BELL AND GORDON JJ. The respondent in each appeal, an owner of two adjoining properties ("the taxpayer"), was assessed for land tax under the Land Tax Act 1958 (Vic) ("the LTA"). Each assessment for the years 1990 to 2002, with which these appeals are concerned, listed those two adjoining properties at the relevant date: one described as "2 Ottawa Rd, Toorak, 3142" and the other as "65 Albany Rd, Toorak, 3142". Each assessment was paid. In December 2007, the adjoining properties were transferred to a related company, Streetriver Pty Ltd. Streetriver was assessed for land tax for the years 2008 to 2011.
On 23 March 2012, a senior revenue officer of the appellant, the Commissioner of State Revenue ("the Commissioner"), informed Streetriver that an error had been detected in the 2008 to 2011 assessments. The error was that the valuation that was applied for land tax purposes to 2 Ottawa Road encompassed both 2 Ottawa Road and 65 Albany Road. The property listed in the 2008 to 2011 assessments as "65 Albany Rd, Toorak, 3142" had been the subject of land tax twice - it was a "duplicate property". The Commissioner issued a refund cheque in favour of Streetriver for excess land tax paid for the years 2008 to 2011.
The taxpayer subsequently formed the view that the 1990 to 2002 assessments, issued to it before it transferred the properties to Streetriver, contained the same duplication error. The taxpayer sought to lodge objections to those assessments under s 24A of the LTA. By that time, the time limit for making those objections under the LTA had expired. The Commissioner refused to consider the objections. The taxpayer requested that the Commissioner issue amended assessments for those years pursuant to s 19 of the LTA. That request was refused by the Commissioner. A delegate of the Commissioner wrote to the taxpayer on 15 August 2013 in the following terms:
"The decision of the Commissioner is not to make any amendment to the assessments.
The discretion conferred by section 19 must be exercised having regard to [the] subject matter, scope and purpose of the [LTA] as a whole. The primary reason for the Commissioner's decision is that, whether or not each of the assessments were now amended as requested, and even putting to one side the fact that no objection was lodged in accordance with section 24A, [the taxpayer] would not be entitled to the consequential relief sought; that is, pursuant to section 90AA of the [LTA], [the taxpayer] would still not be entitled to the refund it seeks."
Section 90AA of the LTA relevantly provided that proceedings "for the refund or recovery of tax paid under, or purportedly paid under," the LTA (including proceedings seeking relief in the nature of mandamus) must not be brought against the Commissioner, or otherwise, unless an application for refund of the payment was lodged with the Commissioner within three years of the payment being made.
In 2013, the taxpayer commenced two proceedings against the Commissioner in the Supreme Court of Victoria - the first by an originating motion seeking mandamus "on judicial review" directing the Commissioner to issue amended assessments and to refund to the taxpayer the land tax overpaid for the years 1990 to 2002, being $363,680 ("the excess amount"), with interest, and the second by a writ indorsed with a statement of claim seeking restitution of the excess amount with interest.
The primary judge (Sloss J) dismissed the proceeding commenced by originating motion and, in relation to the proceeding commenced by writ, entered judgment for the Commissioner and otherwise dismissed the proceeding. The taxpayer sought leave to appeal in both proceedings to the Court of Appeal of the Supreme Court of Victoria.
The Court of Appeal (Hansen and Tate JJA and Robson AJA) granted leave and allowed each appeal. The Court of Appeal's reasoning was to the effect that:
(1) The Commissioner's duplication error for the years 1990 to 2002 deprived the Commissioner of any authority to retain the excess amount of land tax, with the result that the excess amount was not land tax within the meaning of the LTA.
(2) Despite the discretionary terms of the Commissioner's power under s 19 of the LTA to amend an assessment, the Commissioner knew that alterations to the 1990 to 2002 assessments were necessary to ensure their completeness and accuracy, and that knowledge enlivened his statutory duty to exercise the power under s 19. When enlivened, the statutory duty could only be exercised one way - to amend the assessments and to give effect to the amendments by way of refund.
(3) Section 90AA of the LTA did not limit or affect the Commissioner's power under s 19 to amend an assessment or give effect to an amended assessment by refunding an amount that the Commissioner has declared by the amended assessment not to be land tax, as s 19 of the LTA was an "integrity mechanism" integral to the statutory scheme of the LTA, which did not circumvent the objection and refund regime of the LTA.
(4) The Commissioner's refusal to issue amended assessments to the taxpayer in respect of the 1990 to 2002 years, in circumstances where he knew they were inaccurate, amounted to conscious maladministration by the Commissioner, as it constituted a "wilful refusal" to perform his "duty" under s 19 "without good reason or justification". That manifested a jurisdictional error, for which relief in the nature of mandamus was available.
Despite the express terms of s 90AA, the Court of Appeal held that the taxpayer was entitled not only to bring the two proceedings but also to an order in the first proceeding in the nature of mandamus directing the Commissioner to issue amended assessments to the taxpayer for the years 1990 to 2002 and to repay the excess amount to the taxpayer. The Court of Appeal also ordered interest under s 58 of the Supreme Court Act 1986 (Vic) on the excess amount from the date of each payment comprising the excess amount and compound interest on the excess amount from 15 August 2013, as well as costs.
The Commissioner appeals to this Court against the orders in both proceedings. The Commissioner's appeals should be allowed with costs.
The Court of Appeal's analysis was contrary to the text, context and purpose of the LTA. In particular, both proceedings were precluded by the express terms of s 90AA of the LTA. Further, as these reasons will demonstrate, the amendment power given to the Commissioner in s 19 of the LTA is discretionary; it is not a power that, upon satisfaction of certain conditions, must be exercised. What the Court of Appeal identified as the purpose of that power - "completeness and accuracy" of assessment to ensure the integrity of the system of collection of land tax - is properly to be determined by reference to the operation of all of the provisions of the LTA.
Questions of conscious maladministration did not arise in this case. There was no basis for finding that there had been conscious maladministration.
Legislative framework of the LTA
These appeals concern the imposition of land tax under the LTA. As this Court has said many times, the starting point in construing a statute is the statutory text; no less is that so for the LTA.
The LTA was an Act "to consolidate the Law" providing for a tax on land and for assessment of land. Land tax was "assessed charged levied and collected" by the Commissioner each year on the total unimproved value of all land owned by a land owner.
The structure of the LTA was not unlike other taxing statutes. It provided for both the imposition of tax on a taxpayer (here, an owner of land) and the assessment of that tax, it set out procedures for a taxpayer to object to an assessment and to seek review of the Commissioner's decision on that objection, and it contained provisions for the Commissioner to recover the land tax assessed and payable irrespective of those procedures of objection and review.
The Commissioner's powers to assess both the land tax on land owned by a land owner and the land tax payable by that land owner were addressed in ss 17 to 19 of the LTA. Section 17 provided the Commissioner's general assessing power - the power to cause an assessment to be made of the taxable value of land owned by any taxpayer and of the land tax payable. Section 18, which is not relevant to these appeals, provided that the Commissioner had the power to make a "default assessment" of land tax in certain circumstances.
Section 19, which is central to the taxpayer's contentions, dealt with the Commissioner's power to issue amended assessments and provided:
"The Commissioner may from time to time amend an assessment by making such alterations or additions to it as he thinks necessary to ensure its completeness and accuracy, and shall notify to the taxpayer affected every alteration or addition which has the effect of imposing any fresh liability or increasing any existing liability and unless made with the consent of the taxpayer every such alteration or addition shall be subject to objection in the same manner and to the same extent as the original assessment but the validity of an assessment shall not be affected by reason only that any of the provisions of [the LTA] have not been complied with."
It will be necessary to return to consider this section in greater detail later in these reasons. Before doing so, it is necessary to complete the review of the scheme of the LTA.
Section 20(1) was a conclusive evidence provision, similar to those in federal income tax legislation. It relevantly provided that production of an assessment was "conclusive evidence of the due making of the assessment" and, except in proceedings on review or appeal against the assessment, "conclusive evidence that the amount and all the particulars of the assessment are correct".
Once an assessment was made, s 21(1) provided that the Commissioner was required to serve "notice in writing of the assessment" on the taxpayer.
A taxpayer who was dissatisfied with an assessment of land tax "charged, levied and collected" under the LTA had up to 60 days after service of the notice of assessment to lodge a written objection with the Commissioner that stated "fully and in detail the grounds on which [the taxpayer] relies" (emphasis added). The Commissioner was required to give the taxpayer written notice of his decision on that objection.
If the taxpayer was dissatisfied with the Commissioner's decision on that objection, s 25(1) provided that the taxpayer could, within 60 days after being given notice of the objection decision, request the Commissioner either to refer the decision to the Victorian Civil and Administrative Tribunal for review, or to treat the taxpayer's objection as an appeal and have it set down for hearing in the Supreme Court of Victoria. The procedures to be adopted in proceedings on references and appeals were then set out in ss 26 to 29 of the LTA.
Land tax for each year was due and payable on the date stated in the notice of assessment. Once assessed, every sum payable for tax was deemed to be a debt due to Her Majesty by the land owner and was required to be paid to the Commissioner. The tax was recoverable by the Commissioner on behalf of the Crown in right of Victoria regardless of whether the taxpayer had lodged an objection or had exercised its rights of review or appeal. If an assessment was subsequently altered on objection or because of a review or appeal, an assessment was to be made, excess amounts refunded and amounts short-paid recovered as arrears. No statute of limitations barred or affected any action or remedy for recovery of tax.
It is apparent from these provisions that the scheme of the LTA was to raise revenue and to provide certainty of that revenue to the State of Victoria. Other provisions of the LTA reinforced that scheme. In particular, s 90AA, headed "Refund of tax", prescribed a three year time limit on taxpayers seeking a refund of, or to recover, land tax paid. It provided:
"(1) Proceedings for the refund or recovery of tax paid under, or purportedly paid under, [the LTA] … must not be brought, whether against the Commissioner or otherwise, except as provided in this section.
(2) If a person claims to be entitled to receive a refund of or to recover tax paid under, or purportedly paid under, [the LTA], the person must lodge with the Commissioner within 3 years after the payment was made an application in the prescribed form for the refund of the payment.
(3) If -
(a) a person has lodged an application for the refund of an amount in accordance with sub‑section (2); and
(b) the Commissioner has not, within the period of 3 months after the application was lodged -
(i) refunded the amount; or
(ii) applied the amount in accordance with sub‑section (6)(d); or
(iii) refunded part of the amount and applied the remainder in accordance with sub-section (6)(d) -
or has, in writing given to the person within that period, refused to make a refund, the person may, within 3 months after the end of that period or after that refusal, whichever first occurs, bring proceedings for the recovery of the amount, or, if the Commissioner has refunded or applied part, the remainder of the amount.
(4) Sub-section (3) applies whether or not the period for bringing proceedings for the refund or recovery of the amount prescribed by section 20A(1) of the Limitation of Actions Act 1958 has expired.
(5) Sub-sections (1) and (2) do not apply to a person if the person claims to be entitled to receive a refund or to recover tax paid under, or purportedly paid under, [the LTA] by reason of the invalidity of a provision of [the LTA].
(6) If -
(a) an application for a refund is lodged with the Commissioner in accordance with sub‑section (2); and
(b) the Commissioner finds that an amount has been overpaid by the applicant -
the Commissioner -
(c) must refund the overpaid amount; or
(d) must -
(i) apply the overpaid amount against any liability of the applicant to the State, being a liability arising under, or by reason of, an Act of which the Commissioner has the general administration; and
(ii) refund any part of the overpayment that is not so applied.
(7) If, under this section, the Commissioner determines to refund an amount, the amount is payable from the Consolidated Fund which is to the necessary extent appropriated accordingly.
(8) In this section, 'proceedings' includes -
(a) seeking the grant of any relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction; or
(b) seeking any order under the Administrative Law Act 1978." (emphasis in italics added)
Some particular aspects of s 90AA should be noted at the outset. The three year time limit on taxpayers seeking the refund or recovery of land tax included any such proceeding seeking "relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction" or orders under the Administrative Law Act 1978 (Vic). That s 90AA was intended to operate in that manner is apparent from s 92A of the LTA, which expressly acknowledged that s 90AA limited the jurisdiction of the Supreme Court of Victoria by providing that "[i]t is the intention of this section to alter or vary section 85 of the Constitution Act 1975 to the extent necessary to prevent the Supreme Court entertaining proceedings of a kind to which section 90AA(1) applies, except as provided in that section".
Next, the three year time limit on taxpayers seeking the refund or recovery of land tax was in respect of not only land tax "paid under" the LTA but also land tax "purportedly paid under" the LTA. However, as s 90AA(5) provided, the time limit did not apply if a person claimed to be entitled to receive a refund or to recover tax paid under, or purportedly paid under, the LTA by reason of the invalidity of a provision of the LTA. That carve out is significant. The legislature explicitly set out limited circumstances in which the time limit would not apply.
Finally, s 90AA(7) provided that "[i]f, under this section, the Commissioner determines to refund an amount, the amount is payable from the Consolidated Fund which is to the necessary extent appropriated accordingly" (emphasis added). That was the only appropriation in the LTA.
Relevant legislative history of s 90AA
That s 90AA operated to impose a time limit on taxpayers seeking the refund or recovery of land tax and to otherwise limit the jurisdiction of the Supreme Court of Victoria with respect to those claims, and was intended to do so, is also apparent from its legislative history. The LTA contained provisions similar to s 90AA when it was enacted as a consolidating Act in 1958. At that time, s 90(3) required applications for refunds to be made within three years from the date of the overpayment, or within three months of a decision in respect of an objection.
In 1974, s 90(3) - and sub-ss (2) and (4) - were repealed and replaced by a new s 90(2), which had the effect of removing any time limit by which applications or proceedings needed to be lodged or commenced respectively, and instead allowed the Commissioner to refund tax where he found "in any case that tax has been overpaid". In the Second Reading Speech for the amending Bill, the then Premier and Treasurer stated that "[t]he time limit has on occasions led to the unfortunate situation in which a taxpayer had overpaid land tax, not discovered the overpayment until some time afterwards, and been subsequently debarred by sub‑section (3) of section 90 from obtaining a refund".
In 1992, however, a new s 90(2) was substituted to re-impose a three year time limit, beginning from the date of overpayment, within which an application for a refund was to be lodged. That amendment was made in response to the decision of the Full Court of the Supreme Court of Victoria in Royal Insurance Australia Ltd v Comptroller of Stamps (Vic). In the Second Reading Speech for the amending Bill, the then Treasurer stated that:
"The Full Court of the Supreme Court of Victoria has recently decided that a refund provision in the Stamps Act places an obligation on the commissioner to refund overpaid duty in all circumstances. The commissioner is seeking special leave to appeal the decision to the High Court. If special leave is denied or if the appeal is eventually dismissed by the High Court, under existing refund provisions the commissioner will be obliged to refund amounts overpaid no matter how long ago the overpayment occurred.
The government considers that taxpayers who have overpaid tax or duty are entitled to a refund of that tax or duty. However, there must be a point in time in which taxation matters are finalised. The amendments proposed by the Bill ensure that taxpayers are entitled to refunds of tax or duty overpaid up to three years before the date the application for a refund is lodged with the State Revenue Office."
Then, in 1993, s 90(2) was repealed and ss 90AA and 92A were inserted. The Second Reading Speech for that amending Bill recorded that the sections were inserted to address claims by members of the legal community that taxpayers could "take action outside the statutory refund scheme to recover overpaid taxes dating back more than three years, under the common law". The then Treasurer stated that the concern was that if that "argument were accepted by the courts the intention of the 1992 legislation would be frustrated". The amendments were therefore intended to "apply to proceedings which seek to use administrative law procedures to require things to be done which may result in a refund, as well as to proceedings which seek a refund directly".
In the same Second Reading Speech, the then Treasurer also stated that, by inserting s 92A, the Parliament intended to alter the Constitution Act 1975 (Vic) to limit the jurisdiction of the Supreme Court of Victoria so that:
"refunds of overpaid ... land tax ... - other than refunds claimed on the grounds of invalidity of provisions in [the LTA] - are only to be made where the person seeking the refund has lodged an application for the refund with the Commissioner of State Revenue within three years of the date of the overpayment. The purposes of [provisions of the Bill that, amongst other things, inserted s 90AA] would not be achieved if the Supreme Court could entertain an action seeking such a refund notwithstanding that no application for a refund had been lodged with the commissioner within three years of the overpayment."
At the same time, the Limitation of Actions Act 1958 (Vic) ("the Limitation Act") was amended to make clear that the one year limitation period for the commencement of proceedings seeking a refund of a tax payment in that Act, which had existed for many years, continued to apply unless another Act (such as the LTA) specifically provided for a longer period within which proceedings may be commenced. At that point, the limitation period prescribed in the LTA for the commencement of proceedings seeking a refund was three years from the date of payment.
The legislative history reveals that, over the lifespan of the LTA, the legislature balanced the interests of taxpayers and the Commissioner in different ways at different points in time. But there is no doubt that the 1992 and 1993 amendments were intended to provide certainty to the revenue. To reiterate what the then Treasurer said in 1992: "there must be a point in time in which taxation matters are finalised".
Conclusion as to the LTA scheme
The scheme of the LTA was that, once an assessment was made by the Commissioner, the amount specified in that assessment would become a debt, payable as land tax on the date specified in the assessment for payment. That amount remained payable for land tax on the date specified in the assessment even if the assessment was challenged by a taxpayer who was dissatisfied with an assessment and who served an objection on the Commissioner in accordance with the LTA. The fact that an objection was pending did not affect the assessment, and the tax assessed could be recovered by the Commissioner as if no objection had been served by the taxpayer. The provisions of the LTA that dealt with collection and recovery of land tax constituted a scheme that covered the field and "implement[ed] a long-standing legislative policy to protect the interests of the revenue", the operation of which may, in some cases, be harsh.
Issues
It is against that legislative framework that the decision of the Court of Appeal, sought to be upheld by the taxpayer, is to be considered.
It is appropriate to consider the reasoning of the Court of Appeal by assessing the four propositions set out above. That involves considering four issues - whether the excess amount was "tax paid" under the LTA; the proper construction of s 19 of the LTA; whether s 90AA applied to preclude the taxpayer bringing either of the proceedings; and the finding of conscious maladministration. Finally, it will be necessary to consider the appropriate relief, if any, that ought to have been granted to the taxpayer.
The excess amount was "tax paid" under the LTA
For each year from 1990 to 2002, the Commissioner "assessed charged levied and collected" land tax on the properties that the taxpayer owned. Each assessment of land tax was made by the Commissioner under s 17 of the LTA. Each amount assessed was a "sum payable" for land tax by the taxpayer under s 39 of the LTA. Every sum payable for land tax, when it fell due, was a debt due to Her Majesty and that debt was payable to and recoverable by the Commissioner, whether or not the taxpayer had made an objection on the grounds that the amount assessed was excessive or the amount in fact exceeded the value of the land upon which the assessment was based. An amount paid in answer to an assessment - and there is no dispute in these appeals that the taxpayer paid the amount assessed in answer to each assessment for the years 1990 to 2002 - was "tax paid under, or purportedly paid under," the LTA.
What then were the bases for the Court of Appeal's finding, which the taxpayer sought to uphold on appeal to this Court, that part of the amounts the taxpayer paid in answer to each of the 1990 to 2002 assessments - the excess amount - was not tax paid under the LTA?
The Court of Appeal held that the excess amount was not tax paid because it was "wrongly collected", as there was "no authority" to demand or retain payment and therefore no tax debt, for two reasons. First, s 19 of the LTA imposed a statutory duty on the Commissioner to amend a land tax assessment once he knew that the assessment was incomplete or inaccurate, and to give effect to the amendment by refund. Second, because the excess amount paid to the Commissioner was not land tax under the LTA, the Commissioner did not have authority to demand or retain the excess amount. As the Commissioner submitted on appeal to this Court, that construction of the LTA should be rejected.
As explained above, that second reason is wrong. In these appeals, the taxpayer paid the amount assessed in answer to each assessment for the years 1990 to 2002 and that was "tax paid under, or purportedly paid under," the LTA.
Before turning to consider the Court of Appeal's construction of the LTA, it should be noted that it was not until a decade after the tax recorded in the 1990 to 2002 assessments was paid by the taxpayer that the duplication error in the 2008 to 2011 assessments was identified. Further, no amended assessments to correct the duplication error in the 1990 to 2002 assessments were issued to the taxpayer for the years 1990 to 2002 - the Commissioner refused to do so.
So, did s 19 of the LTA compel the Commissioner to issue amended assessments and refund the excess amount, and, if so, was the excess amount paid to the Commissioner therefore not land tax within the meaning of the LTA? The answer to both questions is "no".
The Court of Appeal erred in its construction of s 19
No duty to exercise power under s 19
The Court of Appeal held that the statutory power conferred on the Commissioner by s 19 was such "that once the Commissioner has knowledge that an assessment is inaccurate, and that an amended assessment is necessary to ensure the accurate assessment of land tax, … the Commissioner has a duty to exercise [the] power under s 19".
That conclusion is contrary to the whole of the text of s 19, as well as its context and its purpose, and is not supported by authority.
In its terms, s 19 was discretionary. It provided that the Commissioner "may from time to time amend an assessment" (emphasis added). Section 19 went only as far as "an assessment". As seen earlier, an assessment relating to land tax "charged, levied and collected" could only be challenged by way of objection, within prescribed time limits.
Section 19 then provided that in respect of an amended assessment that had the effect of imposing any fresh liability or increasing any existing liability, every alteration or addition not made with the consent of the taxpayer "shall be subject to objection in the same manner and to the same extent as the original assessment". When read as a whole, the purpose of s 19 was twofold: first, to ensure that the Commissioner had the power to increase an assessment or impose fresh liabilities; and, second, to ensure that where a fresh liability or increased existing liability was imposed, the tax was contestable.
Of course, if the power in s 19 was exercised to reduce the amount of an assessment, what then was to occur was to be found in the balance of the LTA. There was no express reference to a power of refund or to an appropriation in s 19. In other words, s 19 was to be read with, and as part of, the legislative scheme of the LTA. It is relevant to consider not only Pt III of the LTA, which provided for returns by taxpayers, as well as valuations and assessments of land tax, but also Pt VI, which provided for (including in s 90AA) the refund or recovery of tax paid under, or purportedly paid under, the LTA. If the amount assessed had been paid and the taxpayer had sought a refund or recovery of tax paid, then the LTA provided the taxpayer with such a right in s 90AA, but only if the conditions in that section, including the time limit, were satisfied. These provisions must and do inform the exercise of the power in s 19.
The scheme of the LTA provided the Commissioner with an express power of refund and made a consequential appropriation of the Consolidated Fund, both in s 90AA. If the Court of Appeal's construction of s 19 was correct (and it is not), a power of refund and appropriation would need to be implied into s 19, obviating the need for s 90AA. That construction should be rejected. The objection and refund regime of the LTA was a "code" that did not admit of a construction of s 19 that elevated it to a source of refund or recovery, independent of that regime. The objection and refund "code" was not one option among many, but was rather the only means by which a taxpayer could object to an assessment under which land tax had been "charged, levied and collected" or seek recovery or a refund of tax paid or purportedly paid under the LTA.
Further, contrary to the submissions of the taxpayer, the construction adopted by the Court of Appeal is not supported by authority. Contrary to the conclusion reached by the Court of Appeal, Finance Facilities Pty Ltd v Federal Commissioner of Taxation does not support the conclusion that the power to amend in s 19 was a statutory duty that the Commissioner was compelled to exercise. Powers granted by facultative language may impose a duty to exercise those powers where, as a matter of statutory construction, the legislation imposes a duty on the holder of the power to exercise the power when prescribed pre-conditions are met. As seen earlier, having regard to the discretionary text of s 19 and its role and position in the broader statutory context of the LTA, s 19 was not one of those powers.
The taxpayer also contended that the decision of this Court in Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd was authority for the propositions that once an overpayment had been found, the discretion in s 19 had to be exercised by making a refund, and that the amounts refunded therefore were never land tax paid under the LTA. That decision does not assist the taxpayer.
Royal Insurance considered an express statutory power to refund overpayments of stamp duty expressed in facultative terms and using the word "may" in circumstances where stamp duty had been paid by the taxpayer in ignorance of certain retrospective amendments to the taxing Act that exempted the taxpayer from stamp duty. Mason CJ held that the power to refund, in circumstances where the Commissioner found there to be an overpayment, should be exercised in a manner consistent with the taxpayer's common law rights and that the facultative nature of the power should not be treated as giving rise to a discretion that would defeat a common law claim. That is not these appeals. As Mason CJ recognised, notwithstanding knowledge of the overpayment, the discretionary power may be treated as a source of authority for the Commissioner to retain the overpaid amounts where there are "circumstances disentitling the payer from recovery". Those circumstances included where the taxpayer did not have a common law right to recover, or where the right was time-barred (as here). In those circumstances, the discretion to refund should not be construed as giving rise to a duty because the exercise of discretion to refuse a refund would be justified. Brennan J, with whom Toohey and McHugh JJ agreed, also found that the power was discretionary and emphasised that the Commissioner was "under no duty to make a refund unless there be an antecedent liability to do so".
In these appeals, as will be explained below, the Commissioner was under no such antecedent liability to amend the assessments or to make a refund because s 90AA applied to bar the taxpayer's attempts to establish such a liability.
Effect of an amended assessment
For the reasons stated earlier, the excess amount was land tax paid under the LTA.
On appeal to this Court, the taxpayer further contended that if an amended assessment issued under s 19 of the LTA reduced a tax debt, the excess amount paid was never land tax paid under the LTA and that amount recovered by the Commissioner was not land tax under the LTA. That contention should be rejected. It is again contrary to the scheme of the LTA and contrary to authority.
Every assessment issued by the Commissioner under s 17 of the LTA could, at some point, be amended by the Commissioner under s 19. The amended assessment, which could show a different amount, was conclusive that the amount it showed at that time was the true amount of tax payable. That was the aim of s 19. The power in s 19 to amend an assessment did not involve the re‑exercise of the s 17 assessment power or the substitution of an assessment in place of the original assessment. The amended assessment operated on and from the date that it was issued. The amended assessment did not have the effect that the original assessment that "charged, levied and collected" land tax under the LTA was somehow altered so that that land tax subsequently ceased to be land tax within the meaning of the LTA. As Isaacs J said in Federal Commissioner of Taxation v Hoffnung & Co Ltd, when an alteration or addition is made to an assessment, the assessment "henceforth exists as altered or added to, and not as previously existing plus independent alteration or addition" (emphasis in bold added).
That result is not surprising. It must be recalled that the production of an assessment was conclusive evidence both of the due making of the assessment and that the amount and all the particulars of the assessment were correct, except in proceedings on review or appeal against the assessment. When an assessment was served, amounts of land tax payable were fixed and were to be taken as fixed for all purposes, except those of review or appeal under Pt III of the LTA. The power of amendment "pre-supposes that an assessment is something creating a legal obligation". And that logic underpinned the structure of s 19. It provided that every such alteration or addition that had the effect of imposing any fresh liability or increasing any existing liability "shall be subject to objection in the same manner and to the same extent as the original assessment".
As Latham CJ said in Trautwein v Federal Commissioner of Taxation, in relation to an analogous provision in the Income Tax Assessment Act 1922 (Cth), "[a]n amended assessment is not an entirely new assessment substituted for its predecessor so as to open up again full rights of appeal". For example, if an amendment of an assessment increases a liability or has the effect of imposing a fresh liability, the original assessment otherwise stands and the amended assessment is open to objection only by reference to the items or elements introduced or affected by the amendment. The effect of an amended assessment on an original assessment is not altered because the amendment reduces or removes a liability imposed under the original assessment. Indeed, if a contrary conclusion were adopted, then a taxpayer would arguably not have paid an amount of "relevant tax" to the Commissioner under the Taxation (Interest on Overpayments) Act 1986 (Vic) and would not be entitled to interest on that overpayment under that Act.
Section 90AA applied to the taxpayer's claims
Section 90AA applied to, and barred, the taxpayer's claims to a refund. Section 90AA(1) provided that "[p]roceedings for the refund or recovery of tax paid under, or purportedly paid under, [the LTA] … must not be brought, whether against the Commissioner or otherwise, except as provided in this section".
Under s 90AA(2), an application for refund of the payment had to be lodged with the Commissioner within three years of the payment being made. Proceedings could have been brought by a taxpayer where, within three months after the application for refund of the payment was lodged, the Commissioner had not refunded the overpaid amount (or not applied it against another liability the taxpayer has to the State) or had refused to make a refund, whichever occurred first. "Proceedings" was defined in s 90AA(8) to include proceedings seeking the grant of relief or remedy in the nature of mandamus.
Each proceeding commenced by the taxpayer - the first by originating motion seeking mandamus "on judicial review" directing the Commissioner to issue amended land tax assessments and to refund to the taxpayer the excess amount, and the second by writ indorsed with a statement of claim seeking restitution of the excess amount - was a claim to a refund of "tax paid under, or purportedly paid under," the LTA and was barred. No application for refund had been lodged with the Commissioner within three years of the land tax being paid.
As seen earlier, the duplication error in the 1990 to 2002 assessments did not deprive the excess amount "charged, levied and collected" of the nature of being tax "paid under, or purportedly paid under, [the LTA]", and a limitation period does not render the tax incontestable.
Moreover, even if the failure of the Commissioner to amend the assessments constituted a failure to exercise jurisdiction (and it did not), s 90AA was a bar to the proceedings. That conclusion is compelled not only by the express terms of s 90AA (the extended definition of "proceedings" in s 90AA(8)) but also by the scheme of the LTA.
The taxpayer's contention that, in the event s 90AA applied to both proceedings (which it did), s 27 of the Limitation Act - which operates to postpone limitation periods in certain circumstances - meant that the limitation period in s 90AA commenced from the time that the taxpayer discovered the duplication error or from when such error was reasonably discoverable, should also be rejected. However, s 27 of the Limitation Act only applies in relation to a period of limitation prescribed by the Limitation Act - here, relevantly, s 20A(1) of the Limitation Act. Section 20A(1) did not apply to these appeals because s 90AA(4) expressly excluded its operation. Any other construction of s 90AA(4) would be contrary to its express terms and would be contrary to the scheme of the LTA, and circumvent the objection and refund regime. Moreover, it will be recalled that the amending Bills inserting both s 20A of the Limitation Act and s 90AA of the LTA were introduced by the government at the same time. Section 20A was intended to preserve the operation of the long-existing one year limitation period for the recovery of tax in certain circumstances, not to undercut the specific limit imposed by s 90AA.
The taxpayer sought to advance a contention in this Court that the decision in Trustees, Executors and Agency Co Ltd v Commissioner of Land Tax was authority for the proposition that s 90AA was limited in its operation to matters of "account and payment" or that it did not limit or affect proceedings being brought to compel performance of a duty under s 19 of the LTA. That decision does not support the taxpayer's contentions and is distinguishable. Trustees dealt with the Land Tax Assessment Act 1910 (Cth). What was in issue in that case was whether the power in s 20 of that Act to alter or to add to an assessment could be exercised more than once.
In general terms, the facts were as follows. The Commissioner of Land Tax assessed on one basis, and land tax stated in that assessment was subsequently paid. Less than two years later, the Commissioner issued amended assessments and refunded the excess amount that had been paid. Then, shortly after the expiration of two years from the original payment, the Commissioner further amended the assessment on the basis that the original assessment was correct. The taxpayer contended that the power to amend in s 20 was limited by ss 59 and 60 of that Act (the latter imposing a three year limitation on the power of the Commissioner to make refunds) either alone or in conjunction with the doctrine that money paid under a mistake of law cannot be recovered back.
The taxpayer's contentions were rejected. Griffith CJ stated:
"The amount of land tax payable is determined by the existing assessment, which may, subject to the limitations of sec 21, be altered from time to time, either by way of increase or diminution. Whatever amount appears by an existing assessment to be the land tax payable is, until paid, a debt due by the taxpayer to the Crown. If he has not paid so much, he is bound to pay the deficiency; if he has paid more, he is entitled to a refundment of the excess (subject to the limitation, if any, imposed by sec 60), and so on".
Trustees is not authority for the proposition that the taxpayer sought to advance here. The contention is contrary to the legislative history and the scheme of the LTA - a scheme that covers the field. Moreover, the contention would render the objection and refund regime, including s 90AA, otiose.
No conscious maladministration
"Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld". A finding of maladministration, let alone conscious maladministration, is not to be made unless plainly alleged and clearly proved.
The Court of Appeal found that the Commissioner's "actual refusal" in August 2013 to amend the 1990 to 2002 assessments was "conscious maladministration" of the LTA; a "wilful refusal of the Commissioner to perform his duty without good reason or justification". No finding of that kind had been sought by the taxpayer in its pleadings and the argument was first raised in oral submissions before the primary judge. There was no basis for making it.
In 2012, a decade after the last of the assessments were issued for the years 1990 to 2002, the taxpayer formed the view that there had been a duplication error in those assessments. The taxpayer made no challenge to the validity of those assessments. The taxpayer requested that the Commissioner amend the assessments under s 19 of the LTA. As seen earlier, the Commissioner was not under any duty to amend the assessments or refund the excess amount, contrary to the finding of the Court of Appeal.
It was not contended, and there was no basis to find, that the refusal by the Commissioner to amend the assessments was not bona fide, being based on a construction of the LTA that not only was open and accepted by the primary judge, but, as established above, also was correct.
As there was no duty to amend, there was no basis to conclude, as the Court of Appeal did, that the Commissioner wilfully refused to amend, knowing that he was legally obliged to make the amendment.
Moreover, as the Commissioner contended, even if the failure of the Commissioner to amend the assessments constituted a failure to exercise jurisdiction (and it did not), that failure would have been based on an erroneous construction of the LTA. Such a failure, by itself, would not have provided a basis to conclude that the Commissioner refused to amend the assessments knowing that he was legally obliged to make the amendment. In short, even taking the taxpayer's case at its highest, conscious maladministration would not be established.
In the circumstances, the Court of Appeal should not have ordered relief in the nature of mandamus directing the Commissioner to issue amended assessments to the taxpayer for the years 1990 to 2002, and to repay the excess amount to the taxpayer. Nor should the Court of Appeal have ordered interest under the Supreme Court Act 1986 (Vic) on the excess amount from the date of each of the payments making up the excess amount, compound interest on the excess amount from 15 August 2013 or costs.
No restitution and no entitlement to interest
Each of the 1990 to 2002 assessments issued to the taxpayer created a debt when the amounts fell due that was discharged by payment. In that circumstance, there can be no restitution. Payment, including payment of the excess amount, was made in discharge of a legally enforceable obligation to pay. The taxpayer's contention that the Commissioner was unjustly enriched should be rejected.
Both the proceeding commenced by originating motion and the proceeding commenced by writ indorsed with a statement of claim were "[p]roceedings for the refund or recovery of tax paid under, or purportedly paid under," the LTA within the meaning of s 90AA of the LTA. The applications were filed more than three years after payment was made. The Supreme Court was prevented from entertaining both proceedings. The taxpayer was not entitled to any payment, such that any entitlement to interest under the Supreme Court Act 1986 (Vic), or to compound interest, did not arise.
Orders
Each appeal should be allowed with costs. The orders of the Court of Appeal of 8 December 2015 made in both proceedings should be set aside, save for par 1 of both orders, and, in their place, it should be ordered that the appeal be dismissed and the taxpayer pay the Commissioner's costs of the proceedings in that Court.
For the avoidance of doubt, the amended assessments issued by the Commissioner in compliance with par 3(a) of the Order of the Court of Appeal of 8 December 2015, made in proceeding S APCI 2015 0029, should be set aside.
The taxpayer should repay to the Commissioner $1,248,753.38 paid by the Commissioner to the taxpayer, together with interest pursuant to s 58 of the Supreme Court Act 1986 (Vic) on and from the date of payment of that amount by the Commissioner to the taxpayer.