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[2009] VSCA 99
Court of Appeal (Vic)
2009-05-18
REDLICH and DODDS-STREETON JJA and HARGRAVE AJA
Original judgment source is linked above.
TAXATION - Moneys received as and for stamp duty not duly forwarded to Commissioner - Section 40 Stamps Act 1958 - Where both parties concede that right to recover debt an accrued substantive right.
STATUTES - Repeal - Whether s (14)(2)(e) and (g) Interpretation of Legislation Act 1984 preserves 'show cause' procedure in and (3) - Whether s 40(2) and (3) procedure merely 'optional processes of an essentially procedural character' ; - Whether an 'investigation, legal proceeding or remedy' Whether severance would interfere with accrued substantive right - Whether a proceeding.
IMPLIED SAVING - Sutton v Bradshaw [1988] VicRp 83; (1988) VR 920 - Whether show cause provisions implicitly saved because necessary to effective operation of legislative scheme.
1 For the reasons given by Dodds-Streeton JA I agree that leave should be granted, the appeal allowed and the matter remitted to the primary judge.
2 The issue for determination in this appeal is whether s 40(2) and (3) of the Stamps Act 1958 ('the Stamps Act'), although repealed pursuant to the Duties Act 2000, continue to apply pursuant to s 14(2) of the Interpretation of Legislation Act 1984 ('the IL Act') or the common law doctrine of implied saving, to the recovery of duty misappropriated prior to the effective date of the repeal.
3 The appellant, the Commissioner of State Revenue ('the Commissioner') seeks leave to appeal from the judgment of a judge of the Trial Division who, on 23 November 2007, dismissed the Commissioner's application made by summons on originating motion pursuant to s 40(2) and (3) of the Stamps Act to recover over $3.7 million in duty allegedly received and misappropriated during the period from 1999 to December 2001 ('the relevant period') by the defendants below, including the respondent, Mr Bulzomi.
4 Section 40 of the Stamps Act provides:
Failure to appropriate moneys received as duty
(1) Every person who having received any sum of money as or for the duty upon or in respect of any instrument neglects or omits to appropriate such money to the due payment of such duty or otherwise improperly withholds or detains the same shall be accountable for the amount of such duty, and the same shall be a debt due from him to Her Majesty and recoverable as such accordingly.
(2) The Supreme Court may upon application, made for that purpose on behalf of the Comptroller of Stamps upon such affidavit as appears sufficient, grant an order requiring any such person as aforesaid or the officer of any court or the executor or administrator of such person or officer to show cause -
(a) why he should not deliver to the Comptroller of Stamps an account upon oath of all duties and sums of money received by such person or officer; and
(b) why the same should not be forthwith paid to the Comptroller of Stamps or to such other person as the Comptroller of Stamps appoints to receive the same.
(3) The Court may make absolute any such order and enforce by attachment or otherwise the payment of any such duties or sums of money as on such proceedings appear to be due together with the costs of the proceedings.
5 The Commissioner alleged that the defendants had received over $3.7 million as and for duty during the relevant period and had improperly withheld, detained or failed to pay it to the Commissioner within the meaning of s 40(1) of the Stamps Act.
6 The Commissioner sought to utilise the 'show cause' procedure under s 40(2) of the Stamps Act in order to obtain an account on oath and payment of the duty enforced by attachment under s 40(3). To that end, on 25 September 2006, the Commissioner filed and served a summons on originating motion supported by affidavits deposing to the circumstances of the alleged misappropriation of stamp duty. The Commissioner issued an originating motion on 30 September 2005.
7 The Stamps Act, however, had been repealed by s 284 of the Duties Act 2000 with effect from 1 July 2001, after the defendants' alleged receipt of the moneys for stamp duty, but prior to the issue of the Commissioner's originating motion and summons. The Duties Act 2000 applies to instruments executed on or after 1 July 2001 and, save where expressly stated, neither applies to instruments first executed before that date nor governs the recovery of stamp duty payable under the Stamps Act.
8 The trial judge had to determine not only whether any defendant had, during the relevant period, received moneys as and for duty and had improperly withheld or failed to pay them within terms of s 40(1) of the Stamps Act, but also whether, as the appellant contended, s 40 of the Stamps Act (notwithstanding the repeal with effect from 1 July 2001) was preserved in its entirety in relation to such moneys, pursuant to s 14(2) of the IL Act.
(2) Where an Act or a provision of an Act -
(a) is repealed or amended; or
(b) expires, lapses or otherwise ceases to have effect -
the repeal, amendment, expiry, lapsing or ceasing to have effect of that Act or provision shall not, unless the contrary intention expressly appears -
(c) revive anything not in force or existing at the time at which the repeal, amendment, expiry, lapsing or ceasing to have effect becomes operative;
(d) affect the previous operation of that Act or provision or anything duly done or suffered under that Act or provision;
(e) affect any right, privilege, obligation or liability acquired, accrued or incurred under that Act or provision;
(f) affect any penalty, forfeiture or punishment incurred in respect of an offence committed against that Act or provision; or
(g) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as is mentioned in paragraphs (e) and (f) -
and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if that Act or provision had not been repealed or amended or had not expired, lapsed or otherwise ceased to have effect.
(a) the affidavits tendered by the Commissioner established on a prima facie basis that the respondent, Mr Bulzomi (but for the repeal of the Stamps Act) had, within the meaning of s 40(1) of the Stamps Act, received sums of money as or for duty upon or in respect of various instruments, and had omitted to appropriate such money to the due payment of such duty or had improperly withheld or detained it.
(b) as was essentially common ground, s 40(1) of the Stamps Act created substantive rights and correlative liabilities in relation to moneys allegedly received as and for duty but not duly paid prior to the repeal, which were preserved by s 14(2)(e) of the IL Act.
(c) most critically, s 40(2) and (3) of the Stamps Act were not preserved by s 14(2) of the IL Act because, in contrast to s 40(1), they did not create substantive rights but merely optional processes of an essentially procedural character, which were unnecessary to the pursuit of the accrued substantive right to recover the debt under s 40(1). It was therefore not open to the Commissioner to institute a proceeding and obtain orders under s 40(2) and (3) after the repeal came into operation.
11 Following his Honour's determination that there was no basis for an application or orders under s 40(2) or (3) of the Stamps Act, he gave leave for the appellant to file and serve a statement of claim. The appellant's statement of claim dated 10 April 2008 includes claims for a debt due pursuant to s 40(1) of the Stamps Act, breach of contract, knowing receipt of trust moneys or knowing participation in a breach of trust and aiding and abetting a breach of the Trade Practices Act 1974 (Cth). The proceeding, although stayed pending the determination of this appeal, is thus in effect to be continued as if by writ.
(a) not in itself a legal proceeding; or
(b) an alternative legal proceeding; or
(c) a separate and distinct legal proceeding -
in respect of the rights and correlative liabilities which His Honour found had accrued under s 40(1) of the Act.
(a) not a separate legal proceeding; and
(b) an optional statutory mode of procedure within the action to recover the debt.
13 The respondent did not challenge the trial judge's finding that, prima facie, he had received moneys as and for duty within terms of s 40(1) of the Stamps Act. Further, the respondent conceded that the Commissioner's right to recover the duty as a debt pursuant to s 40(1) was an accrued substantive right within the meaning of s 14(2)(e) of the IL Act and was therefore preserved notwithstanding the repeal of the Stamps Act.
14 The sole issue for determination on appeal was thus whether, notwithstanding the repeal of the Stamps Act with effect from 1 July 2001, s 40(2) and (3) of the Stamps Act were preserved either pursuant to s 14(2) of the IL Act or the common law doctrine of implied saving in relation to the moneys received as or for duty but not paid to the Commissioner prior to the repeal.
15 The appellant contended that s 40(2) and (3) of the Stamps Act were preserved pursuant to s 14(2)(e) and s 14(2)(g) of the IL Act. The appellant also submitted that the sub-sections were saved by implication, pursuant to the common law doctrine applied in Sutton v Bradshaw ('Sutton').[1]
16 The respondent submitted that his Honour correctly held that s 40(2) and (3) were merely optional procedural provisions which were unnecessary to the recovery of any debt created under s 40(1) and as such, in accordance with the analysis of Gibbs J in Public Curator (Queensland) v Yrttiaho[2] ('Yrttiaho'), did not survive the repeal. Further, the respondent submitted that, unlike Sutton, the present case did not involve the repeal and subsequent re-enactment of both substantive and procedural provisions, without any transitional provisions. The doctrine of implied saving therefore, he submitted, did not apply.
17 The factual findings of the trial judge were unchallenged and are summarised as follows.
18 The first defendant below, Aid & Abet, was a corporation whose activities were, at all material times from 1999 to the end of 2001, controlled by Mr Bulzomi (the fourth defendant below), and two other individual defendants. On 12 December 1996, Aid & Abet was, pursuant to s 40A(1) of the Stamps Act, declared to be an authorised person in relation to a class of instruments (principally transfers of land, mortgages and declarations of trust and leases) chargeable with stamp duty. Aid & Abet was allotted an AP (authorised person) number. As an authorised person, it was permitted to endorse instruments in a prescribed manner, upon which they were deemed either to be stamped under the Stamps Act to the amount of duty shown on the endorsement or to be exempt from duty.
19 Aid & Abet, as an authorised person, was required to report to the Commissioner the instruments and the amounts of duty it had endorsed for a specified period which, at the outset, was weekly, and subsequently, monthly. Aid & Abet was also required to provide other details, such as the total amount of duty endorsed for a specified class of instruments.
20 Aid & Abet was required to forward a statement for the specified period and at the same time pay the Commissioner the total amount endorsed for stamp duty during that period. It was also required to maintain for three years various records, sufficient to demonstrate that the correct stamp duty had been accounted for in the weekly or monthly statements forwarded to the Commissioner.
21 The Commissioner supplied authorised persons (including Aid & Abet) with a computer software program to enable the details necessary to complete the statements to be electronically recorded and to satisfy the relevant record keeping requirements.
22 Up until October 1999, Aid & Abet complied with the reporting and payment obligations as an authorised person. From October 1999 to June 2001, however, Aid & Abet did not comply. It did not report many of the endorsements it had made. Further, it applied a system ('the Goldstein System') in relation to its principal client, Goldstein Partners. Under the Goldstein System, Goldstein Partners deposited stamp duty money payable on its instruments into Aid & Abet's bank accounts, but only a fraction of the money deposited for remission was in fact paid to the Commissioner.
While Aid & Abet and the non-corporate defendants operated the Goldstein System (during the October 1999 to June 2001 period), Aid & Abet:
...
The non-corporate defendants controlled the activities of Aid & Abet by, inter alia:
24 His Honour found that Mr Bulzomi, an authorised signatory of Aid & Abet from November 1996 until November 2001 (and a sole director for part of that period), was involved in its management throughout. Mr Bulzomi selected instruments and endorsed them for stamp duty during the period from October 1999 to June 2001, while operating the Goldstein system. He supervised and directed all employees who did endorsing work and dealt with client enquiries in relation to endorsements. He also directed and approved Goldstein transaction sheets and forwarded them to Goldstein Partners with a request for a deposit of the due amount of the stamp duty into Aid & Abet's bank accounts.
25 His Honour found that on four occasions, Aid & Abet requested that payment be made by cheques made payable to Aid & Abet. In consequence, four cheques dated 29 May, 5 June, 21 June and 26 June 2001 (totalling $737,782,020) were deposited.
26 His Honour found that during the period commencing at the end of June 2000, on some occasions Mr Bulzomi or another defendant instructed an Aid & Abet employee to remove a non-Goldstein instrument cheque made payable to the State Revenue Office and provide the cheques to them.
27 The primary judge found that, Mr Bulzomi was involved in the avoidance of detection of the misappropriation by:
During the period when Aid & Abet was using the Goldstein System it failed to remit to the Commissioner substantial sums of stamp duty money it had received for that purpose. Aid & Abet received $3,784,590.30 from Goldstein Partners on account of stamp duty to be paid to the Commissioner, which it failed to pay. By 31 December 2001 the balance of Aid & Abet's bank account was only $24,523.98. The stamp duty moneys withdrawn from Aid & Abet's bank account (which led to the reduction of the balances of these bank account to $24,523.98) were paid to certain persons and entities and to the beneficiary of the Bunnett Trust account.[6]
The primary judge's analysis of whether s 40(2) and (3) of Stamps Act applied
29 The primary judge considered that the prima facie case against Mr Bulzomi was made out on the basis that -
... Mr Bulzomi exercised such control over the receipt and disposition of all of the moneys as or for duty paid to Aid & Abet and not remitted to the SRO [State Revenue Office] that he should be regarded, on a prima facie basis, as having himself "received" all that money as or for duty.[7]
30 His Honour also thought that, prima facie, Mr Bulzomi's apparent diversion of money, paid as or for duty to other recipients, albeit using the bank accounts of Aid & Abet, fell within the language of s 40(1) of the Stamps Act.
31 His Honour found, as the respondent conceded, that the Commissioner's right to recover duty as a debt and a recipient's correlative liability existing under s 40(1) of the Stamps Act prior to the repeal were, if established, clearly preserved by s 14(2)(e) of the Act.
32 The primary judge nevertheless concluded that any entitlement to institute a legal proceeding under s 40(2) and (3) of the Stamps Act after the repeal was in a different position. His Honour acknowledged that s 14(2)(g) of the IL Act:
would preserve any investigation, legal proceeding or remedy in respect of rights and liabilities existing under s 40(1) of the Stamps Act at the time of the repeal and most, most probably, if a proceeding had been commenced under s 40(2) and (3) of the Act prior to the repeal of the Act such a proceeding would have been preserved by s 14(2)(g) of the IL Act.[8]
33 His Honour relied, however, on the observation of Gibbs J in Yrttiaho that s 14(1)(g) 'and the words that follow it require that, unless the contrary intention appears, an amending enactment shall be construed so that, notwithstanding the amendments, proceedings pending thereunder at the time of the amendment can be continued, and proceedings can be initiated after the amendment in respect of substantive rights acquired before the amendment took effect'.[9]
In that regard the essential submission made on behalf of the Commissioner was that the concluding words of s 14(2) of the IL Act had the effect of preserving the plaintiff's right to institute a legal proceeding under s 40(2) and (3) of the Act. I agree that these words have the effect that the plaintiff's right to institute a legal proceeding in relation to any obligations and liabilities that had accrued under s 40(1) of the Act would be preserved but this does not mean that the particular procedure laid down by s 40(2) and (3) of the Act is preserved. In other words, if there is a debt to the Comptroller under s 40 of the Act at the time of the repeal of the Act, a legal proceeding might be instituted after the repeal of the Act to recover the debt. But it is a different thing to conclude that the particular procedure established by s 40(2) and (3) of the Act and the Commissioner advanced to no good reason, in my view, for such a conclusion.
It was submitted on behalf of the Commissioner that the procedure in s 40(2) and (3) of the Act was "not separate" from the rights and liabilities arising under s 40(1) but it was not contended, as I understood it, that the statutory procedures were necessary to the operation of s 40(1) or that s 40(1) was not operable without the succeeding subsections. In my opinion it is clear that s 40(1) creates a debt in respect of any sum of money received by a person as or for stamp duty where that person does not appropriate that money to the payment of such duty or otherwise improperly withholds or detains the same. The section makes clear that the debt is "recoverable as such accordingly" and thus an action might be brought to recover the debt. The procedure in the following subsections is thus an optional mode of procedure available to the Comptroller, offering, inter alia, the procedural advantage of forcing a person to go on oath. However this statutory procedure is not necessary to the operability of s 40(1).
I do not think that it is open to conclude that there is any implication arising from the relationship between s 40(1) on the one hand and s 40(2) and (3) on the other, such that any preservation of the rights and liabilities under s 40(1) necessarily carries with it the preservation of the statutory procedure under s 40(2) and (3).
I conclude that the plaintiff cannot obtain any of the orders sought because the empowering provisions had been repealed prior to the institution of this proceeding. [10]
35 His Honour's analysis was thus principally directed at the question whether there was an entitlement to institute a proceeding under s 40(2) and (3) after the repeal. He concluded that there was not, apparently because he viewed s 40(2) and (3) as purely optional procedural provisions unnecessary to the operation of s 40(1), and separate or severable from the rights and liabilities it created. The right to recover the debt could, he found, be satisfied in an action (presumably brought under the general rules of an appropriate court), albeit without the procedural advantages conferred by the succeeding sub-sections.
36 His Honour's reliance on the passage cited from Yrttiaho and his related observations reflected his recognition that under s 14(2)(g) of the IL Act, proceedings may be instituted after repeal in respect of substantive rights accrued or acquired before repeal. His Honour also observed that the right to recover the debt under s 40(1) was an accrued substantive right which itself survived repeal. His Honour nevertheless did not address the question whether the applications and processes under s 40(2) and (3) constituted a proceeding, investigation or remedy in respect of an accrued right under s 14(2)(e), which would be 'affected' by the repeal and were therefore preserved by s 14(2)(g).
37 His Honour appeared implicitly to accept that the accrued substantive right to recover the debt under s 40(1) of the Stamps Act could not be relevantly affected unless the procedures or processes in s 40(2) and (3) were necessary to its pursuit or unless s 40(1), which conferred the substantive right, was incapable of operating independently of the procedural provisions or was otherwise inseparable from them.
38 Further, his Honour apparently assumed that, according to the analysis of Gibbs J in Yrttiaho, s 14(2)(g) of the IL Act will not preserve processes or procedures constituting a proceeding, investigation or remedy in respect of an accrued substantive right unless the right cannot be pursued and satisfied by alternative means.
39 It appears his Honour was not invited to address many of the principal submissions and issues advanced on appeal, as the focus of argument before us differed substantially from that at first instance. On appeal, it was common ground that the debt under s 40(1) constituted an accrued substantive right preserved under s 14(2)(e), so that if s 40(2) and (3) created or constituted a proceeding, investigation or remedy in respect of it, they it would be preserved by s 14(2)(g).
40 The question whether it was open to the Commissioner to apply after the repeal of the Stamps Act for orders under s 40(2) and 40(3) in relation to monies received as and for duty prior to the repeal is governed by s 14(2) of the IL Act.
41 In Ogden Industries Pty Ltd v Lucas[11] ('Ogden') Windeyer J endorsed the opinion of Adam J in Doro v Victorian Railways Commissioners[12] that, given the Victorian interpretation legislation, questions of the retrospective application of legislative amendments or repeals should ordinarily be decided by reference to the terms of the relevant statutory provisions, rather than recourse to common law doctrine.[13]
42 In Ogden, Windeyer J stated that 'the statute states in effect the common law principle [or the presumption against a statute being read so as to affect vested rights], using some economy of words to do so'.[14] In Yrttiaho, Gibbs J construed a provision identical to s 14(2)(g) of the IL Act so that it would not 'completely reverse the rule of the common law that an amending statute which is purely procedural is to be construed as retrospective in its operation, unless a contrary intention appears'.[15]
43 It is not self-evident that s 14(2) of the IL Act is no more than a codification of relevant common law principles and counsel identified no judicial statement to that effect. Judicial construction of s 14(2) has nevertheless been informed by the common law principles, which therefore remain relevant.
44 The general rule of the common law, as expressed by Dixon CJ in Maxwell v Murphy is that:
... a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events. But ... the law appointing or regulating the manner in which [such rights] are to be enforced or their enjoyment is to be secured by judicial remedy is not within the application of such a presumption. Changes made in practice and procedure are applied to proceedings to enforce rights and liabilities ... notwithstanding that before the change in the law was made the accrual or establishment of the rights [was] complete and rested on events or transactions that were otherwise past and closed. The basis of the distinction was stated by Mellish L.J. in Republic of Costa Rica v. Erlanger [(1876) 3 Ch D 62]. "No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done."[16]
45 While the common law rule is frequently said to govern whether legislation changing the law will have a retrospective operation, as Fullagar J (dissenting) recognised in Maxwell v Murphy, 'retrospective' bore an extended sense in this context and 'while not synonymous with ex post facto described the operation of any statute which affects the legal character or the legal consequences, of events which happened before it became law.'[17]
46 As Dixon CJ recognised in Maxwell v Murphy, the distinction between rights and procedure is easily stated but difficult to apply in practice. The legislation or its context could, for example, indicate a desire to cover already existing situations. There was also an 'inveterate tendency'[18] to regard as merely evidentiary or procedural certain matters which in fact impaired or destroyed substantive rights. Dixon CJ also stated:
Again, enactments in both conferring or denying rights are not seldom expressed in terms of remedy. There is a tacit recognition of this in the manner in which Lord Penzance (then Wilde B.) stated the rule in a passage that has been much quoted:
"The rule applicable to cases of this sort is that, when a new enactment deals with rights of action, unless it is so expressed in the Act, an existing right of action is not taken away. But where the enactment deals with procedure only unless the contrary is expressed, the enactment applies to all actions whether commenced before or after the of the Act."[19]
47 In Maxwell v Murphy, the High Court decided that under the common law rule, an amendment extending the period to bring an action for compensation for the death of a relative, enacted after the original, much shorter limitation period had expired, did not apply retrospectively. Maxwell v Murphy concerned an action by writ issued on 30 November 1954 by a widow, on behalf of herself and her children, seeking compensation for the death of her husband who was killed by a motor vehicle negligently driven by the appellant. The husband died on 19 March 1951. At the date of his death, the Compensation to Relatives Act 1897-1946 (NSW) prescribed a 12 month limitation period, but an amendment passed in December 1953 increased the limitation period to six years. As the writ was issued after the expiry of 12 months but less than six years after the husband's death, its validity depended on whether the amendment applied retrospectively to enlarge the limitation period.
48 Dixon CJ, Williams, Kitto and Taylor JJ held that the amendment did not apply retrospectively. Fullagar J dissented.
49 Dixon CJ held that if the amendment enlarging time applied retrospectively in circumstances where the right of action was already statute-barred at the date of the amendment, it would offend 'the common law presumption against the operation of new laws upon rights that have already accrued or immunities established or acquired'.[20] His Honour concluded that although limitations legislation was traditionally (albeit not without criticism) characterised as procedural in nature, its retrospective operation would, in the circumstances of the case, 'impose anew a liability that had ceased to exist'[21] and even if the right to damages notionally survived the barring of the remedy by the effluxion of time, 'the right to damages could not be separated from the right to recover them'.[22]
50 Williams J in Maxwell v Murphy considered that, on the better view, compliance with the limitation period was an ingredient of the statutory cause of action and the amendment therefore did not apply retrospectively. Even if the expiration of the limitation period merely operated to bar the remedy, the amendment would not apply retrospectively, because, in Williams J's view, under the common law rule:
Where the question arises whether a statute has a retrospective operation, it is usual to divide statutes into two classes, the one where the new statute affects existing substantive rights and the other where it affects only the existing practice and procedure of the courts for enforcing such rights.[23]
51 Williams J cited Dixon J's (as he then was) conclusion in Kraljevich v Lake View & Star Ltd[24] that if an alteration in the law related to 'the mode in which rights and liabilities are to be enforced or realised',[25] its application to them would depend upon 'the particular character and the substantial effect that such an operation would produce'.[26]
52 While acknowledging that statutes of limitation were often classed as procedural, Williams J distinguished between situations where:
(a) an alteration to a limitation statute was enlarged or abridged within the time when a proceeding could still be brought (in which case the operation of the amendment might be classed as merely procedural); and
(b) the time limit was enlarged when the plaintiff was already out of time or abridged while time was still running under the old limitation period, in which case the operation of the amendment could not be seen as merely procedural but 'would affect substantive rights'[27] because 'a cause of action which can be enforced is a very different thing to a cause of action the remedy for which is barred by lapse of time.'[28]
53 Williams J expressly recognised that procedural statutes (being 'those which regulate the procedure and practice of the courts'[29]) had in some cases been 'held to affect substantive rights and therefore to be, prima facie, statutes which should not be construed as having a retrospective operation'.[30] Despite their procedural character, they could modify substantive rights.
54 His Honour referred to Mabro v Eagle Start & British Dominions Insurance Co. Ltd which showed that '[i]t has been the accepted practice for a long time that amendments which would deprive a party of a vested right ought not to be allowed.'[31]
55 Williams J concluded that the provisions at issue in Maxwell v Murphy conferring the right of action could not be classified as a limitation statute. The longer limitation period was 'imposed on a new and not an existing cause of action'.[32] The limited time within which the new right could be enforced was, in his Honour's view, of its essence and went 'to its very survival'.[33]
56 The application of the dichotomy between an existing substantive right and a procedural matter is illustrated by the decision in Newell v The King.[34] In that case, an accused pleaded not guilty to an indictment for manslaughter. At his first trial, the jury failed to reach a verdict and the second trial was adjourned due to the absence of a material witness. Shortly thereafter, the Jury Act 1936 (Tas) came into operation. It provided that in any criminal case for a capital charge, the decision of a majority of jurors might be taken as the verdict after two hours' deliberation. At the accused's subsequent trial, 10 of the 12 jurors agreed upon a verdict of guilty.
57 Latham CJ held that the right to have the unanimous verdict of 12 jurors 'was an essential part of the right to trial by jury which the accused had before the amendment was made. It is not merely a procedural matter.'[35]
58 In Yrttiaho, an amendment to the Rules of the Supreme Court of Queensland reduced from six to three years the period of time which could elapse without a party taking a step in an action before a court order would be required to permit a fresh step.
59 Yrttiaho differed from Maxwell v Murphy in two significant respects. First, the amendment reducing the specified time was made when there was still time for the plaintiff to take a step without leave within the reduced time limit. Secondly, the question whether the amendment applied retrospectively was arguably governed not by the common law, but by s 20 of the Acts Interpretation Acts 1954 to 1962 (Qld) which was, relevantly, in the same terms as s 14 of the IL Act.
60 In Yrttiaho, the plaintiff commenced an action for damages for negligence in May 1963. The relevant amendment reducing the time limit took effect from 12 February 1966, at which time the three year period it imposed had not yet expired in relation to the plaintiff's action. The plaintiff did not, however, purport to take any step in the action until an application by summons on 15 August 1967, by which time, three years (but not six years) had elapsed. Whether he could do so without leave depended on whether the amendment reducing the prescribed time applied to his action, which was commenced prior to the amendment.
61 Leave for the plaintiff to deliver a statement of claim was refused by the primary judge and an appeal from that decision was dismissed by the Full Court of the Supreme Court of Queensland. The plaintiff's action was thus forever stayed and also barred pursuant to the applicable limitation legislation.
62 The plaintiff appealed unsuccessfully to the High Court of Australia.
63 Gibbs J (with whose reasoning on the issues relevant to this case Menzies, Windeyer and Walsh JJ agreed) held that under both common law and the statutory provision equivalent to s 14(2) of the IL Act, the amendment, in the circumstances of the case, had a retrospective operation.
64 In relation to the common law rule, his Honour relied particularly upon the statement and analyses of Dixon CJ and Williams J in Maxwell v Murphy. Gibbs J held that a statute of limitation could be regarded as procedural in nature and thus (unless a contrary intention appeared) would have retrospective operation, if (where it enlarged time), it took effect before the right to be enforced became finally barred and (where it reduced time), it left time after its commencement within which an action might be brought. In either of those circumstances, 'the substantive rights of the parties are not affected by the alteration of the limitation period'.[36]
65 In Yrttiaho itself, because, the plaintiff still had time after the commencement of the amendment to take a step without leave of the court, Gibbs J concluded that the alteration to the rules of court did not affect the substantive rights. The amendment was 'purely procedural in its operation'.[37] The presumption of its retrospective application at common law was not rebutted.
66 Gibbs J held that the outcome was the same under the equivalent of s 14 of the IL Act.
67 His Honour rejected the submission that the retrospective application of the amendment was precluded by the equivalent of s 14(2)(e) on the basis that the right to proceed with the action in the time permitted was an accrued 'power' or 'right' within the meaning of that provision.
68 Gibbs J acknowledged that the expression 'right' standing alone, would include a 'right belonging to the area of procedure'.[38] His Honour nevertheless concluded that s 14(2)(e), despite its literal breadth, did not 'refer to rights of a procedural kind, such as a right to take a fresh step in a proceeding'.[39]
69 That conclusion was based on his Honour's recognition that legal proceedings and remedies (which characteristically involved matters of procedure) were expressly dealt with by the equivalent of s 14(2)(g). From that, Gibbs J said, it could be clearly inferred that s 14(2)(e) 'is not concerned with matters of procedure but only with rights of a substantive kind (using the term rights as I have already indicated, to refer as well to the other concepts mentioned in the paragraph)'.[40]
70 Gibbs J concluded that the amending statute was purely procedural in its operation and its preservation pursuant to s 14(2)(g), would:
completely reverse the rule of the common law that an amending statute which is purely procedural is to be construed as retrospective in its operation, unless a contrary intention appears, although the wisdom and convenience of that rule never seem to have been questioned.[41]
71 His Honour acknowledged that s 14(2)(g) required that 'unless the contrary intention appears, an amending enactment should be construed so that, notwithstanding the amendment, proceedings pending thereunder at the time of the amendment can be continued and proceedings can be initiated after the amendment in respect of substantive rights acquired before the amendment took effect'.[42]
Whether the subsection goes further and requires an amending statute to be construed, prima facie, in such a way as to preserve unaffected not only the legal remedy itself, but also the course of procedure to be followed in taking the legal proceeding as pursuing the remedy.[43]
73 Gibbs J held that it did not. He reiterated the view he had expressed in Smith v Thiess Peabody Coal Pty Ltd, that:
all that [s 14(2)(g)] is intended to do is to preserve the availability of investigations, legal proceedings and remedies in respect of accrued rights, and not to preserve the procedure to be followed in the course of such legal proceedings. [44]
74 His Honour acknowledged that the word 'affect' in sub-para (g) was of 'wide import', but emphasised that 'what is to remain unaffected was the legal proceeding or the remedy itself. A proceeding or remedy is not necessarily affected by an amendment to the procedure to be observed in the litigation'.[45]
75 His Honour observed that if, in the case before him, the amendment applied to pending matters, the relevant legal proceeding could be continued in accordance with the procedure established by the rules of court and the remedy (an award of damages) could still be obtained in a proper case.
I conclude therefore that s 20(1)(e) [s 14(2)(g)] refers to the legal proceeding and the remedy themselves, and that the section does not reveal an intention to reverse the established rule of the common law that a merely procedural statute is, in the absence of an indication to the contrary, to be construed as retrospective.[46]
77 Menzies, Windeyer and Walsh JJ agreed with Gibbs J's construction of the legislation. Barwick CJ (dissenting) considered that the legislation had, by its plain terms, effected a radical reversal of the common law. His Honour acknowledged that, under the common law rule, the amendment in Yrttiaho would be construed as procedural rather than substantive and would therefore apply retrospectively.
78 The appellant principally contended that subsections (2) and (3) of s 40 of the Stamps Act were preserved by the operation of s 14(2)(e) and, or alternatively, s 14(2)(g) of the IL Act. Further or alternatively, the appellant submitted that the subsections were implicitly saved by the operation of the common law doctrine in Sutton.
79 First, the appellant submitted that subsections (2) and (3) were so closely connected with the right conferred by s 40(1) (which was conceded to be an accrued substantive right) that their severance would significantly impinge upon its enjoyment and satisfaction. The appellant submitted that subsection (2) and (3) amplified and clarified crucial matters merely adumbrated in subsection (1), which thus depended on them for its complete articulation and effect.
80 In that context, the appellant submitted that the right created by s 40(1) was not limited to the right to recover moneys as a debt but included a right to an accounting, which required the machinery and processes under s 40(2) and (3) for its convenient and certain implementation.
81 The appellant emphasised that s 40 contemplated the recovery of moneys in circumstances where the Commissioner lacked direct knowledge of what was due from the liable parties as duty on instruments and necessarily depended on disclosure by the defendant recipients in order to ascertain the quantum to be recovered.
82 In the present case, the Commissioner did not receive or sight the instruments endorsed by Aid & Abet, and accepted the accuracy of the amounts contained in the statements it forwarded, which did not include all the endorsements it had made and understated the amount of stamp duty due by over $3 million.
83 In the appellant's submission, s 40 (as its historical genesis as an undivided section confirmed) addressed that problem as a unified provision and, in consequence, the severance of subsections (2) and (3) materially derogated from the rights conferred by subsection (1).
84 The appellant submitted that the processes dealt with in subsections (2) and (3) affected the accrued substantive right conferred by subsection (1). It followed, the appellant argued, that the repeal of subsections (2) and (3) would 'affect' that accrued substantive right within the meaning of s 40(1)(e), which therefore operated to preserve them.
85 Despite the different terminology of s 40(1) and (2) of the Stamps Act, the appellant did not argue that s 40(2) created a distinct cause of action independent of the right to recover the debt in s 40(1) and thereby itself created an accrued substantive right which was preserved by s 14(2)(e). Instead, the appellant, as I understood it, submitted that s 40(2) 'enlarged' or amplified the right in s 40(1) in a practical sense, by facilitating the ascertaining and recovery of the total quantum of the debt established under s 40(1), rather than by creating an additional, potentially wider cause of action to recover moneys which were differently defined. The appellant also submitted that processes of a procedural character which were neither essential to the pursuit of the accrued substantive right to recover the debt nor to the operation of subsection (1) could still relevantly 'affect' the accrued substantive right, if they facilitated its ascertainment and pursuit, or the operation of the provision conferring it.
86 Further, or alternatively, the appellant contended that the repeal of subsections (2) and (3) affected a vested substantive right in the sense recognised in Maxwell v Murphy and Yrttiaho, because s 40(2) created a proceeding in relation to the accrued substantive right to recover the debt in s 40(1), and the repeal, in the circumstances of the present case (in contrast to Maxwell v Murphy and Yrttiaho), would operate absolutely to bar that proceeding, rather than simply regulating its procedure.
87 The appellant also relied on the analysis of Gray J in Sutton, in which his Honour read Gibbs J's analysis of s 14(2)(g) in Yrttiaho as confined to amendments of procedure proper, as distinct from the repeal of a substantive provision together with associated procedural or evidentiary provisions.
88 Gray J in Sutton, observed that in Yrttiaho, Gibbs J implicitly acknowledged that remedies and proceedings could, in some cases, be 'affected' by a procedural amendment. His Honour considered that the repeal of the evidentiary provision in Sutton affected the related proceeding to establish an offence (which itself survived repeal) because, although it may have been possible to prove the offence by other means, it was 'beyond argument' that the prosecution would be markedly disadvantaged by the termination of the right to prove the case in the customary way.[47]
Whether application under s 40(2) and (3) of the Stamps Act a proceeding
89 The word 'proceeding' is defined in s 3 of the Supreme Court Act 1986 to mean 'any matter in the court other than a criminal proceeding'. In Braeside Bearings Pty Ltd v JH Brignell & Associates (Boronia) Tadgell JA (with whom Phillips and Callaway JJA agreed), considered that 'proceeding':
used as a generic expression to embrace what was formerly comprehended individually and respectively by the expressions 'action', 'cause' and 'matter'. The expression 'matter in the court' in the definition of 'proceeding' in s 3 refers on that assumption to a proceeding in the sense of a vehicle by which the jurisdiction of the court is invoked and not to the subject matter of a justifiable dispute.[48]
90 His Honour concluded that the word 'proceeding' was also used elsewhere in the Supreme Court Act in the same sense, that is, to indicate 'a vehicle by which [the Court's] jurisdiction is invoked'.[49]
91 In Trustees Executors and Agency Co Ltd v Reilly, Mann CJ stated:
The words "in respect of" are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer. [50]
94 In my opinion, as the language of s 40(3) of the Stamps Act expressly indicates,[55] an application under s 40(2) institutes a proceeding in respect of a substantive right (to recover the debt under s 40(1)) and, with s 40(3), provides for the remedies, enforcement and costs of the proceedings. An application under s 40(2) is a vehicle by which the court's jurisdiction is invoked, and the application is directed at, connected with, and therefore, in 'respect of', the substantive right to recover the debt under s 40(1). The fact that an applicant under s 40(2) is not assured of obtaining the orders provided for in subsections (2) and (3) does not deprive the process of the character of a proceeding. In the present case, the repeal of s 40(2) would have the effect of eliminating the proceeding it creates in respect of the accrued substantive right to recover the debt under s 40(1). Nevertheless, if there be an alternative, conventional proceeding to recover the debt, the repeal of s 40(2) and (3) would not eliminate the existing substantive right or bar the remedy, thereby 'affecting' the substantive right in that sense.
95 The appellant's reliance on s 14(2)(e) of the IL Act is inconsistent with Gibbs J's analysis of its scope in Yrttiaho. His Honour there confined the application of s 14(1)(e) to the preservation of accrued substantive rights, as distinct from rights of a procedural nature directed at their pursuit and remedy. Implicitly at least, Gibbs J did not consider that s 14(2)(e) was (despite its wide terminology) intended to preserve rights of a procedural nature even if they, or their repeal, affected an accrued substantive right, because he concluded that procedural rights were expressly and exclusively dealt with under s 14(1)(g).
96 Therefore, in my opinion, s 14(2)(e) of the IL Act does not preserve s 40(2) and (3) of the Stamps Act. The outcome would be different if s 40(2) created a distinct right of action for the recovery of moneys differently defined from the debt referred to in s 40(1), and on different pre-conditions, as any substantive rights under s 40(2) accrued at the date of repeal, would, on Gibbs J's construction, be preserved by s 14(2)(e) of the IL Act.
97 Given that neither party advanced that interpretation of s 40(2) and I consider, for reasons set out below, that s 40(2) and (3) are preserved under s 14(2)(g) of the IL Act and the common law doctrine of implied saving, it is unnecessary to consider that question further.
98 Similarly, reliance on Gray J's analysis of s 14(2)(g) of the IL Act in Sutton (which Kaye and Brooking JJ did not adopt), is unnecessary to the disposition of the present case.
99 In Yrttiaho Gibbs J decided that s 14(2)(e) did not apply to a proceeding, investigation or remedy because proceedings, investigations and remedies in respect of an accrued substantive right under s 14(2)(e) were expressly provided for under s 14(2)(g), which required them to be preserved 'unaffected'. Gibbs J considered that changes to the procedural rules applying to such proceedings or investigations and the pursuit of such remedies would not relevantly affect them and would therefore apply retrospectively. Conversely, his Honour clearly assumed that the absolute destruction or barring of a proceeding, investigation or remedy would 'affect' it in the relevant sense.
100 In my opinion, as stated above, s 40(2) of the Stamps Act created a proceeding in respect of the debt in s 40(1) (which was itself an accrued substantive right at the date of repeal). Section 40(3) established remedies available in a proceeding instituted under s 40(2) in respect of the accrued substantive right to recover the debt under s 40(1).
101 In contrast to the amendment at issue in Yrttiaho, the repeal of the Stamps Act, including s 40(2) and (3), could not properly be characterised as a merely procedural amendment. Even if it could be thus described, the repeal of s 40(2) and (3) (in circumstances where accrued substantive rights under s 40(1) survived) would, not prima facie, operate only to alter procedures applicable to a s 40(2) application. Rather, it would eliminate the s 40(2) proceeding altogether. The repeal would also eliminate the availability of the remedies of orders for payment, attachment and costs under s 40(3) (albeit they depend on the favourable exercise of the court's discretion). It is also arguable, although unnecessary to decide, that the account on oath under s 40(2) itself constitutes a remedy[56] and an 'investigation' in respect of the substantive right, which, unless preserved by s 14(2)(g) or other means, would be eliminated by the repeal.
102 Before us, the respondent emphasised the reasoning in Kentlee Pty Ltd v Prince Consort Pty Ltd[57] ('Kentlee') and like authorities, submitting that there could be no accrued right or power to initiate an application under s 40(2) of the Stamps Act after the repeal, particularly as s 40(2) and (3) were predicated on various contingencies and cascading levels of discretionary power, such that no right could come into existence absent its favourable exercise.
103 In Kentlee, however, there was no accrued substantive right existing independently of the application in question. Therefore the analysis in Kentlee, while relevant to the principal question addressed below (whether there was an accrued substantive right to initiate a s 40(2) application under s 40(2) after repeal) does not address the question whether the processes under s 40(2) and (3) amount to a proceeding, investigating or remedy preserved under s 14(2)(g) of the IL Act.
104 In Yrttiaho, Gibbs J did not consider the question whether s 14(2)(g) only preserved proceedings, investigations or remedies if no alternative proceeding, investigation or remedy were available in respect of the substantive right. In my opinion, there is no warrant for reading down the language of s 14(2)(g) in that way.
105 It follows that, in my opinion, s 40(2) and (3) of the Stamps Act are preserved pursuant to s 14(2)(g) of the IL Act, because they create or constitute a proceeding and remedies in respect of the accrued substantive right to recover the debt which is preserved under s 14(2)(e) of the IL Act.
106 Given the above conclusion, it is unnecessary to consider the appellant's alternative argument based on the doctrine of implied saving applied in Sutton, but I do so in recognition of the arguments advanced by counsel.
107 In Sutton, some provisions of the Motor Car Act 1958 (including a section (s 81A) establishing the offence of driving with a prohibited level of blood alcohol) and an associated evidentiary provision ((s 80F) permitting proof of the offence by a certificate of the operator of the breathalyser machine) were repealed. Provisions very similar to s 81A and s 80F were subsequently enacted as corresponding new provisions, but there were no transitional provisions. Prior to the repeal, two persons were charged with the offence.
108 While s 14(2)(e) of the IL Act clearly preserved the liability of the offender, the reasoning in Yrttiaho prima facie posed an obstacle to the preservation of the evidentiary provision. The Full Court nevertheless held that the evidentiary provision survived. Kaye and Brooking JJ so found on the basis of the common law doctrine of implication, while Gray J relied on both the common law doctrine and s 14(2) (g) of the IL Act.
109 Kaye J observed that the repeal of the provision was subject to a contrary intention, which need not be expressed, but could be established by necessary implication.
110 His Honour observed that while it was still technically possible to prove the relevant offence without employing the evidentiary procedure, the alternative means (calling the breathalyser machine operator and, probably, the Commissioner of Police as witnesses) was impractical and would defeat the purpose of the certificate.
111 Kaye J considered that, in such circumstances, the legislature must be taken to have intended to preserve the evidentiary provision. Brooking J also considered that, although the words of s 14(2)(g) would be wide enough to leave intact not only 'the criminal liability in respect of past offences, but also the procedure which is to attend their prosecution',[58] the approach of the majority in Yrttiaho precluded that conclusion.
112 Brooking J nevertheless considered that the evidentiary provision was preserved by the principle that 'where an enactment is repealed there may be an implied as opposed to express saving'.[59] The relevant authorities indicated a range of criteria for such implication, ranging from 'reasonable and necessary' to 'clear' or 'one proper to be made'.[60] His Honour considered that implication was justified in the case before him on any of the various formulations, because the evidentiary provision 'is not some minor procedural adjunct for an offence against s 81A: it is concerned to facilitate proof of one of the essential elements of that offence'.[61] His Honour observed that the penal 'line was drawn' by reference to a specified percentage of alcohol in the blood, and s 80F was intended to enable it to be established with precision. His Honour stated:
These two sections, s 80F and s 81A, work in double harness and we all know that from a practical point of view they are both essential to the satisfactory working of the legislative scheme.[62]
113 The appellant submitted that the common law doctrine analysed in Sutton applied in the present case, because both the substantive provision and associated provisions of a procedural or remedial nature (which significantly facilitated the effective satisfaction of the right) were repealed together. The accrued substantive right unarguably survived repeal, so the survival of the advantageous processes attending it must also have been intended.
114 The respondent submitted that the doctrine of implied saving was confined to exceptional cases like Sutton, where the proof of the offence without reliance on the evidentiary provision, if not impossible, was virtually so. In my opinion, while the repeal of the evidentiary provision in Sutton entailed exceptional inconvenience, the reasoning made clear that the implied saving of evidentiary or procedural processes was based on a wider rationale. On Brooking J's analysis, it sufficed if a provision were necessary to the effective operation of the legislative scheme of which it was a part.
115 The respondent also submitted that, unlike Sutton, in the present case only a provision equivalent to that creating the accrued substantive right was re-enacted (s 265(6) of the Duties Act), so an intention to dispense with, rather than save, the related summary procedure in s 40(2) and (3) should be inferred.
116 In my opinion, however, s 265(6) of the Duties Act is not effectively equivalent to s 40(1) of the Stamps Act.
117 The moneys the subject of s 40(1) of the Stamps Act and s 265(6) of the Duties Act are significantly different. Section 40(1) covers, in essence, improperly retained moneys received by a person as and for duty. Section 265(5) covers amounts representing under-endorsement or non-approved endorsement, and imposes liability for double the amount that would have been payable. There is no reference to sums retained and no requirement of improper withholding or the like.[65]
118 As there is no re-enactment of any of the subsections of s 40 of the Stamps Act and no transitional provisions, but the accrued substantive right under s 40(1) unarguably survives, in my opinion, the doctrine of implied saving recognised in Sutton would apply to preserve s 40(2) and (3), given their close interrelationship with s 40(1), their clarification of its concepts and their capacity materially to assist in ascertaining the scope and satisfaction of that right. In such circumstances, s 40(2) and (3) are necessary to the satisfactory operation of s 40 of the Stamps Act viewed as a unified legislative scheme, and thus would be saved by the common law doctrine applied in Sutton.
119 Given the conclusions reached above, it is unnecessary to consider a number of alternative submissions advanced by the parties.
120 In my opinion, leave to appeal should be granted and the appeal should be allowed.
121 The appellant submitted that this Court should now make orders under s 40(2) of the Stamps Act, as the primary judge acknowledged that, but for his conclusions in relation to s 40(2) and (3), he would have done so. Given, however, the multiplicity of additional claims subsequently included in the appellant's statement of claim, the future conduct of the matter should, in my opinion, be determined by the learned primary judge.
122 I have read the draft reasons of Dodds-Streeton JA for allowing the appeal. I agree with those reasons. I also agree that, having regard to the further claims now raised by amendment, the proceeding should be remitted to the trial judge for determination in accordance with the reasons given by Dodds-Streeton JA.
[3] Commissioner of State Revenue v Aidlaw Pty Ltd [2007] VSC 475, [30].
[9] [1971] HCA 29; (1971) 125 CLR 228, 246 (emphasis added).
[10] Commissioner of State Revenue v Aidlaw Pty Ltd [2007] VSC 475, [99]-[102] (citations omitted).
[13] Ogden Industries Pty Ltd v Lucas [1967] HCA 30; (1967) 116 CLR 537, 582.
[15] Public Curator (Queensland) v Yrttiaho [1971] HCA 29; (1971) 125 CLR 228, 242.
[19] Ibid 267-8. Wright v Hale [1860] EngR 1191; (1860) 6 H & N 227, 232; [1860] EngR 1191; 158 ER 94.
[20] Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, 268.
[27] Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, 278.
[31] Ibid 281. (1932) 1 KB 485, 489 (Greer LJ).
[32] Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, 283.
[36] Public Curator (Queensland) v Yrttiaho [1971] HCA 29; (1971) 125 CLR 228, 242.
[44] [1965] QWN 38, 47.
[45] Public Curator (Queensland) v Yrttiaho [1971] HCA 29; (1971) 125 CLR 228, 246.
[48] [1996] VicRp 3; [1996] 1 VR 17, 20.
[50] [1941] VicLawRp 22; [1941] VLR 110, 111.
[55] Section 40(3)'s reference to 'such proceedings' clearly refers to the application made under s 40(2).
[56] See, for example, Justin Gleeson and James Watson, 'Account of Profits, Contracts and Equity' 2005 79 Australian Law Journal 676.
[58] Sutton v Bradshaw [1988] VicRp 83; [1988] VR 920, 928.
[60] Ibid_,_ see Chorlton v Lings (1868) LR 4 CP 374, 387.
[65] Section 40(1) of the Stamps Act refers to 'any sum of money as or for duty' which the recipient omitted or neglected to appropriate to payment, or otherwise improperly withheld or detained. Section 265(6) of the Duties Act refers to an amount equal to double the amount which would have been payable had an authorised person (as defined) not contravened s 265(5) of the Duties Act by knowingly endorsing an instrument with an amount of duty less than the chargeable amount, or otherwise than in the approved manner.
Commissioner of State Revenue
Bulzomi [2009] VSCA 99
(1971) 125 CLR 228
(1967) 116 CLR 537
(1957) 96 CLR 261
(1945) 70 CLR 647
(1936) 55 CLR 707
(1966) 117 CLR 412
(1969) 118 CLR 658
(1979) 144 CLR 549