant, the passing on of the tax to
customers of the plaintiff results in conduct which should disentitle
the plaintiff in equity from recovery is difficult to understand. The
better view is that, if passing on of the tax disentitles the
plaintiff, it is because, in the particular circumstances, the
defendant's enrichment has not been at the expense of the plaintiff.

44. That was the way in which the problem was approached by Learned
Hand J. in his dissenting opinion in 123 East Fifty-Fourth Street v.
United States (45 (1946) 157 F Rep (2d) 68) . There the Court
rejected the defence of passing on in circumstances where a restaurant
owner, in accordance with advice received from revenue authorities that
it was liable to cabaret tax, paid amounts as and for that tax. The
Court held that the tax was not payable because the restaurant was not
a cabaret. The restaurant owner had charged the tax to its patrons so
that items on the patrons' bills were actually part of the price paid
by them and the money became that of the restaurant owner. The
majority considered that this was no bar to recovery by the restaurant
owner because the money, when paid to the government, belonged to and
was the property of the restaurant owner. However, Learned Hand J. was
prepared to infer that the owner had added the tax as a separate item
to the bills and described it as a tax which it must pay and was
collecting it from patrons in order to pay it to the Treasury. His
Honour regarded as crucial the distinction between passing on the tax
in this form and merely including in the bills the amount of the tax
without saying anything about it.

45. Learned Hand J. went on to say (46 ibid. at 70; see also Wayne
County Produce Co. v. Duffy-Mott Co. (1927) 155 NE 669 at 669 per
Cardozo C.J. (where Duffy-Mott recovered the tax that it had paid to
the federal government but, having charged the tax specifically to its
customers in addition to the price of the goods sold, was held liable
to account to them for the tax recovered)) :
"If it said nothing, I should agree ... that the guests had no legally
recognizable interest in the money collected, which gave them any
claim to it superior to the plaintiff's ... On the other hand, if the
plaintiff collected the money under what the guests must have
understood to be a statement that it was obliged to pay it as a tax,
and that it meant to do so, the money was charged with a constructive
trust certainly so long as it remained in the plaintiff's hands."

According to his Honour, the constructive trust attached to the claim
for recovery of the money so that if the plaintiff recovered the
payments it would hold as trustee for the patrons. That would be no
answer to the claim if the plaintiff could and would distribute the
recovery to the patrons. But that did not appear to be the case so
that in the result, the equities being equal, the legal title should
prevail.

46. In Decorative Carpets Inc. v. State Board of Equalization (47
(1962) 373 P 2d 637) , the Supreme Court of California followed the
dissenting opinion of Learned Hand J. In that case, the plaintiff had
overpaid sales tax with respect to transactions combining sales and
installation. The plaintiff had collected for each transaction giving
rise to a liability to pay sales tax a separately stated amount to
cover the tax imposed on it, and had charged to its customers the
amounts computed to be payable as sales tax on those transactions. The
Court held that the plaintiff's mistake of law gave rise to an
involuntary trust in favour of the customers and that the plaintiff
could recover only if it submitted proof that the refund would be
returned to the customers from whom the payments were erroneously
collected. Traynor J., with whom Gibson C.J., Peters and White JJ.
concurred, said (48 ibid. at 638) :
"To allow the plaintiff a refund without requiring it to repay its
customers the amounts erroneously collected from them would sanction a
misuse of the sales tax by a retailer for his private gain."

47. The Court considered that, although the defendant would
ordinarily, like the plaintiff, become a constructive trustee of the
moneys for the plaintiff's customers, adherence to statutory
procedures precluded the imposition on the defendant of an obligation
to make refunds to the customers. The Court did not discuss the
question whether the defendant would be unjustly enriched if the
plaintiff were unable to offer proof that it could and would refund the
sums to its customers.

48. On the other hand, in Javor v. State Board of Equalization (49
(1974) 527 P 2d 1153) , car purchasers sought to recover amounts of
sales tax which had been passed on to them by retailers. The amount
paid was excessive because of the repeal, with retrospective effect, of
a federal manufacturers' excise tax which had been included in the
sales tax base. The overpaid tax was in excess of $10,000,000;
however, each customer was owed only a very small amount (50 For
example, the plaintiff, who had purchased a Rolls Royce, was owed
$65.72) . Only a retailer could apply for a refund, which was required
to be paid over to the customer. Accordingly, a retailer had no
particular incentive to request the refund. Sullivan J., with whom
Wright C.J., Tobriner, Mosk and Burke JJ. concurred, considered that
(51 (1974) 527 P 2d at 1160-1161) :
"the Board is very likely to become enriched at the expense of the
customer to whom the amount of the excessive tax actually belongs.

... The integrity of the sales tax requires not only that
retailers not be unjustly enriched, but also that the state not be
similarly unjustly enriched."

The Court found that the customers could compel the retailers to make
refund applications, and require the refunded sales tax to be paid
into court.
49. I would accept so much of Learned Hand J.'s analysis in 123 East
Fifth-Fourth Street as leads to the conclusion that the restaurant
owner was a constructive trustee of the amount of the tax received
from its patrons if the owner charged the separate amount of the tax to
its patrons. The tax so received was received by the owner as a
fiduciary on the footing that it would apply the money in payment of
the tax. If that purpose failed or could not be effected because the
tax was not payable then the owner held the moneys for the benefit of
the patrons who paid the moneys. The same result would ensue if the
owner recovered payments from the revenue authority made as and for tax
which was not payable. And, in my view, the patrons who paid the tax
to the owner would have a right of recovery, as Learned Hand J. makes
clear, against the revenue authority so long as it retained the
payments which it was not entitled to retain.

50. But does all this require the further conclusion that in the
circumstances predicated by Learned Hand J. - the addition of the tax
as a separate item to the bills - the restaurant owner could not
recover? I would answer the question in the negative on the footing
that the restaurant owner had a legal title to the money immediately
before it was paid to the revenue authority. In that respect, the
money belonged to the plaintiff even though, if it recovered the
money, it would hold as trustee for the patrons. But, in such a case,
the plaintiff should be required to satisfy the court, by the giving of
an undertaking or other means, that it will distribute the moneys to
the patrons from whom they were collected, thereby recognizing their
beneficial ownership of those moneys.

51. If, however, the plaintiff did not become the constructive
trustee of the moneys by separately charging them as tax to the
patrons, I do not see why the plaintiff's claim should be defeated
simply because the plaintiff has recouped the outgoing from others.
As between the plaintiff and the defendant, the plaintiff having paid
away its money by mistake in circumstances in which the defendant has
no title to retain the moneys, the plaintiff has the superior claim.
The plaintiff's inability to distribute the proceeds to those who
recoup the plaintiff was, in my view, an immaterial consideration, as
Windeyer J. suggested it was in Mason v. New South Wales. There was in
that case the additional element of an unlawful demand but the absence
of that element does not mean that, in the situation under
consideration, unjust enrichment was otherwise than at the plaintiff's
expense.

52. In the present case, that reasoning leads me to the conclusion
that the Commissioner would have no defence to a restitutionary claim
by Royal to recover the mistaken payments of duty. Even if it had
been established that Royal charged the tax as a separate item to its
policy holders so that it was a constructive trustee of the moneys
representing that separate charge when it made the payments to the
Commissioner, it would have been entitled to recover from the
Commissioner, provided that it satisfied the court that it will
account to its policy holders. The Courts below, unlike Learned Hand
J. in 123 East Fifty-Fourth Street, did not draw an inference that the
tax was charged as a separate item to the policy holders. And, in any
event, it has not been suggested that the Court should draw such an
inference.

53. It then follows, in the light of my earlier conclusion that the
discretion under s.111 is to be exercised in accordance with the
principles of the law of restitution, that the discretion was
exercised erroneously. On the basis on which the case was fought in
the courts below, subject to consideration of the two issues still
outstanding, Royal was entitled to recover the overpayments in
conformity with the law of restitution.

Limitation of Actions Act 1958 (Vict.), s.20A

54. Section 20A provided as follows (52 A new s.20A was substituted by
the Limitation of Actions (Amendment) Act 1993 (Vict.)) :

"Actions to recover moneys paid as taxes etc.

(1) No action shall be brought to recover, from the Crown or the

State of Victoria or any Minister of the Crown, or from any
corporation officer or person or out of any fund to whom or which it
was paid, the amount or any part of the amount of any tax, fee, charge
or other impost paid under the authority or purported authority of any
Act, after the expiration of twelve months after the date of payment.

(2) Sub-section (1) of this section shall not apply to any action

or proceeding brought pursuant to any specific provision of any Act
providing for the mode of challenging the validity, or for the
recovery of the whole or any part, of any tax, fee, charge or other
impost actually paid."

55. As the last payment of duty sought to be recovered was paid on
21 August 1989, if s.20A(1) applied, the time within which any action
might be brought to recover duty expired no later than 21 August 1990,
which was prior to the commencement of the proceedings for recovery of
the duty paid.

56. The Appeal Division was of the view that s.20A had no
application for three reasons. First, their Honours thought, from the
speeches of the Attorney-General and others as reported in Hansard,
that the section was introduced to protect the State from the
obligation to repay moneys that might become payable as a consequence
of successful challenges to the constitutional validity of State
fiscal laws. In those speeches reference was made to Dennis Hotels
Pty. Ltd. v. Victoria (53 [1961] UKPCHCA 1; (1961) 104 CLR 621) and the "windfall" that
the hotel industry would have gained had its challenge to the licensing
fees been successful. While apprehension of the prospect of a
liability to refund imposts as a result of successful challenges to the
constitutional validity of fiscal laws was the occasion and the
mainspring for the introduction of s.20A, the terms of sub-s.(1) are
much wider. It prohibits the bringing of an action to recover the
amount of any impost "paid under the authority or purported authority
of any Act" (emphasis added).

57. The second reason was that the 1987 amendment which
retrospectively declared that duty was not exigible back to 30 June
1985, covering a period of 2 years, would not have been necessary if
s.20A had the effect contended for by the Commissioner. The Appeal
Division therefore concluded that the 1987 amendment at least modified
the operation of s.20A in relation to payments of duty properly made
at the time but deemed retrospectively not to be payable. However,
this reasoning overlooks the possibility that the duty to which the
1987 amendment related may have been paid within one year of the
enactment of the amendment.

58. The third reason was that the imposts sought to be recovered
were not "paid under the authority or purported authority of any Act".
In my view, the Appeal Division was correct in so holding. The
effect of the 1987 amendment was to abrogate any requirement to make a
payment after 30 June 1985 of duty on premiums received on "cost-plus"
policies. Hence, the payment of duty mentioned in the first category
in the document prepared by the Commissioner was not "under the
authority or purported authority of any Act". Likewise, the other
payments of duty sought to be recovered were not made under such
authority or purported authority for the simple reason that the duty
was not payable; instead of imposing duty on the relevant categories
of premium the Act abrogated the liability to pay duty. It is not
possible to read the words "under the authority or purported
authority" as denoting "under a mistaken belief as to authority".

59. It follows that s.20A has no application.

Relief

60. The Appeal Division granted relief in the nature of mandamus by
directing the Commissioner to refund the amount claimed. The
Commissioner submitted that mandamus would not result in an order for
payment of that money.

61. Although the argument was not elaborated, it is to be understood
as invoking the principle that mandamus requires the exercise of the
relevant statutory discretion rather than its exercise in a particular
way (54 Randall v. Northcote Corporation [1910] HCA 25; (1910) 11 CLR 100 at 105) .
But that principle means no more than that the administrator to whom
mandamus is directed will be required to perform the legal duty to the
public which is imposed by the statute and ordinarily that duty is
limited to exercising the statutory discretion according to law, there
being no obligation to exercise the discretion in a particular way.
However, if the administrator is required by the statute to act in a
particular way and in certain circumstances, or if the exercise of a
statutory discretion according to law in fact requires the
administrator to decide in a particular way, so that in neither case
does the administrator in fact have any discretion to exercise, then
mandamus will also issue to command the administrator to act
accordingly (55 Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. (1965)
[1965] HCA 27; 113 CLR 177 at 188 per Kitto J. (dissenting but not on this point),
203, 206 per Windeyer J.; Minister for Immigration and Ethnic Affairs
v. Conyngham (1986) 68 ALR 441 at 448-451) . Moreover, it has long
been recognized that mandamus will issue as a remedy for certain forms
of abuse of discretion upon the principle that "the improper or
capricious exercise of discretion is a failure to exercise the
discretion which the law has required to be exercised" (56 Reg. v.
I.R.C.; Ex parte Fed. of Self-Employed [1981] UKHL 2; (1982) AC 617 at 650 per Lord
Scarman; see R. v. Askew (1768) 4 Burr 2186 at 2188-2189 per Lord
Mansfield C.J. [1768] EngR 8; (98 ER 139 at 141); Padfield v. Minister of Agriculture,
Fisheries and Food [1968] UKHL 1; (1968) AC 997) .

62. At one time it seems to have been thought that mandamus would
not be granted to enforce payment of money by the Crown (57 See, for
example, Reg. v. Lords Commissioners of the Treasury (1872) LR 7 QB
387) . However, in principle there can be no objection to the grant of
relief by mandamus directed to a statutory officer requiring that
officer to pay money if there be a public legal duty to so act (58 See
Reg. v. Commissioners for Special Purposes of the Income Tax (1888) 21
QBD 313 at 322 per Lindley L.J) . In the present case, the duty to
exercise the discretion was a public duty (59 Reg. v. I.R.C.; Ex parte
Fed. of Self-Employed (1982) AC at 651-652 per Lord Scarman) and it
was a discretion which, in the circumstances of this case, could be
exercised only in one way. Consequently, mandamus will issue not only
to compel exercise of the discretion according to law but also to
compel it to be exercised in the way in which it must be exercised.

63. The appeal must be dismissed.

BRENNAN J. The respondent, a company carrying on the business of an
insurer in Victoria (hereafter "Royal"), issued policies of insurance
against liability for workers' compensation and remitted to the
Comptroller of Stamps amounts which Royal believed to be due to the
Comptroller as stamp duty chargeable on premiums received in respect
of those policies. The appellant Commissioner is the statutory
successor of the Comptroller (60 Administrative Arrangements Act 1983
(Vic.), s.3(10)(a); Administrative Arrangements Order (No.106) 1992,
Orders 4 and 5 and Schedule; Victorian Government Gazette G16, 29 April
1992 at 1003-1004) and the holder of the office may be referred to
indifferently hereafter by either title. The Commissioner is the
officer responsible for the receipt and refund of moneys paid
purportedly as duty under the Stamps Act 1958 (Vic.) ("the Act"). The
Act provided for registered insurers to lodge returns with the
Commissioner and to pay in cash the relevant amounts of stamp duty (61
ss.96, 97) . This system of self-assessment was followed by Royal
during the period between 1 July 1985 and 21 August 1989 when Royal
paid to the Commissioner $1,907,908.10 more than the amounts which
Royal was ultimately liable to pay as stamp duty under the Act. Royal
was apparently unaware of amendments to the Act which, consequent upon
the introduction of a new regime of workers' compensation by the
Accident Compensation Act 1985 (Vic.), exempted from charge certain
premiums for workers' compensation insurance.

2. The overpayments of stamp duty were made in respect of premiums
paid on two classes of policy which were described respectively as
"wages" policies and "cost plus" policies. The premium payable in
respect of a wages policy was initially calculated on an estimate of
wages for a year with an adjustment being made at the end of the year
based on the actual wages paid for that year. The premium payable in
respect of a cost plus policy was paid in arrears and was effectively
a reimbursement of incurred liabilities, that is the amount paid out
by the insurer in respect of claims made in the preceding period plus
the cost involved in handling the claim.

3. The Accident Compensation Act 1985 (62 s.276 and Sched. Two)
inserted amendments into the Act (63 amending ss.95, 97, 98 and 99)
which exempted from charge those premiums which were paid for wages
policies where the period of risk commenced after 4.00pm on 30 June
1985, the exemption operating proportionately in the case of premiums
paid for policies where the period of risk commenced before but expired
after that time (the first 1985 amendment). If a registered company
had paid an amount of stamp duty and the period of risk commenced
before but ended after 4.00pm on 30 June 1985, provision was made for
proportionate refunds to be made by the Comptroller. The provision for
refunds was itself amended later in 1985 by the Stamps and Business
Franchise (Tobacco) (Amendment) Act 1985 (Vic.) (64 s.11) (the second
1985 amendment). The premiums received in respect of cost plus
policies remained, by omission, chargeable to stamp duty until an
amendment to the Act was introduced by a provision of the Taxation Acts
Amendment Act 1987 (Vic.) (65 s.8) (the 1987 amendment). The 1987
amendment exempted from charge premiums on cost plus policies received
after 30 June 1985 in respect of liabilities incurred before 1 October
1985. The 1987 amendment commenced on 12 November 1987 but, by s.2(4)
of the Taxation Acts Amendment Act, it was "deemed to have come into
operation on 30 June 1985".
4. The following amounts were the integers of the total amount that
was overpaid before Royal realized that the premiums in respect of
which it had been making payments to the Comptroller were no longer
chargeable with stamp duty:

(i) $138,179.21 in respect of premiums on wages policies received
for extensions after 4.00pm on 30 June 1985;

(ii) $1,674,301.94 in respect of premiums on cost plus policies
received after 4.00pm on 30 June 1985, of which approximately -
(a) $1,370,000 was paid in respect of premiums received before the
1987 amendment commenced, and

(b) $300,000 was paid in respect of premiums received after the 1987
amendment commenced;

(iii) $95,426.95 in respect of over-estimates of premiums on cost
plus policies received before 1 July 1985 in respect of liabilities
incurred before 1 October 1985.

The payments in items (i) and (ii)(b) were made by mistake of law,
Royal being unaware of the 1985 and 1987 amendments. The payments in
item (ii)(a) were due and owing when paid but, by retrospective
operation of the 1987 amendment, were deemed not to have been due and
owing. The payments in item (iii) were made provisionally and should
have been adjusted in the ordinary course of dealing between Royal and
the Comptroller when the over-estimate of premiums was ascertained.
No error of law affects this item.

5. When Royal became aware that it had made payments to the
Comptroller that it was not liable to pay or was deemed not to have
been liable to pay, it demanded a refund, but no response was received
to Royal's solicitor's letter of demand written on 19 September 1990.
On 17 October 1990, Royal commenced proceedings against the
Comptroller claiming, inter alia:

"1. An order that the defendant refund to the plaintiff in accordance
with s.111(1) of the Stamps Act 1958 ('the Act') the sum of
$1,907,908.10 being an amount of stamp duty found by the defendant to
have been overpaid by the plaintiff.

2 . Alternatively to 1, an order that the defendant as required
by s.111(1) of the Act forthwith -

(a) make a finding whether or not the plaintiff has overpaid the

sum of $1,907,908.10 or some other sum in respect of premiums for
workers' compensation insurance received after 30 June 1985 in respect
of liabilities incurred before 1 October 1985; and
(b) refund to the plaintiff any such sum found to have been

overpaid."

Royal thus sought an order in the nature of a mandamus to compel the
Comptroller to perform what was said to be her duty under s.111(1) of
the Act. That sub-section read:

" Where the Comptroller finds in any case that duty has been
over-paid, whether before or after the commencement of the Stamps Act
1978 he may refund to the company, person or firm of persons which or
who paid the duty the amount of duty found to be overpaid".

6. When the proceedings were commenced the Comptroller had made no
finding of overpayment for the purposes of s.111(1). However, a
finding was made on 19 October 1990 as appears from a statement of
facts, agreed for the purposes of the proceedings, which contains the
following paragraph:

" On the 19th October 1990, the Comptroller of Stamps:

(a) found that duty had been overpaid in the amounts referred to in
(an affidavit setting out the amounts appearing in items (i), (ii) and
(iii), above;)

(b) decided not to make a refund of any part of that amount under
s.111 of the Stamps Act 1958."

Although Royal's solicitors on 25 January 1991 requested reasons for
the Comptroller's decision not to make a refund, no reasons were
furnished. The proceedings were continued on the footing that the
original notice of motion was sufficient to enliven the Supreme
Court's jurisdiction to make an order in the nature of mandamus under
s.111(1). The question in issue is whether an order should be made
directing the Commissioner to refund the moneys overpaid by Royal.

Does s.111(1) create a duty to refund?

7. Although the power conferred by s.111(1) is expressed to be
discretionary, Royal submits that on a true construction of the Act,
the Commissioner is under a duty to refund overpaid duty once she
"finds ... that duty has been over-paid". The question whether the
repository of a discretionary power is under a duty to exercise the
power depends upon the intention of the legislature as revealed in the
language of the statute and, in ascertaining that intention, there is
a prima facie presumption "that permissive or facultative expressions
operate according to their ordinary natural meaning" (66 Ward v.
Williams [1955] HCA 4; (1955) 92 CLR 496 at 505) . Therefore, if the facultative
term "may" is used in the creation of a power, it does not in itself
impose a duty to exercise the power but such a duty may be found in the
statutory context in which the power is created. Thus, where a power
is conditioned upon the existence of an event or upon the formation of
a particular opinion by the repository of the power, the condition may
sometimes be taken to specify the circumstances in which the power must
be exercised (67 Finance Facilities Pty. Ltd. v. Federal Commissioner
of Taxation [1971] HCA 12; (1971) 127 CLR 106 at 134-135) . In the present case,
Royal submits that the condition governing the existence of the power
to refund - a finding of overpayment - specifies the circumstances in
which the power must be exercised. That submission evokes a
consideration of the Act as it stood when s.111(1) was introduced and
the nature of the power conferred by that provision.

8. Section 111(1) was introduced into the Act by the Stamps Act
1978 (Vic.) which commenced on 1 January 1979. Prior to that time,
the general refund provision was to be found in s.111 which read:

" 111. If after any duty has been paid by any company person or firm
of persons under the provisions of this subdivision the Comptroller of
Stamps, on application made to him within twelve months after such
payment, is satisfied that such overpayment has been made shall apply
to the Treasurer of Victoria for a refund to such company person or
firm of persons of the duties overpaid, and the Treasurer shall
without further or other authority than this Act refund the amount
thereof to the company person or firm by whom the overpayment has been
made or to any person acting in its his or their behalf."

This provision, by using the mandatory "shall", cast upon the
Comptroller a duty to apply to the Treasurer for a refund to the party
entitled once the Comptroller was satisfied that an overpayment had
been made and it cast upon the Treasurer a duty to make a refund
accordingly. But these duties could arise only if the party entitled
applied for a refund within 12 months after the overpayment had been
made. Under this provision, the Comptroller had no access to the
Consolidated Fund of Victoria out of which the refund was to be paid.
When the new s.111(1) was introduced, not only was the mandatory term
"shall" replaced by the facultative term "may" in the creation of the
power to refund but the Comptroller was given power to make the refund
directly (68 Presumably s.111(1) operated as an implied appropriation
for the purpose of making refunds. Subsequently, an express
appropriation was provided by s.166D) . Concurrently, the time
limitation was removed. If Royal's submission be correct, the new
s.111(1) imposed on the Comptroller a duty to refund any overpayment,
whether or not there was a legal liability to refund and irrespective
of delay in discovery of the overpayment or in the making of a demand
for a refund. That would be a surprising construction to place on
s.111(1).

9. When the first 1985 amendment was introduced by the Accident
Compensation Act, a duty to make certain refunds was imposed on the
Comptroller and a time limitation for applying for those refunds was
prescribed by s.99(5) and (7). Those provisions read:

" (5) Where a registered company paid an amount in respect of stamp
duty in respect of a premium for workers compensation insurance in
respect of a period commencing before and ending after four o'clock in
the afternoon on 30 June 1985 at a rate of 3.5 per centum of the
premium, that registered company may, before 1 December 1985, apply to
the Comptroller of Stamps in writing in the form approved by the
Comptroller for a refund of stamp duty calculated in accordance with
(a formula which apportioned premiums by reference, inter alia, to the
number of days after 30 June 1985 to which the insurance relates.)

(7) Where an application is made in accordance with sub-sections

(5) and (6), the Comptroller of Stamps shall make a refund to the
applicant accordingly."

10. The first 1985 amendment was itself amended by the second 1985
amendment. The latter amendment deleted the special time limitation
in s.99(5), altered the formula therein contained and provided for
rebates as well as refunds of stamp duty. An express duty to make
refunds and rebates was retained in a new s.99(7). Evidently, it was
not then the legislature's understanding that any duty had been imposed
on the Comptroller by s.111(1) to make a refund once an overpayment was
found to have been made. Had that been the legislature's
understanding, it would not have imposed expressly a duty to refund a
proportion of the stamp duty which, by reason of the 1985 amendments,
had been overpaid. Rather, I would take the legislature to have
intended that, while s.111(1) was the source of the power to make a
refund out of the Consolidated Fund, s.99(7) should be the source of a
particular duty imposed on the Comptroller to make the refund
prescribed by s.99.

11. Subsequently, s.166D of the Act was introduced (69 by the Taxation
Acts (Amendment) Act 1986 (Vic.) s.28, which commenced on 9 December
1986) to provide a standing appropriation for the amounts which "the
Comptroller of Stamps becomes liable to pay ... in accordance with the
provisions of this Act". The Commissioner's liability to pay must be
the source of her duty to refund. That liability cannot arise simply
from her finding that an overpayment has been made. Some overpayments
might be made without the Commissioner's incurring of any liability to
refund - for example, duty paid in compromise of the Commissioner's
claim when it is subsequently discovered that the compromise amount
was, or included, an overpayment of duty. The Commissioner's liability
must arise aliunde, either under statutory provisions other than
s.111(1) or under the general law.
12. In terms, s.111(1) confers a discretionary power on the
Commissioner to refund moneys overpaid out of the Consolidated Fund of
Victoria (in lieu of applying to the Treasurer for the money), but
creates no duty to do so. In other words, once the Commissioner finds
that an overpayment has occurred, there arises a power to make a
refund by withdrawing from the Consolidated Fund an amount which is
limited to the amount found to have been overpaid but which, by reason
of s.166D, does not exceed the amount which the Commissioner is liable
to pay. But no enforceable obligation to make the refund arises merely
from a finding that there has been an overpayment. It is arguable
that, prior to the commencement of s.166D, the Commissioner was
empowered in exercise of her discretion to refund an overpaid amount ex
gratia where there was no legal liability to refund. Presumably,
s.111(1) would have been construed as an implied appropriation. But
the express appropriation of the Consolidated Fund by s.166D is limited
to refunds in discharge of liabilities of the Commissioner. If the
Commissioner is liable to make a refund she is liable "to pay amounts
in accordance with the provisions of this Act", that is, she is liable
to discharge her liabilities in accordance with s.111(1). But she is
under no duty to make a refund unless there be an antecedent liability
to do so. Unless such a liability exists, there is no duty to exercise
the power conferred by s.111(1) nor any authority to do so.

Relief

13. If the Commissioner is under a liability to refund an amount
which she has found to have been overpaid under s.111(1) of the Act,
can she be compelled to perform her duty to do so? The power is
conferred in terms that are broad enough to embrace two situations of
overpayment: one, where there is no legal liability to refund the
overpaid amount; the other, where there is such a liability. In the
former situation, there is nothing in the Act or in the general law
which would create a duty to refund the overpaid amount and s.166D
precludes the Commissioner from making such a payment. In the latter
situation, however, an exercise of the power conferred by s.111(1) of
the Act is the means by which the Commissioner's legal liability is
discharged.

14. Where the Commissioner is liable to refund an amount overpaid
and has power to do so, a refusal to exercise the power can be
judicially reviewed in accordance with the approach stated by Earl
Cairns L.C. in Julius v. Lord Bishop of Oxford (70 (1880) 5 App Cas
214 at 222-223; see per Evatt J. in R. v. Mahony; Ex parte Johnson
[1931] HCA 36; (1931) 46 CLR 131 at 145-148) :
"there may be something in the nature of the thing empowered to be
done, something in the object for which it is to be done, something in
the conditions under which it is to be done, something in the title of
the person or persons for whose benefit the power is to be exercised,
which may couple the power with a duty, and make it the duty of the
person in whom the power is reposed, to exercise that power when
called upon to do so."

The Commissioner is a public officer vested with a power to be
exercised for the purpose, inter alia, of discharging her liabilities.
When the power exists and the circumstances call for the fulfilment
of a purpose for which the power is conferred, but the repository of
the power declines to exercise the power, mandamus is the appropriate
remedy even though the repository has an unfettered discretion in
other circumstances to exercise or to refrain from exercising the power
(71 Padfield v. Minister of Agriculture, Fisheries and Food [1968] UKHL 1; (1968) AC
997 esp. at 1033-1034) . Mandamus will go where there is a duty to pay
money (72 Reg. v. Commissioners for Special Purposes of the Income Tax
(1888) 21 QBD 313 at 322; R. v. Lords Commissioners of Treasury (1835)
4 Ad and E 286 at 294-295 [1835] EngR 1004; (111 ER 794 at 797); Federal Commissioner of
Taxation v. Official Receiver [1956] HCA 24; (1956) 95 CLR 300 at 311-312, 324) . In
this case, there is no residual discretion in the Commissioner to
refrain from making a refund in exercise of her powers under s.111(1)
once she finds that there has been an overpayment and there is a legal
liability to refund the amount found to have been overpaid.

Legal liability to refund

15. Some of the moneys overpaid by Royal were paid under a mistake.
The amounts in items (i) and (ii)(b) were paid under a mistake as to
the existence of a statutory liability to pay; the amount in item
(iii) was paid under a mistake as to the quantum of premiums to be
received or, alternatively, was paid provisionally pending final
determination of the quantum of the premiums actually received. In the
case of the amounts in items (i) and (ii)(b), the Comptroller must be
taken to have known at all material times that the statutory liability
had been repealed and that she had no entitlement to retain these
amounts (73 David Securities Pty. Ltd. v. Commonwealth Bank of
Australia [1992] HCA 48; (1992) 175 CLR 353 at 399) . It would therefore be unjust
that the Commissioner should retain these amounts; they were
recoverable under the general law of restitution. As the amount in
item (iii) was paid on the understanding that the amount paid would be
adjusted when the quantum of the premiums on which the payments of
stamp duty had been calculated became known, the Comptroller was bound
to refund or to allow credit for the amount of the overpayment when
ascertained.

16. However, there was no mistake affecting the payment of the
amount in item (ii)(a). When paid, the Comptroller was entitled -
indeed, she was bound - to retain it. But, by force of the operation
attributed to the 1987 amendment, the Commissioner is retrospectively
disentitled to retain what was paid as stamp duty under the Act as it
had stood before the 1987 amendment commenced. What effect in law
does the 1987 amendment have? If the 1987 amendment is to be
effective retrospectively, the rights and liabilities of the
Commissioner and those who overpaid money must be so altered as to
place them in the same position as they would have been in had the Act
not imposed the stamp duty abolished by the 1987 amendment during the
period of the retrospective operation of the 1987 amendment. In other
words, the Commissioner is bound to refund the amount paid by way of
stamp duty exigible under the Act during the period of the
retrospective operation of the 1987 amendment. It is only by creating
a right to a refund of stamp duty already paid that retrospective
effect can be given to the 1987 amendment. The Commissioner's
liability thus arises directly from the provisions of the Taxation Acts
Amendment Act 1987. I see no reason to treat the Commissioner's
liability to refund the amount in item (ii)(a) as other than statutory.
There is no occasion to invoke notions of common law restitution in
order to discover a cause of action entitling a payer to a refund (74
This case is quite different in principle from Air Canada v. British
Columbia (1989) 59 DLR (4th) 161 and Woolwich Building Society v.
Inland Revenue Commissioners (1993) AC 70 where payments had been made
under statutory provisions that were held to be invalid) .

17. It follows that, prima facie, all of the amounts claimed by
Royal are recoverable. The Commissioner's liability to refund would
have been enforceable by action if it were not for s.111(1) but, as
that provision is clearly intended to prescribe the means by which the
Commissioner's liabilities should be discharged, mandamus is the
appropriate remedy to compel the Commissioner to refund overpayments
which she is legally liable to refund.

18. However, as against the prima facie liability to repay the
entire sum of $1,907,908.10 overpaid, the Commissioner raises two
defences: (1) the windfall gain that Royal would make if the
Commissioner were liable to refund all the money overpaid when Royal
had already received from its policy holders premiums that covered the
amounts paid; and (2) s.20A of the Limitation of Actions Act 1958
(Vic.).

The windfall gain defence

19. The fact that Royal had passed on to its policy holders the
burden of the payments made to the Commissioner does not mean that
Royal did not pay its own money to the Commissioner. The passing on
of the burden of the payments made does not affect the situation that,
as between the Commissioner and Royal, the former was enriched at the
expense of the latter. It may be that, if Royal recovers the
overpayments it made, the policy holders will be entitled themselves
to claim a refund from Royal (75 Mutual Pools and Staff Pty. Ltd. v. The
Commonwealth [1994] HCA 9; (1994) 179 CLR 155 at 177, 191) of so much of the
overpayments made by Royal to the Commissioner as represents the amount
paid to Royal by the policy holder (76 This was the effect of s.99(8)
and (9) of the Act in relation to the particular refunds which the
Comptroller was directed to make to insurers under s.99. The original
sub-sections inserted by the Accident Compensation Act were amended by
the Stamps and Business Franchise (Tobacco) (Amendment) Act 1985:
s.11(3)(a) and (b)) . However that may be, no defence of "passing on"
is available to defeat a claim for moneys paid by A acting on his own
behalf to B where B has been unjustly enriched by the payment and the
moneys paid had been A's moneys (77 Mason v. New South Wales [1959] HCA 5; (1959)
102 CLR 108 at 136, 146; see also Woolwich Building Society v. Inland
Revenue Commissioners (1993) AC at 177-178 and Air Canada v. British
Columbia (1989) 59 DLR (4th), per Wilson J. (diss) at 169-170) .

Time limitations on claims for refunds

20. The Limitation of Actions Act contained a particular provision,
inserted into that Act by the Limitation of Actions (Recovery of
Imposts) Act 1961 (Vic.) (78 s.2. It commenced on 19 December 1961) ,
relating to recovery of money paid as taxes. Section 20A read as
follows:
" (1) No action shall be brought to recover, from the Crown or the
State of Victoria or any Minister of the Crown, or from any
corporation officer or person or out of any fund to whom or which it
was paid, the amount or any part of the amount of any tax, fee, charge
or other impost paid under the authority or purported authority of any
Act, after the expiration of twelve months after the date of payment.

(2) Sub-section (1) of this section shall not apply to any action

or proceeding brought pursuant to any specific provision of any Act
providing for the mode of challenging the validity, or for the
recovery of the whole or any part, of any tax, fee, charge or other
impost actually paid."

No doubt this provision was inserted for the purpose of guarding the
revenue in the event of a taxing statute being held to be ultra vires,
for sub-s.(1) related to taxes paid under the "purported authority of
any Act". But in terms s.20A was not limited to that purpose. It
related also to taxes paid under the actual authority of an Act.
There are some situations where money paid and payable under an Act is
refundable. Federal Commissioner of Taxation v. Official Receiver is
an instance. However, none of the amounts claimed under items (i),
(ii)(b) or (iii) was paid under a provision of the Act which imposed
or purported to impose a duty to pay the amount so paid. An action to
recover any of these amounts would not be barred by s.20A. There is
no time limitation applicable to actions to recover these amounts
except, perhaps, the limitations prescribed by s.5(1) of the Limitation
of Actions Act or applied by analogy to that provision (79 In re
Diplock; Diplock v. Wintle (1948) Ch 465 at 514; Re Croyden; Hincks v.
Roberts (1911) 55 Sol Jo 632. It is therefore unnecessary to consider
the question of the limitation period which might be applicable to a
claim for refund of money paid under a mistake of law (as to which, see
Ministry of Health v. Simpson (1951) AC 251 at 274)) . As the time
limited by s.5(1) is six years from the accrual of the cause of action,
the liability of the Commissioner was not statute barred at the time
when the present proceedings commenced.

21. However, an action to recover the amount in item (ii)(a) would
be an action for recovery of an amount paid under the authority of the
Act, for it was due and owing under the Act at the time when it was
paid. On that account, an action to recover the amount in item
(ii)(a) answers the description of an action falling within s.20A.
But, if s.20A had applied to the payments of stamp duty that had been
made within the retrospective period prescribed by the 1987 amendment,
the 1987 amendment could not have operated to entitle a party to a
refund in respect of stamp duty paid as early as 1 July 1985.
Impliedly, s.20A was excluded by the retrospective operation of the
1987 amendment. The limitation provision applicable to an action to
recover the amount in item (ii)(a) is therefore par.(d) of s.5(1) of
the Limitation of Actions Act, that is, "(a)ctions to recover any sum
recoverable by virtue of an enactment". The limitation period
applicable to such an action is six years from the accrual of the
cause of action.

22. Of course, the application made by Royal is not an action for
the recovery of money; it is for relief in the nature of mandamus.
The relevance of the limitation periods is that they mark the periods
during which a legal liability to refund would have been enforceable
by action, if s.111(1) had not transformed the cause of action into a
right to performance by the Commissioner of her duty to exercise her
power to refund. In the exercise of the Court's jurisdiction to grant
mandamus to compel the Commissioner to discharge her duty by making
refunds under s.111(1), the Court should apply the six-year period of
limitation, refusing relief when proceedings are not brought within
that period. Here, the proceedings were brought within time and an
order compelling the Commissioner to make the refund claimed was
rightly made.

23. The appeal should be dismissed.

DAWSON J. The respondent, Royal Insurance Australia Limited
("Royal"), carried on an insurance business in Victoria. It was
registered under s.96 of the Stamps Act 1958 (Vict.) and was obliged,
in accordance with Pt II, Div.3, Subdiv.11 of that Act, to lodge with
the Comptroller of Stamps monthly returns of premiums received by it.
Under s.97 it was required to pay stamp duties upon those returns.

2. One class of business carried on by Royal was workers
compensation insurance. In 1985 a new scheme, known as WorkCare, was
introduced in Victoria to replace the existing workers compensation
scheme (80 See Accident Compensation Act 1985 (Vict.)) . Under the
new scheme the Accident Compensation Commission became the sole insurer
for workers compensation liabilities and it became necessary to phase
out stamp duties on workers compensation insurance. To this end a
number of sub-sections were added to s.99 of the Stamps Act (81 See
Accident Compensation Act 1985, s.276; Sched.2, "Stamps Act") , the
most significant of which was sub-s.(3) which was as follows:

"For the purposes of section 97, premiums for workers

compensation insurance in respect of the issue, renewal or taking out
of policies that take effect at or after four o'clock in the afternoon
on 30 June 1985 or the extension of which takes effect from that time
are not chargeable with stamp duty."

Sub-section (4) provided for the payment of stamp duty on a pro rata
basis in respect of premiums payable on policies for a period
commencing before and expiring after 30 June 1985. Sub-sections (5)
and (6) provided for application to be made for a refund of stamp duty
previously paid in respect of premiums for workers compensation
insurance for a period commencing before and ending after 30 June
1985: a situation commonly referred to as "straddle". Sub-section
(7) provided:

"Where an application is made in accordance with sub-sections

(5) and (6), the Comptroller of Stamps shall make a refund to the
applicant accordingly."

Sub-sections (8) and (9) provided for the insurance company to pass on
to an insured person any part of the refunded stamp duty which had
been paid by the insured to the insurance company.

3. Further amendments were made to s.99 of the Stamps Act by s.11
of the Stamps and Business Franchise (Tobacco) Amendment Act 1985
(Vict.). New sub-ss.(5) and (6) were inserted providing for
application to be made for a rebate or refund. A substituted
sub-s.(7) was as follows:

"Where an application is made in accordance with sub-section

(5)-

(a) if the application is for a rebate, the amount of the rebate

shall be deducted from the amount payable as stamp duty on a return
lodged with the Comptroller of Stamps under section 97(2) or, if the
amount of the rebate exceeds that amount of stamp duty, from the
amount so payable on two or more returns; and
(b) if the application is for a refund, the Comptroller of Stamps
shall make a refund to the applicant accordingly."

4. In 1987 it was realized that the exemption provided in 1985 did
not cover stamp duty payable in respect of premiums upon a particular
type of workers compensation insurance policy known as a cost plus
policy. Under a cost plus policy the annual premium was paid in
arrears and was recalculated after the close of the relevant period of
insurance so as to form, in effect, a reimbursement of claims made and
paid during that period plus the cost of handling those claims. In
order to extend the exemption from duty to premiums paid upon cost
plus policies, s.99(3) was amended by s.8 of the Taxation Acts
Amendment Act 1987 (Vict.) to embrace premiums received after 30 June
1985 in respect of liabilities incurred before 1 October 1985. The
amendment was made retrospective to 30 June 1985 (82 Taxation Acts
Amendment Act 1987, s.2(4)) . Unlike the 1985 amendment to s.99 which
contained a "straddle" provision, the 1987 amendment exempted from duty
all premiums received after 30 June 1985 in respect of liabilities
insured before 1 October 1985, irrespective of when the liability was
incurred.

5. Royal remained unaware of the 1985 amendments, or of their
significance, for some years. It was also unaware of the 1987
amendments for about two years. It continued to include in its
monthly returns the amounts of premiums which it received in respect of
workers compensation insurance policies issued or renewed after 30 June
1985 and paid stamp duty upon those amounts.

6. It seems that the Comptroller of Stamps (now described as the
Commissioner of State Revenue although it is convenient to continue
describing her here as the Comptroller of Stamps (83 See
Administrative Arrangements Act 1983 (Vict.), s.3(10)(a);
Administrative Arrangements Order (No.106) 1992, Orders 4 and 5 and
Schedule; Victorian Government Gazette, 29 April 1992 at 1003-1004) )
gave advice to Royal which caused it to cease the payment of stamp duty
on workers compensation insurance premiums. It then made a demand for
a refund of the payments of stamp duty which it had made in ignorance
of the statutory provisions and, when the demand was not met, commenced
these proceedings seeking a refund of the relevant amount or,
alternatively, a finding that the respondent had overpaid stamp duty
and a refund of the amount found to have been overpaid. The relief
sought was in the nature of mandamus by way of originating motion.
Royal also sought a declaration that the amount in question had been
overpaid and that it was entitled to a refund of that amount. The
explanation for the alternative relief sought is to be found in
s.111(1) of the Stamps Act which in its form at the relevant time was a
general provision for the refund of overpaid stamp duty. Section
111(1) provided:
"Where the Comptroller finds in any case that duty has been

over-paid, whether before or after the commencement of the Stamps Act
1978 he may refund to the company, person or firm of persons which or
who paid the duty the amount of duty found to be overpaid."

Since these proceedings commenced, s.111(1) has been amended to
provide that the Comptroller "must refund the amount of the overpaid
duty" upon an application made within three years of overpayment (84
Section 111(1) was amended by s.36 of the State Taxation (Amendment)
Act 1992 (Vict.)) .

7. At the time these proceedings were commenced it was the
respondent's belief that the Comptroller had made no finding that duty
had been overpaid. Two days after the commencement of proceedings the
Comptroller made a decision not to refund the overpaid duty. It was
not in dispute before the trial judge or on appeal to the Full Court
of the Supreme Court that an amount of stamp duty in the sum of
$1,907,908.10 had been overpaid by Royal in respect of premiums for
workers compensation insurance and that the Comptroller had decided
not to refund any part of that amount.

8. The overpaid duty comprises three amounts. The first amount is
$1,674,301.94 paid in respect of premiums received by Royal for cost
plus policies. This amount may be divided into a figure of
approximately $1,370,000 by way of duty paid on premiums received
during the period from 30 June 1985 to the commencement date of the
legislation which retrospectively removed the liability to pay duty in
respect of that period and a figure of approximately $300,000 paid by
way of duty on cost plus premiums subsequently received, being paid by
Royal in ignorance of the 1987 repeal of duty on cost plus premiums.

9. The second amount is $95,426.95 overpaid by Royal upon
overestimates of premiums for cost plus policies received by it before
1 July 1985 in respect of liabilities incurred up to 1 October 1985.
These payments in respect of overestimates were never owing under the
system which prevailed and would have been the subject of an
adjustment when identified even if the amendments to the legislation
had not taken place in 1985 and 1987.

10. The third amount is $138,179.21 paid as duty on premiums
received by Royal for extensions after 4.00 pm on 30 June 1985 of
policies (other than cost plus policies) taken out before that date.

11. Royal was unsuccessful before the trial judge, who reached the
conclusion that the use of the word "may" in s.111(1) gave the
Comptroller a discretion whether or not to refund overpaid tax. The
Full Court on appeal came to a contrary conclusion, holding that the
context in which the power to refund overpayment of stamp duty was
given to the Comptroller called for its exercise when the requirement
upon which its exercise was conditioned - a finding of overpayment by
the Comptroller - was satisfied. I am of the view that the Full Court
was correct in reaching that conclusion.

12. The predecessor of s.111(1) first appeared as s.34 of the Stamps
Act 1892 (Vict.) and was as follows:

"If after any duty has been paid under the provisions ...

relating to annual licences it shall be found within three months
after the payment of such duty that too much duty has been paid the
Collector of Imposts shall upon being satisfied that such overpayment
has been made apply to the Treasurer of Victoria for a refund to such
company person or firm of persons of the duties overpaid, and the
Treasurer shall without further or other authority than this Act refund
the amount thereof to the company person or firm by whom the
over-payment has been made or to any person acting in its his or their
behalf."
It is to be noted that, under this provision, once he was satisfied
that an overpayment had been made, the Collector of Imposts had no
discretion whether to apply to the Treasurer for a refund: he was
required to do so. And the Treasurer was required to make the refund.
There was, however, a time limit for making an application for a
refund. This provision remained unchanged in substance in successive
re-enactments of the Stamps Act, including several consolidations,
until 1958 when it appeared as s.111 in the following form:

"If after any duty has been paid by any company person or firm

of persons under the provisions of this subdivision the Comptroller of
Stamps, on application made to him within twelve months after such
payment, is satisfied that such overpayment has been made shall apply
to the Treasurer of Victoria for a refund to such company person or
firm of persons of the duties overpaid, and the Treasurer shall
without further or other authority than this Act refund the amount
thereof to the company person or firm by whom the overpayment has been
made or to any person acting in its his or their behalf."

Again, neither the Comptroller of Stamps nor the Treasurer had any
discretion once the Comptroller was satisfied that an overpayment had
been made: the steps resulting in a refund were required to be taken.

13. By an amendment made in 1978 the provision was recast to appear
in the form which is relevant to these proceedings. That form is to
be found in previous legislation, both Commonwealth and State (85 See
Pay-roll Tax Assessment Act 1941 (Cth), s.24; Pay-roll Tax Act 1971
(Vict.), s.19) . There is nothing in the explanatory memorandum
accompanying the 1978 legislation to suggest an intention to convert
the obligation imposed by the previous provisions into a discretion to
refund overpayments and if such a significant change in policy were
intended, it might be expected to have received some attention. What
is evident is that the new provision was intended to remove the
requirement that the Comptroller of Stamps should make application to
the Treasurer for the refund of overpayments and to allow the
Comptroller herself to make the refund. In that context the use of the
word "may" is explicable in terms of enabling the Comptroller to do
something which she was previously unable to do, rather than in terms
of replacing an obligation with a discretion.

14. The word "may" is frequently merely facultative, leaving open
the question whether the faculty bestowed must be exercised when the
occasion prescribed for its exercise has occurred or whether its
exercise is discretionary. The answer to that question is to be
determined by reference to the nature of the provision and its context
in the relevant legislation (86 See Ward v. Williams [1955] HCA 4; (1955) 92 CLR 496
at 505-506) . As Lord Selborne said in Julius v. Lord Bishop of Oxford
(87 (1880) 5 App Cas 214 at 235) :
"The question whether a Judge, or a public officer, to whom a power is
given by such words, is bound to use it upon any particular occasion,
or in any particular manner, must be solved aliunde, and, in general,
it is to be solved from the context, from the particular provisions,
or from the general scope and objects, of the enactment conferring the
power."

15. In Finance Facilities Pty. Ltd. v. Federal Commissioner of
Taxation (88 [1971] HCA 12; (1971) 127 CLR 106 at 134) Windeyer J. pointed out that
the word "may", when used of a person having an official position, "is
a word of permission, an authority to do something which otherwise he
could not lawfully do". But the word "may" merely confers the
authority and whether the authority must be exercised in the prescribed
circumstances or whether its exercise is discretionary depends upon the
nature of the authority itself (89 See Macdougall v. Paterson [1851] EngR 970; (1851)
11 CB 755 (138 ER 672)) .

16. The condition prescribed for the exercise of the authority
conferred by s.111(1) is a finding of overpayment and it is, in my
view, not to be concluded that when such a finding is made there is a
discretion conferred, rather than a duty imposed, upon the Comptroller
to refund the overpayment. Section 111(1) is a remedial provision
and, even without an historical explanation, it should be construed, so
far as its language will allow, to the advantage of those whom it was
intended to benefit (90 See Bull v. Attorney-General for New South
Wales [1913] HCA 60; (1913) 17 CLR 370 at 384 per Isaacs J) . But when regard is had
to the history of the provision, I do not think that it is possible to
regard the section as replacing a previous obligation to refund
overpayments with a discretion, particularly when the use of the word
"may" is wholly explicable by an evident desire to confer upon the
Comptroller an authority which was previously exercisable only by the
Treasurer. To borrow the words of Windeyer J. in Finance Facilities
Pty. Ltd. v. Federal Commissioner of Taxation (91 (1971) 127 CLR at
134) , the scope of the permission or power given to the Comptroller is
circumscribed in this instance both by context and circumstances.

17. No significance can be attached to the use of the word "shall"
in s.99(7) of the Stamps Act in relation to the making of a refund in
both that sub-section's original and amended forms. Sub-section (7)
(which does not apply in the present case) was added in 1985 after the
commencement of the Interpretation of Legislation Act 1984 (Vict.).
Section 45 of that Act provides that, where in an Act passed after the
commencement of the Interpretation of Legislation Act the word "may"
is used in conferring a power, that word shall be construed as meaning
that the power so conferred may be exercised, or not, at discretion,
and, where in such an Act the word "shall" is used in conferring a
power, it shall be construed as meaning that the power must be
exercised. Section 45 has no application to s.111(1) in its relevant
form which pre-dates the Interpretation of Legislation Act, but it
serves to explain the choice of the word "shall" in s.99(7).

18. The Comptroller argued that a number of considerations might
justify her withholding a refund of overpaid stamp duty and submitted
that the possibility of these situations arising explains why it was
the intention of the legislature in s.111(1) to confer a discretion
rather than impose an obligation. Chief among these considerations -
indeed it was said in argument to be the relevant consideration in
this case - was the impossibility of ensuring that, where the duty had
been passed on to some other person, any refund should be similarly
passed on. It was said in the present case that the unlikelihood of
Royal's passing on any refund would result in a windfall to it because
the burden of the duty had in fact been borne by its customers. But
that is a situation for which the legislature might have provided had
it wished to do so and its failure to do so does not indicate an
intention to give to the Comptroller a discretion to retain payments of
stamp duty which were not made pursuant to any legal obligation.
Section 99(8) and (9) when enacted in 1985 provided for an insurance
company to pass on the amount of any refund to those who actually bore
the burden of the overpayment and, indeed, a provision such as s.111(1)
is capable of adaptation to meet that situation. An example is
provided by s.26(1) of the Sales Tax Assessment Act (No.1) 1930 (Cth)
which, as amended in 1933, provided:

"Where the Commissioner finds in any case that tax has been

overpaid and is satisfied that the tax has not been passed on by the
taxpayer to some other person, or, if passed on to some other person,
has been refunded to that person by the taxpayer, the Commissioner may
refund the amount of tax found to be overpaid."
The absence of any qualification of this kind in s.111(1) suggests to
my mind an obligation to refund the overpaid duty rather than a
discretion to withhold repayment in situations which the legislature
might have specified but did not.

19. It must be borne in mind that the occasion for the exercise of
the authority conferred by s.111(1) is the finding of an overpayment
of stamp duty; that is to say, a finding that the Comptroller received
moneys to which she had no entitlement. The sub-section must be read
either as requiring her to refund the overpayment or as conferring a
discretion upon her to keep the moneys notwithstanding that she had no
entitlement to receive them. The principle that a statute will not be
read as authorizing expropriation without compensation unless an
intention to do so is clearly expressed has been described as a
"firmly established rule of law" (92 See C.J. Burland Pty. Ltd. v.
Metropolitan Meat Industry Board [1968] HCA 77; (1968) 120 CLR 400 at 406 per Kitto J).

It is at least an analogous proposition that clear words are

required to authorize the retention of moneys received without any
entitlement and I, for my part, would not construe a statute as
conferring a discretion to do so unless such an intention were made
explicit.

20. Nor do I think it can be said that s.111(1) confers a discretion
which must then be exercised in accordance with the law relating to
restitution, for that would be to confer no discretion at all.
Clearly the sub-section authorizes the making of a refund, and is not
confined merely to conferring capacity upon the Comptroller should she
otherwise be under a duty to do so. The occasion for the exercise of
the authority is identified. The only question which arises is whether
the authority must be exercised when the necessary finding of
overpayment has been made or whether its exercise is discretionary. If
the common law, rather than the sub-section, were to govern the
Comptroller's obligation to make a refund, then no doubt a refund would
now be required. That would be the result of applying the decision of
this Court in David Securities Pty. Ltd. v. Commonwealth Bank of
Australia (93 [1992] HCA 48; (1992) 175 CLR 353) where it was held that the
principle of restitution upon the basis of unjust enrichment extends to
moneys paid under a mistake of law as well as moneys paid under a
mistake of fact. However, as the law stood, or at least was believed
to have stood, before David Securities, moneys paid under a mistake of
law were not recoverable and Royal was not entitled to recover upon the
basis of a mistake of law. And, if the common law of restitution
governed the Comptroller's obligation under s.111(1), that result must
have been intended by the legislature, because s.111(1) came into force
before the decision in David Securities and the legislature cannot be
taken to have anticipated that decision.
21. Moreover, assuming that the common law was intended to govern
the Comptroller's obligations under s.111(1) and even assuming that
the effect of that sub-section changed following David Securities, the
bulk of Royal's claim was not paid under a mistake of law or fact. Of
the total amount of $1,674,301.94, some $1,370,000 was paid in respect
of premiums received for cost plus policies between 30 June 1985 and
the commencement of the retrospective legislation in 1987. That amount
of duty was payable according to law at the time it was paid and only
became an overpayment when the legislation was retrospectively
amended. It does not seem to me that the retrospective amendment
converted the payments of duty making up the amount of $1,370,000 into
payments made under a mistake of law, however much the amendment
retrospectively removed the Comptroller's entitlement or authority to
receive those payments. As Deane J. observed in University of
Wollongong v. Metwally (94 [1984] HCA 74; (1984) 158 CLR 447 at 478) :

"A parliament may legislate that, for the purposes of the law

which it controls, past facts or past laws are to be deemed and
treated as having been different to what they were. It cannot,
however objectively, expunge the past or 'alter the facts of
history'".

It need hardly be added that the legislation in question did not deem
the payments made by Royal to have been made under a mistake of fact
or law.

22. No question such as that which arose in Air Canada v. British
Columbia (95 (1989) 59 DLR (4th) 161) would arise in the present case.
In the Canadian case a majority of the Supreme Court held that, whilst
moneys paid under a mistake of law might be recovered upon the basis of
unjust enrichment, that doctrine did not extend to moneys paid under
unconstitutional legislation. No question of unconstitutionality
arises in this case. The application of the common law would also
raise the question whether the principle of unjust enrichment can be
invoked when moneys paid under a mistake of fact or law constitute an
expense which has been passed on to someone else, as the respondent
insurer is said to have passed on the overpayments of stamp duty to its
insured in this case. The better view would seem to be that it is the
unjust enrichment of the payee rather than loss suffered by the payer
which should govern entitlement to restitution, but, having regard to
the view which I take, it is unnecessary to determine that question in
these proceedings.

23. Were the Comptroller to be governed by the common law rather
than s.111(1) with regard to her obligation, if any, to refund the
overpaid stamp duty, the remedy available to the respondent would be
of a quite different nature. The respondent would then have an action
for money had and received based upon a right to restitution. On the
other hand, were the Comptroller's exercise of her authority
discretionary under s.111(1), the remedy available to Royal would be
confined in the first place to requiring the Comptroller to exercise
her discretion and then to contesting the validity of its exercise by
way of judicial review. The confined grounds upon which an
administrative decision may be reviewed by a court would preclude the
substitution of a decision based upon restitutionary principles. Of
course, a court would require the discretion to have been exercised
having regard to the scope and purpose of the relevant legislation and
to be within the confines formulated in Associated Provincial Picture
Houses Ltd. v. Wednesbury Corporation (96 [1947] EWCA Civ 1; (1948) 1 KB 223) with regard
to reasonableness. But that is something different from an application
of the common law relating to restitution. That may be seen from the
decision in Reg. v. Tower Hamlets London Borough Council; Ex parte
Chetnik Developments Ltd. (97 (1988) AC 858) where it was held that
the purpose of legislation, which conferred a discretion upon a borough
council to refund overpaid rates, extended to the repayment of rates
paid under a mistake of law. The exercise by the council of its
authority was, however, discretionary notwithstanding that it was to be
governed by the scope and purpose of the legislation in question, as
well as the principle of reasonableness as applied to administrative
discretions. True it is that Lord Goff of Chieveley pointed out that
the general principles of the law of restitution should be of
assistance in the exercise of the discretion, but it is clear that he
did not regard those principles as necessarily determining the
outcome.

24. However, as I have said, I do not regard s.111(1) as conferring
a discretion. Once the Comptroller found that duty had been overpaid,
she was under an obligation to refund it. The necessary appropriation
to enable her to do so was to be found in s.166D of the Stamps Act
which provided:

"If the Comptroller of Stamps becomes liable to pay amounts in
accordance with the provisions of this Act, those amounts shall be
paid from the Consolidated Fund which is hereby to the necessary
extent appropriated accordingly."

It may observed that, in the light of s.166D, if the Comptroller's
obligation to refund overpaid tax were dependent upon the common law,
there would seem to be no work for s.111(1) to do and its existence
would be superfluous.

25. It is necessary then to turn to s.20A(1) of the Limitation of
Actions Act 1958 (Vict.). That sub-section provides (98 A new s.20A
has since been substituted into the Limitation of Actions Act 1958
(Vict.) by s.4 of the Limitation of Actions (Amendment) Act 1993
(Vict.)) : "No action shall be brought to recover, from the Crown or
the State of Victoria or any Minister of the Crown, or from any
corporation officer or person or out of any fund to whom or which it
was paid, the amount or any part of the amount of any tax, fee, charge
or other impost paid under the authority or purported authority of any
Act, after the expiration of twelve months after the date of payment."

26. It was pointed out on behalf of Royal that s.20A was inserted in
the Limitation of Actions Act in 1961 to afford protection to the
State of Victoria against its taxing Acts being found to be
unconstitutional (99 cf. Mason v. New South Wales [1959] HCA 5; (1959) 102 CLR 108).

However, even accepting that to be the reason for the legislation,

its ambit clearly extends beyond taxes paid under unconstitutional
legislation and there is no occasion to read down its express words in
that regard. Nevertheless, the sub-section is confined to taxes etc.
paid "under the authority or purported authority of any Act" and those
words are not apt to describe the overpayment of duty in this case.
Accepting, as I do, that the retrospective legislation in 1987 removed
any requirement to pay or authority to receive duty on premiums
received in respect of cost plus policies during the period from 30
June 1985 until the commencement of the legislation, none of the duty
overpaid by Royal could be described as paid "under the authority or
purported authority of any Act". There simply was no Act conferring or
purporting to confer authority with respect to the duty overpaid by
Royal. Assuming, without deciding, that s.20A(1) was capable of
applying, directly or indirectly, in proceedings by way of judicial
review, that sub-section had no application in the circumstances of
this case. It was not contended that any limitation period otherwise
prescribed by the Limitation of Actions Act had any application in the
present circumstances.

27. For these reasons, I would dismiss the appeal.

TOOHEY J. For the reasons given by Brennan J., the appeal should be
dismissed.

McHUGH J. I agree that the appeal should be dismissed for the
reasons given by Brennan J.

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