Hookway v Racing Victoria Limited & Anor [2005] VSCA 310

Hookway v Racing Victoria Limited & Anor [2005] VSCA 310 | Case summary | Zoe

[5]

4 The factual circumstances raising the questions in this appeal are relatively simple but the answers to those questions depend, in the first place, upon legal principles concerning restitution which have been worked out by the courts in their major implications only over the last 20 years or so[3], in particular those relating to mistakes of law, and, in the second place, upon the construction of the Rules of Racing, especially the rules relating to appeals from stewards, applicable in this State whose frequently inelegant terms are a mixture of the Australian Rules of Racing ("AR") and the Local Rules of Racing ("LR") of the first-named respondent. The latter are strategically but not entirely logically inserted at various places within the

Australian Rules and carry numbers which bear no relationship to the numbers given to the Australian Rules which surround them.[4]

5 As to the facts it is sufficient for present purposes to give the following account. After the running of a Group 2 race, the Schillaci Stakes, at Caulfield on Caulfield Guineas Day on 13 October 2001, a routine swab was taken from the horse which finished first past the post, namely Mistegic. The appellant Mr Hookway was the owner of a horse named Windigo which finished second past the post. Before any prize-money had been distributed by the first respondent, Racing Victoria Ltd., (on behalf of the club which conducted the meeting at Caulfield, the second respondent, Victoria Amateur Turf Club), the swab, which was a urine sample, appeared to show a positive result such that the stewards (who acted for the purpose of the meeting of 13 October as Stewards of the second respondent) decided to conduct an inquiry as to whether a prohibited substance had been administered to Mistegic, which was capable of leading to a disqualification of that horse as winner pursuant to AR 177.

6 In the ordinary course of events the prize-money is distributed within two to three weeks of the relevant meeting by the Stakes Payment Officer of the first respondent, who at the relevant time was Mr Victor Chung. Because he was aware of the proposed stewards' inquiry he did not pay the first prize-money to the connections of Mistegic, but paid those of each of the other placegetters (which for the purpose of the Schillaci Stakes included the second to fifth placegetters) the amounts they were entitled to by virtue of their finishing in those positions. The stewards completed their inquiry, as a result of which they forwarded a written report dated 4 January 2002 by which they disqualified Mistegic as the winner of the race on the ground that a prohibited substance had been administered to it. Consequently they revised the placings for the race so as to award first place to Windigo with the other horses, including a sixth horse, being moved up the list of placings accordingly. Such a report by the stewards was, however, not necessarily the end of the matter for under the local rules, in particular LR 6A to LR 6E, the Racing Appeals Board had been set up, to which the owner of Mistegic had a right of appeal by giving notice not later than 5 p.m. on the second day "next following the day on which the person was advised of the decision" excluding weekends and public holidays.

7 Unfortunately, as the learned judge in the County Court found on the balance of probabilities, neither Mr Chung nor his staff were aware of this right of appeal at that time, possibly because the Board had been set up only in the relatively recent past. So, because he was ignorant of that right of appeal and thus mistakenly believed that there could be no appeal against the stewards' decision, Mr Chung proceeded to distribute the balance of the prize-money in accordance with the revised placings, including an additional payment of $76,500 to the appellant. The payment was in fact made on 7 January 2002 before the time for appeal to the Racing Appeals Board had expired. As it turned out the owner of Mistegic did not appeal within the time specified in the rules, partly because he had been told by somebody in the employ of the first respondent that he had a week in which to bring an appeal, but he did bring an appeal on 11 January 2002 or at least sought leave to appeal from the decision of the stewards out of time. The Board proceeded to hear the appeal and on 21 March that year it seems that it allowed that appeal and determined that "Mistegic was the winner of the Schillaci Stakes and that the placings [were] to be amended" so as again to place Windigo in second place and otherwise to restore the placings as the horses passed the post. Precisely what form that determination took is not now clear for it also appears that reasons for that decision were not immediately given. Indeed a carefully drafted set of reasons for decision was in fact not published until 9 May 2002 in which the conclusion was simply stated that the Board allowed the appeal and quashed the trainer's conviction. It can fairly be assumed, however, that by virtue of the Board's decision itself on 21 March or by an act of the stewards, in consequence of the allowing of the appeal, the placings had been amended so as to restore Windigo to second place.

8 Consequently a letter of demand was sent by the General Manager, Finance, of the first-named respondent seeking repayment, originally only pursuant to Rule of Racing AR 173. The present action was commenced in the County Court when the appellant refused to pay.

9 There were two bases upon which the respondents sought to recover the sum of $76,500 "mistakenly" paid out by the first respondent shortly after the stewards' report was received. The first was that the payment was made under a mistake of fact or law in that the respondents through the Stakes Payment Officer mistakenly believed that the decision of the stewards placing Windigo first was final inasmuch as either he believed that the period for appeal had expired or he was ignorant of the possibility of an appeal, i.e. of the right of appeal. It should be noted that the apparent inconsistency as to Mr Chung's belief arose because, by reason of his later death, he was unable to give direct evidence as to his belief, so that it remained a matter of inference as to precisely what mistaken belief he held. It is sufficient for the present to say that the judge found that the relevant mistake was "Chung's ignorance of the right of appeal by [the owner of Mistegic] against the stewards' decision". Sensibly the appellant has conceded that it was open to the judge to make such a finding, and no ground of appeal has been pursued which is directed to that finding of fact.

10 The reasons of the learned County Court judge were both clear and well ordered. His Honour observed that both parties accepted that the principal authority governing the law on recovery for mistake of law was David Securities Pty. Ltd. v. Commonwealth Bank of Australia[5]. Accepting that as the basis, his Honour asked whether the payment made by the appellant was made "under the kind of mistake that allows recovery" whether of law or of fact. As to this the judge expressed himself as follows:

[7]

Whether or not the absence of knowledge by Chung and his associates came about by negligence, his Honour said that was of no great consequence for this purpose, except that among many other factors it might have a bearing on the justice or otherwise of making a restitutionary order. Moreover the judge said that he was confident that the payment was not "voluntary". The respondents did not stand to gain anything by making the payment and, had they collected the disputed sum from the appellant in time, his Honour considered that it would have been paid over to the ultimate winner and other placegetters, so that the respondents would not have kept the sum for themselves. They had merely sought recoupment. There was no suggestion that it had been paid over in settlement of any claim.

11 In considering whether for other reasons the payment was voluntary his Honour said, having regard to the authorities, a sum paid voluntarily in this sense "meant that the payer knew all the relevant circumstances, yet had chosen to pay the [appellant]", although he conceded that in some circumstances the payer may not know all the circumstances but may waive further inquiry.[6] Nor was this a case where recovery would be denied on the basis that the law upheld bargains and enforced compromises freely entered into.

12 A number of other matters were referred to and rejected by the learned judge. He said there had been no bargain. There was no rule which required immediate payment of first prize-money to the appellant in the circumstances. Further his Honour considered that this was not a case of misprediction.[7] There was no element of prediction, in that there was no suggestion that Chung was seeking to predict the outcome of the appeal to the Board and was taking a risk that the appeal would be dismissed. His Honour also rejected an argument on the part of the appellant raising the so-called defence of "honest receipt", as formulated by Brennan, J. in David Securities[8]. The judge in the end concluded that he doubted that Brennan, J.'s view was consistent with the decision of the majority in David Securities and in that I consider that he was entirely correct. The judge also considered that the mistake of Chung was causative of the overpayment, especially as it was made before expiration of the time for appeal. It was not for the Court to consider a collateral attack on the decision of the Racing Appeals Board.

13 Finally, the judge considered whether there were any circumstances which would make an order for restitution unjust. He concluded that the retention by the appellant of the sum would be a "windfall enrichment" and it would have been unjust to withhold the relevant sum from the owner of the ultimate winner, although, as his Honour stated earlier, it was more a case of recoupment of the sum which the respondents had already been obliged to pay. His Honour thought the only other factor potentially operating in the appellant's favour was that the plaintiff's system was deficient to the extent that it permitted premature payment but that, he concluded, was "quite insufficient" to justify refusal to make an order for restitution.

14 The second basis for recovery was a contractual claim based upon what is now accepted to be a contractual relationship between the appellant (and the other owners of horses which ran in the race) and the respondents. That contract was, at least in part, represented by the Rules of Racing and the respondents' claim was made pursuant to AR 173:

[9]

It will be necessary to return to the Rules of Racing, in particular to a series of definitions of words used in that rule.

15 The learned judge decided that the appellant had been "found" not to be "entitled" to the balance of the first prize-money "by reason of the disqualification of his horse or otherwise", but denied the appellant's liability on this contractual basis because he held that that finding was not one by either the stewards or the committee of any relevant club. That conclusion is in itself the subject of a notice of contention by the respondents. The basis of the judge's holding that, but for the latter conclusion, the appellant would have been entitled under rule AR 173 was not, of course, by reason of the fact that there had been "a disqualification of his horse", for the disqualification had been of the first horse Mistegic, but because there had been a finding that the appellant was not entitled to the prize-money "otherwise", in that the Racing Appeals Board (if its decision was otherwise relevant), by reversing the stewards' decision, had found that the appellant was not entitled to the first prize-money, as had been assumed by the Stakes Payment Officer.

16 As is apparent his Honour did not uphold what I might describe as the contractual basis for the respondent's claim based primarily on AR 173 of the Rules of Racing. His reasons examined the rules in some detail before coming to the conclusion that the finding of the Racing Appeals Board was not a relevant finding for the purposes of that rule, but I will not examine those rules until I turn to examine this second basis of claim and the arguments put forward by both the appellant and by the respondents, particularly, in the latter case, in support of the notice of contention.

17 The appellant filed a notice of appeal which contained an elaborately constructed set of grounds of appeal. A number have been abandoned and the rest reformulated in a clearer way. Consequently I will deal with the grounds broadly in the way in which counsel presented the arguments on the appeal.

Claim in Restitution - General

18 The concepts behind the respondents' claim in restitution are by no means fully worked out, whether one goes to authorities binding on this Court or to the works of the many text writers who have attempted to expound the principles applicable in this new "field" of the law. Relevant principles are none the clearer when one knows that a respected writer, such as Professor Birks, published his original work on the subject under the title An Introduction to the Law of Restitution (in 1985), but wrote his final work on the subject in 2003, shortly before his untimely death, calling it Unjust Enrichment, at the same time stating[9] in his preface to the latter work that, "Almost everything of mine now needs calling back for burning". To add to the theoretical difficulties, what Professor Birks ultimately saw as a new and preferable insight into these problems, the existence of a basic, overriding principle of unjust enrichment, was effectively rejected by the High Court in David Securities.[10] As was there stated by the majority, the "submission that the [plaintiff] must independently prove 'unjustness' over and above the mistake cannot therefore be sustained", for, if a payment has been caused by mistake, that is "sufficient to give rise to the prima facie obligation on the part of the [defendant] to make restitution". The burden then rests on the defendant to point to circumstances which the law will recognise as making such an order for restitution unjust.[11]

19 Lest what I have just said should be misunderstood, it does not mean that, in the development of principles relating to restitution, "unjust enrichment" is irrelevant, far from it, especially in identifying and defining what kinds of payments should be treated as prima facie requiring restitution. As the majority pointed out in David Securities[12], unjust enrichment was a "unifying legal concept", which explained why, in certain categories of case, there is an obligation on the payee to make fair and just restitution for a benefit derived at the expense of the payer. Restitution[13] is not, however, a principle which requires, in examining any particular payment, "some subjective evaluation of what is fair or unconscionable"; rather recovery depends upon the existence of a "qualifying or vitiating factor such as mistake, duress or illegality", though subject to particular defences examined in David Securities. Thus the unifying concept of unjust enrichment might lead to the development and application of principle, but it is not a principle which in itself defines liability.

20 For present purposes that "unifying concept" has now been applied by the High Court so as to produce a principle that moneys paid under a mistake of law may be the subject of a claim in restitution. The reasons of the majority in David Securities were there set out in detail but, after examining the authorities, they concluded[14] that "the rule precluding recovery of moneys paid under a mistake of law should be held not to form part of the law of Australia". The majority then considered what principle should be substituted in its place, disposing first of two contentions, one that persons making a mistake in payment must in every case have supposed that they were under a legal liability to make the payment and secondly that the kind of mistake must have been a "fundamental one"[15]. If once thought to be relevant, they are no longer so.

21 Moreover, mistake, including mistake of law insofar as that is now to be separately considered, comprehends not merely a belief (which actuates a payment or transaction) arising out of an erroneous conclusion as to a matter of fact or law but comprehends also a mistaken belief arising from inadvertence to or ignorance of the existence of a specific fact or legal requirement. This much was stated in David Securities[16] where the majority, citing Winfield's article on "Mistake of Law"[17], said, "Mistake not only signifies a positive belief in the existence of something which does not exist but also may include 'sheer ignorance of something relevant to the transaction in hand'".[18] More particularly, in Commissioner of State Revenue (Vict.) v. Royal Insurance Australia Ltd.[19] payments by the respondent when "unaware" of certain statutory amendments were held to have been made as a result of a mistake of law. Of course, in the present case it was Mr Chung's ignorance of the appeal provisions (and that of his staff), so it may be inferred, which led to the respondents making the relevant payment before the appeal had been instituted or could be heard.

Whether Payment "Voluntary" - General

22 The primary answer of the appellant to the respondents' claim was that their payment was voluntary in the sense comprehended by the authorities, especially David Securities. On the face of it the respondents' payment might appear to have been voluntary in that Mr Chung (and his staff) made a free, intentional and deliberate choice to pay, not induced or otherwise affected by external pressure or constraint. In the context of restitution, however, that is not the end of the matter, for a payment may relevantly be involuntary if the will of the payer is affected by a mistake, so long as the mistake (relating to facts or law) causes that person to make the payment upon a false assumption which, if the truth were known, would have resulted in no payment being made, nor any desire to pay.

23 An important distinction must first be drawn, namely, between the different uses to which the words "voluntary" and "involuntary" have been put in the context of restitution. Generally the subject, however analysed, relates to the recovery of payments which may be characterised, in one way or another, as involuntary in that the payer's will is defeated or qualified by events or circumstances such as extortion, compulsion, undue influence, unconscionable conduct and mistake of fact or law which might, at least in broad terms, be said to deny, at least to some significant extent, the exercise of free will by the payer. Even in cases of mistake it can fairly be said, if that factor is truly made out, that the payer has not willingly made the payment in the sense that, if the correct facts or legal propositions were known, that person would not have contemplated making the payment. At that stage the issue is, as has frequently been stated, whether a mistake has led to or caused the impugned payment, but that is essentially a question of fact. On the other hand the so called "defence" of voluntariness raises a different and not unrelated issue, for it assumes that otherwise the plaintiff has made out its case. That is why the majority in David Securities made the cautionary observation_[20]_: "We use the term 'voluntary' therefore to refer to a payment made in satisfaction of an honest claim, rather than a payment not made under any form of compulsion or undue influence."

24 It follows that, in cases such as the present, where a mistake of law is said to have led to a payment being made, there remains a further question, namely, whether, notwithstanding the mistake, what the payer did can still be characterised as amounting to a voluntary payment. This meaning of "voluntary" here is much more elusive, indeed the concept has been described by Mason and Carter in their Restitution Law in Australia (1995)[21] as "a slippery one" and that its various meanings are "apt to mislead". The subject of voluntary payments is therefore given little prominence in that work and is not favoured by several other commentators.[22] A not dissimilar scepticism may be seen in the judgment of Brennan, J. in David Securities_[23]_, but on this subject his Honour's view was clearly and by his own admission a dissenting one and it is necessary here to examine what the majority considered to be the meaning of "voluntary".

25 The majority of the High Court, however, was particularly concerned in David Securities lest certain payments made in response to honest demands might be treated as recoverable as having been made under mistakes of law where parties agreeing to make those payments later assert that they have not been fully aware of their rights, so leaving the way open for people to challenge any payment which could be ordinarily characterised as an accord and satisfaction or otherwise as a compromise of the relevant legal claim. The majority judgment thus turned to the question of voluntary payment or election on the part of a plaintiff, which was said to provide an explanation for those decisions in the past which had rejected mistake of law, as follows[24]:

[11]

Consequently in the present case it has been contended, in reliance on the latter part of this passage, that Mr Chung (including his staff) was indifferent to the legal rights of the parties and chose voluntarily on behalf of the respondents to make the payment in question, having assumed the validity of their obligation to the appellant. But what was intended by that passage?

26 As appears from the passage already cited at the end of para.[23], the majority summarised their approach by saying that they "[used] the term 'voluntary' therefore to refer to a payment made in satisfaction of an honest claim." (Emphasis added.) It should be remembered, however, that a number of concepts may be wrapped up in their use of the term "voluntary" apparently defined in the last two pas[25]ges quoted.25 Their reasoning, as was to appear short[26] thereafter26, was that such an analysis was founded firmly on the policy that "the law wishes to uphold bargains and enforce compromises freely entered into". Payments in "satisfaction" of claims clearly include those based on an accord (in the strict sense) but with little difficulty would comprehend all other compromises arising from "bargains" of the kind described in [27]at passage.27 But the payments described as "voluntary" in the quotation in the l[28]t paragraph28 are of a wider kind, albeit that from time to time compromises and the like are also called "voluntary" payments in the authorities and by the text-writers, or at the least are treated as part of the [29]me subject.29 Essentially this wider group of payments need not arise from any bargain or other agreement but will ordinarily represent the freely determined response of the payer to an apparent legal obligation, often described as an "honest claim", though "honest" here connotes little more than that the claim or demand suffers from no known [30]gal defect.30 As a matter of policy there ought to be no dispute about the irrecoverability of payments made by way of compromise, except to the extent that mistake might vitiate the compromise agreement itself, but there remains the difficult question whether the passage quoted in the second sentence above (set out [31] full below31), which places emphasis solely on "bargains" and "compromises", was intended to deny or qualify, at least in part, the extent to which a "voluntary" payment can be an answer to a claim in restitution based on mistake.

27 To this stage the majority's reasoning in David Securities might point to the conclusion that, although mistake of law can found a claim in restitution, the "defence" of voluntary payment might restrict claims of that kind to a very narrow field, most likely to cases where the payer could point to a specific error of law which was a direct cause of an undemanded payment. The majority then pointed out again that the concept of mistake of law "includes cases of sheer ignorance as well as cases of positive but incorrect belief"[32]. It followed that, if one were to define mistake as the "supposition" that a specific matter were true, then that would leave out of account many situations. In their opinion[33]: "A narrower principle, founded firmly on the policy that the law wishes to uphold bargains and enforce compromises freely entered into would be more accurate and equitable." The acceptance of that narrower principle was strongly supported by the difficulty, indeed the illogicality, of seeking to draw "a rigid distinction between cases of mistake of law and mistake of fact". Thus they thought that it was appropriate by that time, 1992, to abolish what had been seen to be the traditional rule distinguishing the two kinds of mistake and to permit recovery for mistakes of law, subject only to the general defences available for restitutionary claims.

28 On this broad basis the majority then considered two "defences" relied upon by the respondent in David Securities, the first of which was that the payments had been made for "good consideration".[34] They said that this concept had been effectively summarised in the course of what Robert Goff, J. said in Barclays Bank Ltd. v. W.J. Simms Son & Cooke (Southern) Ltd.[35], where his Lordship stated that a claim to recover moneys mistakenly paid may fail if -

[13]

It would be fair to say that these two categories corresponded in broad terms to what the majority had already defined as "voluntary", para.(a) largely reflecting what had been said[36] about payments intended to be made "irrespective of the validity of the claim" and para.(b) reflecting, at least in part, the later "definition"[37] referring to "payment[s] in satisfaction" of claims. Looking at the facts relied on in David Securities, the majority said that, by contending that the appellants had contracted to pay the additional amounts "without adverting to the question of whether they could legally be forced to pay", the respondent had argued in effect that the appellants had "voluntarily submitted to payment".[38] In their opinion that entailed the conclusion that the appellants could not truly be said to have made a mistake, "as they knew what they were agreeing to ... or waived enquiry into the issue and paid the additional amounts with the intention to effect an absolute transfer".[39] The defence was rejected on an analysis of the facts in that case so that the majority held that the payments had not been made for good consideration, but it is apparent that the majority thought that payment for apparently good consideration might amount to an effective voluntary submission to payment. I would add that, notwithstanding this careful analysis, the majority did not, on the materials before the Court, find it possible to reach a conclusion as to whether the appellants had truly paid the moneys over under a mistake, for they remitted the case to the trial judge to have a series of matters resolved, two of which were, in the first place, whether the appellants should be permitted to call evidence on the issue of mistake, and secondly, whether the appellants had paid the additional amounts because of their mistaken belief that their contractual arrangements with the respondent required the payments.

29 For present purposes, although Brennan, J. accepted that there could be recovery for mistake of law, he did not agree in the final orders and cannot be taken as having agreed with the analysis of the majority, especially as he saw the quite different defence of "honest receipt" (which will be examined later) as a principal defence available to a claim to recovery of money paid under a mistake of law. Although he made a number of observations about the nature of voluntary payments, the conclusion which he reached makes it unlikely that his views on the subject can be treated as consistent with those of the other members of the Court.

30 On the other hand Dawson, J. agreed both with the conclusions and the reasoning of the majority in David Securities[40]. Under cover of his concurrence, however, he sought to make some further observations as to the nature and significance of voluntary payments. Noting that some of the earlier decisions had been based upon an analysis of mistaken payments being treated as voluntary and thus not giving rise to any claim for repayment, he commented[41] that it would continue to be difficult to establish that a payment was made under a mistake of law in circumstances giving rise to a claim in restitution, observing that in the case of those who honour contractual obligations:

[15]

This may go further than the majority and to that extent cannot be treated as binding. His Honour conceded[42] that what he had said shows that in the nature of things cases of mistake of law may be relatively few, "but it is obvious that a person may be caused by a mistake of law on his part to make a payment which he would not otherwise have made". A payment in those circumstances "would not be

voluntary".[43] Moreover Dawson, J. did not see that there had been good consideration provided by the payee in that case or any other basis for resisting restitution, as long as it was established that the payment had in fact been paid under a mistake of law, so that he agreed the matter should be remitted to ascertain whether that was made out on the facts.

31 What was said in David Securities about "voluntary" payments in the context of restitutionary claims has, unfortunately, not been (to my knowledge) the subject of any significant exposition by the High Court or indeed by any intermediate appellate court in this country in the period of nearly 13 years since it was decided. Two important cases on the subject of restitution generally have been decided, Commissioner of State Revenue (Victoria) v. Royal Insurance Australia Ltd.[44] and Roxborough v. Rothmans of Pall Mall Australia Ltd.[45], but for various reasons, although David Securities has been referred to as settling the general question of principle relating to restitution of payments made in mistake of law, the issue of voluntary payments has not been discussed. One might say, consequently, that what was said in David Securities is effectively the last word on the subject, although a word of warning is needed to this extent, that the majority in the Royal Insurance Case, consisting of Brennan, Toohey and McHugh, JJ., seemed to go some way, if one considers the reasoning of Brennan, J. with whom Toohey and McHugh, JJ. concurred, to preferring what Brennan, J. had said[46] in apparent (partial) dissent in David Securities on the defence of honest receipt which some may see as essential to Brennan, J.'s difference of approach and which is discussed below at para.[48]ff.

32 References to concepts such as involuntary payments appear in cases going back many centuries. All that has happened is that the legal rubric under which they may be recovered has changed in the last 20 years so that claims for repayment are now based on what the courts now call the law of restitution. Recovery, however, has been permitted for many years in a vast range of situations where payments (or other transactions) have been characterised as involuntary by reason of mistake, compulsion or necessity, which ordinarily, before the Judicature Acts, was sought and obtained by suing on one of the common counts. Insofar as they were once described as "quasi-contractual" claims, they have been comprehensively analysed (in arguably old-fashioned terms) in both their historical and modern context in the last edition of Professor Stoljar's The Law of Quasi Contract[47].

33 The defence that a particular payment was "voluntary" has likewise been accepted over the years in many circumstances where actions for money had and received and the like have been brought. One may instance the discussion in Stoljar[48] of the kind of supposedly mistaken payments for which recovery has been denied because it has been held that those payments have been voluntary, by reason that they involve the payment of "honest debts" (more frequently described as the "settlement of honest claims"[49]). Likewise he discusses payments which have been protected either because[50] they have been made by way of compromise or agreed settlement of legitimate claims or because[51] the motive for the payments has been more their desirability rather than any legal liability, as those concepts have derived from Aiken v. Short[52]. In terms of payment under compulsion the potential defence of voluntary payment permeates the whole discussion in Chapter 3 of Stoljar's work_._

34 The difficulty, however, is to ascertain the extent to which the defence of voluntary payment in cases of restitution for mistaken payments remains the same now as it did before the decision in David Securities, the outcome in which has been reflected in decisions in virtually all other common law jurisdictions. So some of the writers on restitution itself see the concept of voluntary payment as providing not so much a defence to a claim in restitution based on unjust enrichment but rather as defining the boundary line between those payments which must be restored and those which may be retained by the payee. The most recent edition of Goff and Jones The Law of Restitution identifies[53] the limits by listing a catalogue of general bars, only two of which can more fairly be described as defences (inability to restore to original position and public policy) and the first four of which are listed, as follows:

[17]

35 The difficulty with mistake of law in this context is that the voluntary or officious payment, in particular the payment of the "honest claim", was formerly treated as the basis of, if not the excuse for, denying liability on that ground. If one takes away what was seen to be the accepted rule, seemingly an almost unqualified rule, the courts must reconsider the extent to which voluntary payments remain the relevant dividing line or, alternatively, can be raised by way of defence. So it is not so simple as taking the language used in David Securities and merely applying examples of voluntary payments taken from the past, for the end result might thereby still be an almost complete denial of liability for recovery of payments made under mistakes of law, at least those made in a contractual context. This seems to have been recognised by Dawson, J. in his reasoning in David Securities[55], for he said that cases of payments under a mistake of law may be "relatively few". Nevertheless his Honour appeared to allow for the fact that the change in the law might mean that, even when a payment is made without compulsion or inducement, a payment might not necessarily be voluntary even though made under a mistake of law and that was one reason for his agreement that the case be remitted for further consideration.

36 The difference between seeing the criterion of voluntariness as, on the one hand, defining whether the payer of a sum may claim restitution of the amount mistakenly paid and, on the other, of its merely providing a defence to claims otherwise made out as having been actuated by a mistake on the part of the payer, has also been noticed in the only comprehensive textbook on restitution published in this country, Mason and Carter's Restitution Law in Australia[56]. The authors are critical of the apparent acceptance by the majority in David Securities of the criterion of voluntariness, referring with approval to what Brennan, J. said on the subject. With respect to the learned authors, that assumes that the majority were endorsing precisely the same test of voluntariness which had been laid down in the earlier authorities as being that which should continue to be applicable, particularly in the case of payments caused by mistakes of law.

37 The judgment of the majority in David Securities is long and complicated inasmuch as their Honours were accepting that the law as understood up to that time was defective in principle, so that they then sought to state what principles thereafter should govern restitutionary claims based on mistake of law. In order to show why so few claims based on such mistakes had succeeded in the past, they first demonstrated how that had resulted largely from applying the principle of voluntariness, if so it may be described. In substance they asserted that thereby virtually no claims based on mistake of law had succeeded in the past (or at least for nearly 200 years), but that there was no logic in distinguishing between mistakes of fact and mistakes of law in order to determine which restitutionary claims ought to succeed. If the majority was in fact intending that exactly the same strict criterion for voluntary payments should continue[57] to define liability in mistake, then it might seem strange for them at the same time to consider that such a change ought to be adopted and be considered a significant change in the law. Their Honours might equally have concluded that there was little point in recasting the law to declare that the former "defence" of mistake of law does not form part of the law in Australia for the purposes of restitutionary recovery, unless they also had decided to modify to some extent the qualification based on voluntariness. In itself that suggests the majority were proposing a rather more limited qualification or defence based on the term "voluntary".

38 It is possible that the answer can be discerned from the order in which these matters were examined in the majority judgment. Significantly, so it may seem, most of the discussion of voluntary payments appeared in that part of the judgment appearing under the heading "The Traditional Rule"[58]. Three leading cases were examined[59], namely Werrin v. The Commonwealth[60], South Australian Cold Stores Ltd. v. Electricity Trust of South Australia[61] and J. & S. Holdings Pty. Ltd. v. NRMA Insurance Ltd.[62], but each to show the "emphasis placed on voluntariness or election by the plaintiff". Having concluded that the former principles as to mistake of law and their application were no longer appropriate the majority then asserted[63] that it would be more accurate and equitable to lay down a "narrower principle, founded firmly on the policy that the law wishes to uphold bargains and enforce compromises freely entered into", which was consistent with developments elsewhere. The majority thereafter stated[64] that it was then "necessary to consider what principle should be put in ... place" of the former, traditional rule. But in so doing it is clear that the premise or starting point for any new principle was, significantly, an expressed desire to uphold bargains and compromises, a qualification not at that point stated in the broader terms of mere submission to "honest claims".

39 From this stage of the majority judgment, relatively little was said directly as to the concept of voluntariness, as such, and its operation and effect on the newly accepted principle permitting restitution for mistake in law. However, the majority returned[65] to the issue in considering one of two "defences" relied upon by the respondent, namely that the appellants had made the payments "for good consideration", which might appear to be analogous to the defence of "payment in satisfaction of a lawful claim", already described, or at least form a sub-group within it. It was at this stage that their Honours set out the passage previously quoted[66] from Goff, J.'s judgment in Barclays Bank, where one potential answer to a restitutionary claim was said to arise if a payment was given for good consideration, particularly where it is paid to "discharge, and does discharge, a debt owed to the payee ...". As it happened the factual basis for this defence in David Securities was complex. One argument was that the respondent would have negotiated a different interest rate if it had known that the sums made illegal by s.261 of the Income Tax Assessment Act 1936 did not have to be paid effectively by the appellants. As to that the majority said[67]:

[19]

Though this test was implicitly accepted, the defence was rejected because the true burden for payment of the withholding tax fell upon the respondent and thus the payments were not made for good consideration.

Suggested classification of voluntary payments

40 What payments may be classed as voluntary or at least those which may be described as being in satisfaction of honest claims, can perhaps be categorised by what was said in David Securities and in some of the other authorities referred to. The subject is not given such prominence in the leading textbooks now as in the past, for the reason I have attempted to suggest, namely, that the broad-brush denial of recovery of payments made under a mistake of law is no longer accepted either in this country or in England, to the extent that a wide view of the defence of voluntariness (or honest payment) might seem an unreasonable bar to claims in restitution, although for present purposes it is unnecessary to reach any firm conclusion. As has been seen Mason and Carter touch on these defences only briefly and with some scepticism, and Goff and Jones in their most recent edition have reduced the discussion to but a few pages[68]. The subject was carefully canvassed in detail, but before the decision in David Securities or any of the recent leading decisions in England on mistake of law, in Arrowsmith "Mistake and the Role of the 'Submission to an Honest Claim'" in Essays on the Law of Restitution (ed. Burrows, 1991)[69]. More usefully, since the report was made after[70] the decision in David Securities, there is a most helpful and well ordered discussion of submission to honest claims and compromises in the report of the English Law Commission[71] entitled Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments, the Commissioners for which included (at various times) Brooke, J. and Professors Burrows and Beatson (as he then was). The discussion in the report on submissions to honest claims and compromises[72] is as helpful a discussion as one might wish to find on the subject, although I would not wish to endorse all of the conclusions in its summary[73], as they appear in some respects and with hindsight restrictive (the rule as to mistake of law had not yet been reversed in England), so that the rules there stated seem, to a degree, unnecessarily preclusionary.

41 Nevertheless, with the benefit of that analysis, one may take the following categories from the passages already cited from David Securities[74] and ask how and to what extent those classes will be treated as voluntary or as otherwise precluding recovery. One may start with compromises and other bargains by way of settlement[75]. Secondly, one may take from the quotation set out earlier from David Securities the other payments "in satisfaction of an honest claim"[76] dividing that second class into the various kinds of payments described earlier as voluntary[77] being:

[21]

The classification clearly concentrates on the mind and intention of the person making payment, which, according to the majority, though not according to Brennan, J., is the critical enquiry but it does not concentrate, as does the English Law Commission Report, on the nature of the claims made by the payee and the extent to which they have been pursued. However, in the case of compromises and other bargains one must assume both that a claim has been made and that it has been agreed to be satisfied by the person making payment. Those payments have been treated for many years as incapable of being overturned, at least on the basis of a mere mistake on the part of the payer: see e.g. Callisher v. Bischoffsheim[78] applied by the High Court in Wigan v. Edwards[79]. Secondly, it would still seem accepted that where action is brought and judgment is suffered or payment is deliberately made, then that form of submission to an honest claim may be accepted as irrecoverable, in that the courts discourage people from raising matters which they could have advanced in an action already brought successfully against that party: see e.g. Moore v. Vestry of Fulham[80]. But where there are merely threats of legal proceedings or simple claims the position is less clear. It is here that the intention of the payer is critical and the five categories to which I have referred each involve some conscious decision on the part of the payer to make payment regardless of the legal obligation. It would follow that, if such a payment is made in ignorance of the legal position and in circumstances where it has not been shown that some such conscious decision has been made, then the party subsequently discovering that the payment was made under a mistake of law may, at least since the decision in David Securities, sue to recover the sum paid.

42 Nevertheless, in the absence of binding or compelling authority subsequently on the issue, it is difficult to be confident precisely how the test of voluntariness should continue to be applied. One cannot doubt that if a payment is truly voluntary, in the precise sense of the term, then it is unlikely to have been actuated by a mistake of any kind, let alone a mistake of law.[81] It is preferable in my opinion to regard the test of voluntariness as having been unduly emphasised in the past in order to deny recovery for payments caused by a mistake of law. The relevant test based on that laid down by the majority in David Securities must insist, therefore, that what is "voluntary", and thus not actuated by a mistake of law, is limited to payments made of a kind which the law wishes to protect because of its explicit desire[82] in the first place to uphold bargains and to enforce compromises freely entered into and secondly to protect payments consciously made in satisfaction of honest claims but indifferent as to their legal merits. How that comes about in many circumstances must await some further working out of principle. I would see it, however, as depending upon the majority's broad understanding of the term 'voluntary' as referring to "a payment made in satisfaction of an honest claim"[83]. That properly would not be confined to compromises, settlements or the like, but would make due allowance for circumstances in which payments were made in response to claims or demands of a kind which could not fairly be resisted but which, if a stricter test were demanded, would require the parties to work out a formal compromise, a requirement which would conduce to unnecessary expense and upon which the law could not insist. Satisfaction of "honest claims" would not, however, go beyond the categories already proposed in para.[41], nor did the majority in David Securities suggest that it should.

43 As the majority made clear, "voluntary" for this purpose does not mean "not involuntary", i.e. not made under any form of compulsion or undue influence or the like.[84] That is why they referred to the possibility of recovery of payments made under mistake of law in cases of sheer ignorance of the law. There would be little point in their so describing that seemingly additional category of mistake of law, if a payment made in ignorance of a legal prohibition had to be described as voluntary. One can posit many kinds of payment made in ignorance of legal requirements or restrictions which could otherwise be described as voluntary, in the sense that the payer chooses to make the payment of his or her own free will. If there has been a demand or claim of any kind explicit or implicit, which could be characterised as "honest", then on this basis the payment must ordinarily be treated as one for the purpose of carrying out a bargain and therefore incapable of being overturned, just as a carefully worked out compromise would also be protected. But I would not read the majority judgment as otherwise excluding recovery for voluntary payments if they were actuated by a mistake of law.

44 In conclusion, therefore, as to what may be thought for present purposes to amount to "voluntary" payments in cases where there has been a mistake of fact or law, one must return to the passages already cited by the majority in David Securities. There have been cases in the past where mere acquiescence in a party's liability to pay has led to the payment being characterised as voluntary but the desire in the present case was to produce a coherent statement relevant to all mistakes. Moreover, their Honours clearly wished to include within the class of mistaken payments, even if they had not been thought to have been included in the past, payments made in simple ignorance of a relevant legal proposition or of a conclusion as to legal liability based on the relevant facts. To achieve this a principle had to be worked out, as it was, in a way which nevertheless allowed bargains to be upheld and compromises to be enforced.[85] The term "voluntary" payment had been defined in terms of one made in satisfaction of an honest claim which connoted, beyond mere payment, an effective closure of the transaction. Moreover, if one has regard to the two relevant paragraphs accepted from Goff, J.'s judgment in Barclays Bank and the passage also defining the expression "voluntary" which appears in David Securities after the analysis of earlier authorities[86], then, apart from cases of discharge for good consideration (para.(b) in Barclays Bank), in order to satisfy the term "voluntary" there must otherwise be a conscious choice to make a payment notwithstanding any possible defects in the claim. To this end there must be an assumption as to the validity of the obligation, notwithstanding that ultimately it may turn out that there is no obligation in law. Until it was made clear in David Securities that ignorance of law may properly be a basis for restitution, then it was not difficult to identify for these purposes the circumstances in which payers were treated as having been prepared to make payment regardless of their liability. But when total ignorance is included, then it is not surprising that the courts should require something more, namely, a conscious decision to make payment regardless of possible invalidity or want of liability. In my opinion, as worked out by the majority in David Securities, it was not intended that a person, who makes a payment in ignorance of a basis of invalidity for denying liability, can thereby be treated, without more, as having intended voluntarily to pay the sum regardless of what might be shown to have been a mistake of law. It was intended only to restrict claims by those who consciously decided to pay regardless of what might arise in the future, as well as those who were otherwise bound by accord and satisfaction or any other compromise, or by submission to judgment, each of which will amount to satisfaction of the payee's claim. These may be said, in general terms, to be paid in satisfaction of honest claims.

Conclusion as to "defence" of voluntary payment

45 In the present case it may in the end not be significant whether and to what extent the majority in David Securities intended to heighten the barrier constituted by the defence of voluntariness. The fact is that the appellant had made no claim or demand and that Mr Chung (and his staff) on behalf of the respondents made the payment in ignorance of the contractual provisions relating to appeals and therefore in ignorance of the legal qualification that the stewards' placings could be altered as a result of such an appeal. The question of prediction must be dealt with in a moment, but otherwise, if the matter be properly analysed, there seems ultimately little complexity in the case. It is not contended that there had been any accord or compromise, or that there had been a claim or demand on the part of the appellant, albeit that, if the racing appeal had not been instituted, some claim may have been expected in the not far distant future. The fact is that Mr Chung, and therefore the respondents, chose to make the payment on 7 January but in ignorance of the first placegetter's legal rights of appeal and thus in ignorance of the potentiality for a lawful change in the placings for the race. Their ignorance was as to the legal requirements of the contract constituted by the parties' arrangements under the Rules of Racing but nothing further was said or done between the parties about these requirements.

46 In the broader sense, nevertheless, such a payment might otherwise have been described as "voluntary", for it proceeded from the respondents through its authorised officer without any demand having been made for its payment. As already stated, however, that is not what is meant by voluntary in the sense I have sought to describe above, whether one views it from the perspective seemingly endorsed by David Securities, or even, arguably, in terms of the understanding of voluntary payments before that decision. What is clear is that there was no bargain involved in the making of the payment nor compromise freely entered into, nor any payment made "in satisfaction of an honest claim", which would otherwise have imported at least the implied settlement of an obligation.

47 If one looks, as the majority in David Securities insisted, however, for an actuating cause, then a primary reason for the payment of $76,500 in early January was a mistaken belief as to the legal position surrounding the placings for the Schillaci Stakes, in that those placings, as announced three days earlier by the stewards, were not final under the rules, because there was an outstanding right of appeal in the owner, again as set out in the relevant Rules of Racing which permitted such an appeal to the Racing Appeals Board. There can be no doubt in my opinion that Mr Chung (and his staff), and therefore the respondents, would not have made the relevant payment if the respondents' staff had been aware of the true legal position, namely that there was a right of appeal, and that the placings announced by the stewards were not final in terms of the legal requirements of those rules. There was therefore a relevant mistake of law involved in the payment by the respondents, such that it could not properly be characterised as voluntary in the sense understood in the law relating to claims in restitution.

Defence of "Honest Receipt" and Other Answers to Claim in Restitution

48 A number of other matters were put on behalf of the appellant. The most significant of those was a claim that he was entitled to rely on the defence of honest receipt as proposed by Brennan, J. in David Securities and on one view adopted by a majority of the Court in Royal Insurance. It was said that, as the appellant had no reason to believe that the respondents were mistaken in the decision to pay him the additional prize money in early January, then he honestly believed at that time that he was entitled to receive and retain the moneys paid. So it was contended that it would have been unjust to deprive the appellant of the payment in the circumstances.

49 In David Securities Brennan, J. ostensibly espoused the precept that there was no different rule precluding recovery of moneys under a mistake of law in the Australian common law[87]. But his apparent concurrence on that point was largely dissipated by his subsequent insistence[88] that the "distinction between mistakes of fact and mistakes of law is material to the question whether a payment is 'voluntary' and, on that account, is irrecoverable". Previous authorities, both here and in England, had, to a degree, qualified the general rule by saying that in effect mistake of law "on its own" could not found an action for restitution.[89] That qualified proposition seems clearly to have attracted Brennan, J. in that, after making reference to certain earlier authorities, he said[90]:

[25]

Nevertheless, in order to get over the difficulties which were examined in the succeeding pages of his judgment, Brennan, J. then proceeded[94] to work out a principle intended "to achieve a degree of certainty in past transactions". This he did by stating[95] directly, as considered in only his judgment, that there should be a defence to claims for restitution of payments made under mistake of law, where it can be shown that the payee "honestly believed when he learned of the payment ... that he was entitled to receive and retain the money ...".

51 An examination and comparison of their reasoning shows that the proposed principle of Brennan, J. is inconsistent with the reasoning of the majority. It is sufficient to note, in the first place, their approval of a statement in Westpac Banking Corporation[96] that mistake does not require that "the payer's mistake be shared by the payee ..." and, secondly, their conclusion as to general principle[97] that "the payer will be entitled prima facie to recover moneys paid under a mistake if it appears that the moneys were paid by the payer in the mistaken belief that he or she was under a legal obligation to pay the moneys or that the payee was legally entitled to payment of the moneys. Such a mistake would be causative of the payment."[98] In so holding the majority rejected the need to satisfy any further condition requiring proof that retention would be unjust or unconscionable[99], before they expressed the opinion that, before a prima facie liability to repay is displaced, the payee "must point to circumstances which the law recognises would make an order for restitution unjust", describing then in some detail the defences which might in certain circumstances, though not those which had been proved in David Securities, permit a payee to retain a mistakenly paid amount.[100] Without examining those defences, however, it is clear that at no stage did the majority accept a defence based on the honest belief of the payee to receive and retain the moneys paid.

52 On the other hand Brennan, J. was critical of the concept of voluntary payments or "voluntariness", expressing the views already noted that it was not an appropriate criterion for denying liability. To "achieve a degree of certainty in past transactions"[101], he considered a limiting principle based upon a rule of "honest claim" or "honest receipt" which had to be devised appropriately to meet a prima facie right to restitution. Again he saw the proposed limitation as a defence based on a "claim in conscience".[102] Having regard to the limited definition of the term "voluntary" espoused by him, Brennan, J. chose to put forward honest belief in entitlement as a defence, the burden of proving which rested on the defendant payee.[103] Although, if I may say so with respect, there was much commonsense contained in Brennan, J.'s examination of the difficulties relating to defining voluntary payments, there can be little doubt that it was a dissenting view and that it was inconsistent with what the other six judges said in David Securities. Moreover, as a number of commentators have suggested, the proposed defence was based on the need to find a practical limiting principle and not on any authority.[104] It has been the subject of very few references in subsequent reported authority in this country and in England it was explicitly rejected in the speech of Lord Hope in Kleinwort Benson Plc v. Lincoln County Council[105].

53 If that were all, then it would not be necessary to consider what was clearly a dissenting view in David Securities. There was, however, a brief reference to the page at which this principle appeared in David Securities in the later judgment of Brennan, J. in Royal Insurance[106]. That judgment was concurred in[107] by both Toohey and McHugh, JJ., with whom Brennan, J. formed the majority in Royal Insurance. The passage in question, which has been seized upon by a number of commentators[108], appeared in that part of the judgment where his Honour was dealing with certain moneys (defined as items "(i)" and "(ii)(b)") overpaid by Royal Insurance which he held to have been paid under a mistake of law, being a mistake as to the existence of a supposed statutory obligation to pay certain stamp duty. His Honour then said[109], without further discussion or exposition of principle:

[27]

Although much was said generally about the nature of the payments made to the Comptroller[111] by Royal Insurance and as to the beliefs which the insurance company had as to its legal liability with respect to the various payments, it was not a judgment in which general principles relating to restitution were discussed in detail by his Honour except for the purpose of considering and rejecting[112] a windfall gain (or "passing on") defence and a defence based on the Limitation of Actions Act 1958 (as specifically amended to deal with refunds of overpayments), neither of which is presently relevant. Mason, C.J., while substantially concurring in the outcome with Brennan, J., reached his conclusions[113] by a different path, holding the relevant moneys recoverable by an application to the facts of the principles he had espoused in the majority judgment in David Securities. Dawson, J., on the other hand, did not find it necessary to consider the issue, except in passing, in that he resolved the case upon an interpretation of the relevant legislation which was not shared by the other members of the Court.

54 The passage quoted in the preceding paragraph clearly enough indicates that Brennan, J. thought that the relevant payments[114] could be recovered under the general law of restitution. The other members of the Court, Toohey, J. and McHugh, J., both agreed with the reasons of Brennan, J. in dismissing the appeal and so must be taken as endorsing the basis upon which the appeal was resolved. But what was that basis? Because Brennan, J. had said that it was "unjust" that the Commissioner should retain the relevant amounts, it has been said by some commentators that the other two members of the Court thereby accepted that a test of that kind, and more particularly that a test involving the application of the defence of honest receipt had been accepted by those judges, thus creating a majority in favour of that view. So it is said that implicitly a majority of three in the Royal Insurance case overturned the opinion of the six judges who made up the majority in David Securities. See, e.g., McInnes: "Mistaken Payments Returned to the High Court: Commissioner of Revenue v. Royal Insurance"[115]; J.D. Merralls, Q.C., "Restitutionary Recovery of Taxes After the Royal Insurance Case" being Chapter 7 in Restitution: Developments in Unjust Enrichment[116]; Glover: a "Commentary" on the preceding article[117]; Butler "Restitution of Overpaid Taxes, Windfall Gains and Unjust Enrichment"[118].

55 Perhaps the most illuminating of these commentaries is that of Mr Merralls, if only for the fact that, as having represented the successful respondent Royal Securities in the appeal in the High Court, he was aware of the evidence and could also provide a very clear exposition of the issues in fact raised and resolved. From that it is clear that there was in fact no defence of honest receipt taken by the appellant Commissioner, albeit that it should be noted that in stamp duty appeals in Victoria there were ordinarily no pleadings. An examination of the argument as reported[119] shows that, although the respondent's counsel apparently examined the issue in some detail, there was relatively little argument put on behalf of the appellant on restitution and that appears to have concentrated on the "windfall gain" defence (which was rejected) and the general principle stated by the majority in David Securities[120]. Although Mason, C.J. was able to find in favour of a restitutionary remedy by the simple application of the principles in David Securities, Brennan, J. reached a similar conclusion, by the use of what seems to be his test in that case and it is to this reasoning that the other two judges appeared to add their approval.

56 Whether or not Brennan, J. intended to apply the test based on honest belief proposed by him in David Securities, it seems unlikely that Toohey and McHugh, JJ., having concurred in the majority judgment in David Securities barely two years earlier, would have intended to endorse the quite different approach of Brennan, J. in that case, without explaining why it was that they took a different approach to this important question of principle so soon after reaching their earlier decision. Either they might have sought that Brennan, J. explain his reasoning in greater detail, so that they could justify their change of stance, or they might have written separate judgments, again to show why it was that they were now taking a different position. It seems to me highly unlikely that Brennan, J. would have disregarded what was said by the other members of the Court in David Securities having regard to his understanding of the law of precedent. Perhaps he considered that it was still open to the High Court to accept the additional defence of honest receipt when the occasion presented itself. Nevertheless it is apparent that no such defence was taken by the appellant Commissioner.

57 Moreover the passage I have set out from Royal Insurance was not expressed by Brennan, J. in terms of deciding whether a defence of honest receipt in answer to a prima facie right to restitution had been made out; rather it was expressed in terms of asking whether a newly and differently formulated basis for restitution had been satisfied. On its face that was not consistent with what his Honour had said[121] in David Securities, albeit that the deemed knowledge of the Commissioner seems "therefore" to have been the basis for his considering it "unjust" that she should retain the mistaken duty payments. Secondly, what his Honour said in Royal Insurance did not sit happily with the proposed defence of "honest" receipt inasmuch as it was now predicated upon what the Commissioner "must be taken to have known". That deemed understanding seems to be inconsistent with the concept of honest receipt for it suggests that, whatever may have been the mistaken and honest belief of the Commissioner, she would not have been permitted to put forward the defence of honest receipt if objectively she had to be "taken" as having believed or known the contrary. These two significant changes of emphasis from the manner in which his Honour framed his proposed principle in David Securities[122], as "a defence ... focussing on the payee's state of mind", would not, in my opinion, have been reformulated in objective terms by so careful a judge as Brennan, J., unless at the same time he had explained the reasons for that reformulation.

58 I would therefore come to the conclusion that his Honour was merely stating the factual circumstances together with the inferences which might fairly be drawn from them. Because the Commissioner in these circumstances was to be treated as having the requisite knowledge, it was seen to have been "unjust" for Royal Insurance to be shut out from a claim in restitution, whatever defences might otherwise have been open to the Commissioner. In other words, his Honour was merely emphasising that restitution in the entirely different circumstances arising in Royal Insurance was the appropriate outcome having regard to the general justice of the case, but nevertheless upon the application of the "general law of restitution", which was not otherwise expounded in his reasoning: nor, on this analysis, did it have to be. The reference in the footnote to p.399 of his judgment in David Securities was merely intended, in my opinion, to indicate that no such defence would have been available, even assuming that it had been raised, which it had not. Honesty of belief was simply not in issue in Royal Insurance.

59 Even if I be wrong in my analysis of what Brennan, J. said in this delphic passage in Royal Insurance, I am quite satisfied that it should not be taken to be a rejection by implication of the statements of principle contained in the majority judgment in David Securities, being a judgment of five members of the Court concurred in by a sixth member. It is not appropriate that principles so carefully worked out in a considered judgment in the High Court should be taken as having overturned, by a side-wind, as it were, and without appropriate discussion of principle and, in particular, without analysis of the basis upon which the recently formulated statement of principle should no longer be followed. I am therefore not prepared to treat what was said in Royal Insurance as overruling the principles worked out and stated generally by the majority in David Securities.

60 Consequently, whatever view the appellant had as to the nature of the moneys paid to him on behalf of the respondents immediately after the stewards' findings were made known, there was no basis upon which he was entitled to resist the restitutionary claim of the respondents by reason of any "honest belief". It might be added that, whatever he knew of the requirements and of the provisions relating to appeals, this was far removed from a case where the course of the parties' behaviour indicated that the matter had been brought to an end in a conventional way. Whatever be his belief, there can be no doubt that the additional payment was a windfall to which he had no entitlement and which was a sum which ought to have been paid to the connections of the first place winner (indeed not paid at all at that stage), nor could it be said that that sum should be retained by the appellant at the respondents' expense.

61 The appellant also contended that what occurred here was that Mr Chung made merely a misprediction, not an error of law. As best I could understand the argument, it was said that because the stewards' placings on 7 January were merely provisional, any belief as to what might happen as a result of an appeal, assuming that Mr Chung's staff were aware of that right, would have been merely a misprediction as to the possible outcome of the appeal. This made it distinguishable from the facts in York Air-conditioning and Refrigeration (A'asia) Ltd. v. The Commonwealth[123], where provisional payments under the terms of a contract were treated effectively as voluntary because the final liability under the Commonwealth was yet to be ascertained. The logic of the appellant's argument eludes me but on a simpler basis I understood it also to be asserted that, if Mr Chung had thought that the same horse might have been placed first after an appeal, that would have been merely an erroneous prediction as to the future. Of course that would have been a wrong prediction, but what is here in question was not a prediction at all. Mr Chung, so it may be fairly inferred, thought only that Windigo was at that stage the first placegetter, and acted accordingly. He and his staff may be taken to have been ignorant, and thus mistaken, as to the possibility that the placings might be altered on appeal, but that did not involve any negative or positive misprediction, only mistake as to the potential for change and as to Mistegic's connections' rights of appeal.

62 I am not asserting that the courts have not distinguished between mistakes as to fact (or law) and mispredictions, in as much as they have never (to my knowledge) permitted a payer of moneys to recover merely because a payment had been made in an erroneous belief as to what might occur in the future or what might be the law in the future. Counsel referred us to a number of discussions in academic writings on the subject of misprediction and how it should be contrasted with a mistake as to an existing state of facts or legal principle: see Birks Introduction to the Law of Restitution[124] and McInnes "Mistaken Payments Return to the High Court: Commissioner of Revenue v. Royal Insurance"[125]. There is also brief discussion in Mason & Carter[126], but there have only been passing references to the distinction in reported authority until relatively recently, when in an obscurely reported decision of the Privy Council (in a judgment delivered by Lords Goff and Bingham), there was a direct quotation from Professor Birks' Introduction, together with the statement that misprediction "does not ... provide the basis for a claim to recover money as having been paid under a mistake of fact": see Dextra Bank and Trust Co. Ltd. v. Bank of Jamaica[127]. It is not the distinction in principle which is in doubt in the present case, it is its application to the facts before the Court. The respondents did not suggest that they had made any mistake as to what decision the Racing Appeals Board might make; their mistakes were as to the finality of the stewards' placings in their findings of 4 January and as to the right of appeal to the Racing Appeals Board with respect to those placings.

63 It was further argued that the payment was voluntary also in the sense that Mr Chung caused the payment to be made not mistakenly, but properly in accordance with the usual practice which was to follow the stewards' placings in accordance with AR 16. The appellant asserted that Mr Chung's actions were and still remain valid. That invalidity was not affected by the later decision of the Racings Appeal Board merely because the placings were reversed, so it was said, nor was the additional payment of $76,500 which had been perfectly proper thereby converted into something that was improper. Absent the right of appeal, that no doubt was so. But the payment was not proper in the first place because the stewards' placings at that stage were merely provisional and were subject to alteration in consequence of an appeal.[128] The matter may well have been different if Mr Chung had waited until the time for appeal had expired and then paid over the sum before the owners of Mistegic had sought leave to appeal out of time, but that need not trouble the Court here. Bearing in mind the subject matter and terms of the rules, it had been neither appropriate nor lawful for Mr Chung to make a final payment of the whole sum due to the first placegetter and its connections before the placings had been finally settled by the various processes under the Rules of Racing including that of appeal. There is no substance in the point.

64 One other contention raised may be briefly dismissed. The appellant argued that his enrichment was not unjust because there was an absence of any vitiating factor such as mistake, duress or illegality. From what has appeared above it will be apparent that I accept that there was an appropriate vitiating factor of the kind which prima facie demands restitution, namely, a mistake of law as to the legal rights under, and the requirements of, the Rules of Racing.

65 Finally I should deal with a suggestion on the part of the respondents as to another mistake of law, namely an error as to the proper construction of the Rules of Racing. The rule in question appears among a number of rules (AR 161-AR 174) relating to "Objections and Complaints" and in particular on Rule AR 172 which reads:

[29]

So it was suggested that there was here a power to conduct an "inquiry" which might affect the placing of Mistegic and thereby consequentially Windigo. If such an inquiry is under way, the rule permits bodies responsible for the payment of prize-moneys to withhold them to await the "consideration" of the inquiry. There is an assumption behind the argument that what the Racing Appeals Board carried out was such an inquiry. Undoubtedly, the function the stewards performed in this case was an "inquiry" in as much as under AR 10 the stewards are given power to "inquire into, adjudicate upon and deal with any matter in connection with any race meeting or any matter or incident related to racing". They had embarked upon this inquiry because they had already exercised their powers under AR 8 para.(j) to "make or cause to be made any test in their opinion desirable to determine whether any prohibited substance as defined in AR 1 has been administered to any horse". See also the stewards' power to enquire under local rule 7C. They had concluded that, in terms of AR 177, Mistegic had been brought to the Caulfield Racecourse and that it had had administered to it a prohibited substance as defined, so that they had on 4 January disqualified that horse from its first place in the Schillaci Stakes.

66 That inquiry was of course completed when the respondents made the relevant payment, but there might have been, as the respondents appeared to contend, an argument based on the fact that the stewards' inquiry was subject to an appeal to the Racing Appeals Board. The Racing Appeals Board's jurisdiction is set out in rules LR 6A to LR 6E. The Board's function is to hear and determine appeals from both the committees "of any Racing Club" and from any stewards: see sub-r.(2) of LR 6A. For this purpose LR 6C gives the Board very wide powers, as "it thinks fit", to conduct an appeal in varying ways including hearings based upon notes of evidence taken by the stewards, upon a case stated by an aggrieved party and by the stewards or, by para.(1)(d), "by rehearing upon affidavits, statutory declarations and viva voce evidence". The powers of the Board under LR 6D include powers to draw inferences of fact and to "confirm, set aside or vary the decision appealed against", as well as to "give any judgment or decision and make any order as in the RAB's opinion the justice of the case requires", among other matters. From that it might be argued that the power of the Board is to stand in the shoes of the stewards and to substitute orders of the kind which the stewards were entitled to make. Whether that means that the hearing by the Racing Appeals Board can be assimilated with, and treated as the equivalent of, "an inquiry" is somewhat more difficult to conclude, though certainly it must be the inquiry which is the subject of the Board's rehearing, but for the present limited purposes of interpreting AR 172 it is not necessary to express any further opinion. So far as reliance on that rule is concerned, the difficulty facing the respondents is in showing that there was in fact an inquiry on foot at the relevant time which would have given them the direct right to withhold the relevant prize-moneys. The payment was made shortly after the stewards' finding but before the time for appeal had expired and in fact before the time that the owner of Mistegic sought to appeal. Strictly, therefore, there was no inquiry on foot at that time but, even if Mr Chung and his colleagues had been aware of the power, there would be little doubt that they would have withheld payment regardless of the provisions of rule AR 172. That would have been merely commonsense and, if the appellant had chosen to challenge their decision by legal proceedings, then by that time the deemed "inquiry" by way of the Board's rehearing would have been instituted. I say nothing about the meaning of the expression "any action is ... about to be taken which may lead to such inquiry", since there was no evidence on that matter, although it seems unlikely that anybody other than the connections of Mistegic were aware of their proposed appeal.

67 Rule of Racing AR 172, therefore, is of no present assistance in resolving this appeal.

68 Otherwise, however, I would reject the appellant's grounds based on the absence of any right to restitution. The learned judge properly held that the respondents were entitled to claim repayment of the sum.

Claim Made under the Rules of Racing

69 There was, however, a somewhat more straightforward case made by the respondents which was entirely dependent on the contractual force[129] of the following rule AR 173, which reads:

[31]

Two specific issues were raised by the appellant as denying the respondent's right to recover under this rule. The first was that this was not a case where prize-moneys had been paid "to a person who is subsequently found by the stewards or the committee of the club not to be entitled thereto ...". On this the learned judge held that the subsequent finding in question was that of the Racing Appeals Board and not that of the "stewards" or the "Committee of the Club", so that the rule had no application at all. The notice of contention challenges that conclusion in two ways by saying that either the Racing Appeals Board can be seen to be the "Committee" of the relevant club because of an alleged delegation of the power to hear and decide appeals contained in AR 7 para.(a) to the Racing Appeals Board, or, alternatively, that there was in fact a finding "by the stewards" by reason of the orders made by the Racing Appeals Board which had the effect of substituting findings for those of the stewards which had been successfully appealed against pursuant to the provisions to which I have just made reference. The second issue, upon which the appellant was unsuccessful below and therefore seeks to appeal, is that it was held by the judge that the prize-moneys in question had been paid "to a person who is subsequently found ... not to be entitled thereto by reason of the disqualification of his horse or otherwise ...". Clearly enough the relevant sum was not prize-money to which thereafter Mr Hookway was found not to be entitled by reason of the disqualification of his horse, for his horse Windigo had not been the subject of any disqualification or adverse finding of any kind. Rather it was held that he was a person to whom prize-money had been paid who was "otherwise" found later not to be entitled thereto. It had been so found because the additional prize-money which the stewards' finding meant would have been payable to the appellant was subsequently found no longer to be payable to him by reason of his horse's subsequent relegation to second placing flowing from the reinstatement of Mistegic to first position. Each of these arguments will have to be examined.

70 I propose to deal first with the interpretation of the word "otherwise" in AR 173, for it may be disposed of more shortly. Obviously the most frequent circumstance leading to a need to recover prize-money will be that where a horse has wrongly been awarded a first (or other) placing and there has been a subsequent disqualification, albeit that the present practice makes it unlikely that any payment will be made while a stewards' investigation is underway. Nevertheless those responsible for the rules saw it possible that a person may be paid prize-moneys which should fairly be taken away from that person under other circumstances. One such circumstance would be if the money was paid after an inquiry but before an appeal could be heard, where the recipient of the moneys was the fortuitous recipient of prize-money after another horse's disqualification which was ultimately reversed by, say, the committee. There would be no blame thereby resting on the recipient but the rule makes provision for the moneys thereafter to be recovered, perhaps because those responsible for its drafting did not contemplate a claim in restitution. Whatever be the variety of circumstances which those responsible had in mind, that situation, analogous to the present, is obviously one other basis for a claim to recover the overpaid prize-money.

71 The appellant sought to give a narrow interpretation to the whole expression, asserting in substance that there was no such finding by stewards, Committee or Board in the present case, for the apparent overpayment was only a consequence of the reversal of the placings by the Racing Appeals Board. Such a view seems too narrow and would require undue formality in the sense that an appellate body would have to find explicitly, in addition to altering the placings, that those who had received excessive prize-money were not entitled thereto. I do not believe so technical an interpretation was intended.

72 It was also contended, by reference to a number of authorities, that the word "otherwise" should be read narrowly. In particular reliance was placed on the decision of the High Court in Marwey v. The Queen[130]. Words such as "otherwise" are found in a large variety of contexts and it would be dangerous to argue from a decision based on one such context to another, unless both contexts were so similar as to make the authority compelling. It is sufficient to say that the reading of a statutory provision relating to criminal liability, such as was considered in Marwey (albeit, by chance, that the case also deals with the concept of mistake in quite different circumstances), is not a safe basis to argue by analogy to the present case, because of the Court's natural caution in dealing with the terms of a criminal code. The Rules of Racing, though having wide consequences for those engaged, must be looked at as a form of contractual document, in respect of which precision in drafting cannot always be fairly expected. The appellant also sought to constrain the subject matter of the rule to that of the group of rules within which it is found relating to "Objections and Complaints", namely rules AR 161-AR 174. In passing it should be noted, in AR 1, though in form the provision seems to follow LR 1 (or is supplementary to the latter rule)[131], it is provided that headings "are for reference purposes only and shall not be regarded as being part of the rules". Nevertheless a fair reading of these rules and in particular of AR 173 shows that the latter must have a wider context for it follows immediately after AR 172 and appears to deal or deal potentially with a number of matters which are not strictly either objections or complaints. Finally, an argument was advanced by the appellant that the rule was intended to deal with matters of placings or amended placings, as provided for under AR 136(2), so that the only other circumstance permitting recovery other than disqualification is the amended placing of an owner's own horse under AR 136. I can see no reason for such a limited interpretation of the rule which should be treated as general in application, subject only to the final matter to be determined. This ground of appeal should therefore be rejected.

73 That final matter is the subject of the notice of contention given by the respondents. The judge had held that the relevant "finding" for the purposes of AR 173 ought to be confined to a finding by the stewards or by "the Committee of the Club" in question. So he held that there was here no finding by the stewards which had otherwise led to the appellant not being entitled to the claimed sum, nor was there any relevant finding by the Committee of the Club, which here by definition was the second respondent. The decision and the relevant finding, he held, was that of the Racing Appeals Board.

74 Such an interpretation clearly has the attraction of being straightforward and easy of application. However it has the disadvantage of overlooking what appears to be now the ordinary means of overturning a decision of the stewards, namely by an appeal to the Racing Appeals Board. It may well be that the rule preceded the insertion of the provisions relating to the Board which counsel said were probably inserted in about 1996 by certain Local Rules, whereas rule AR 173 is part of the Australian Rules which have been in existence for longer, albeit subject to an amendment in 1999. The respondents' argument in the first place depended upon two difficult propositions, neither of which I am able to accept. The first was a contention that for the purposes of AR 173 the Racing Appeals Board was the delegate of "the Committee of the Club". So it was argued that, as the Rules of Racing are those of Racing Victoria Ltd., no body set up as an appeals board can be other than a delegate of that corporation which is the "principal club" in this State, i.e. the first respondent. Consequently under rule AR 7 the "Committee of a Principal Club shall have the control and general supervision of racing within its territory" and "in furtherance and not in limitation of all powers conferred on it or implied by these rules shall have power, in its discretion: (a) to hear and decide appeals as provided for in its rules or by law". It was argued, therefore, that the Racing Appeals Board ought to be treated as the delegate of the Principal Club for the purpose of hearing and deciding appeals and rules LR 6A to 6E should be considered the relevant provisions for that purpose in the rules.

75 The difficulty is that the Racing Appeals Board, being set up under the Local Rules, has a number of powers which are seemingly the same as those to which I have referred to in AR 7. In particular its sole function is to hear appeals from decisions of "(a) the Committee of any Racing Club; and (b) any Stewards". On their face there seems to be an inconsistency between the relevant rules (or at least a duplication), but that may be overcome by confining the power in AR 7(a) to hearing appeals only "as provided for in its Rules", i.e. the rules of the Principal Club.[132] The appellant's present argument depended upon the decision of the Racing Appeals Board in March 2002 being treated as resulting in a finding of "the Committee of the Club". In the first place, forgetting altogether about any question of delegation, there is the issue whether a decision of "the Committee of the Club" can comprehend a decision of the committee of a Principal Club, which for Victorian purposes is defined in the definition clause as being Racing Victoria Ltd. for this State. The relevant distinction seems to be confirmed by the definitions given with respect to the word "committee" in AR 1, as follows:

[33]

The latter definition does not seem to be expanded by the definition of the word "Club" which is merely inclusive, comprehending "any person or body holding or proposing to hold a race meeting in the Commonwealth". Nor does the definition of "Registered Club" appear to add anything, other than potential confusion in other circumstances, for it is defined twice in definitions appearing one after the other, the Australian Rules definition of the expression meaning "a Club registered by a Principal Club in accordance with the Rules", whereas the identical expression apparently inserted as a Local Rule (because it is printed in red) defines the word more simply as meaning "a Club registered pursuant to the Rules" (a distinction without a difference, so it may seem).

76 Then, examining the two relevant appellate powers one finds that in AR 7, the power given to the committee of a Principal Club, in the present circumstances Racing Victoria Ltd., is confined to the hearing and deciding of appeals "as provided for in its Rules or by law". On the other hand the function of the Racing Appeals Board, as set out in LR 6A(2) is generally expressed as a power to hear and determine appeals from both the decisions of "any Stewards" and from "the Committee of any Racing Club". Confirming the generality of the right to appeal, subject to stated exceptions, is the provision in LR 6B(1) which states that, subject to sub-rule LR 6B(2), "any person aggrieved by the decision of the Committee of any Racing Club or of any Stewards may appeal to the RAB by lodging a notice in writing ...". Sub-rule LR 6B(2) states that no appeal can be made against the decision of any Stewards or Committee in respect of matters identified in AR 199A. None of the exceptions in the latter rule are presently relevant, for they deal with protests or objections against placed horses arising out of incidents in the running of races, with disabilities imposed providing that a horse pass a specified test, with the eligibility of horses to run and with declarations under AR 134 relating to riderless horses. Those same exceptions apply to one of the relatively few specific provisions as to appeals "to the Committee", as set out in AR 199, which, subject to those exceptions in 199A already referred to, permits appeals thereto by any person aggrieved by any punishment or any disability imposed by the stewards or by "the Committee of a Club", the right being expressed in terms of an appeal "to the Committee", which as defined is limited to the committee of the Principal Club, as is set out in the preceding paragraph herein.

77 From an examination of these rules, therefore, it appears that the powers of the Racing Appeals Board to hear appeals from decisions of the stewards or committee of any racing club are widely expressed and do not depend on any other specific empowering provision, subject only to the restrictions set out in AR 199A. A more limited right of appeal, confined to those matters provided for in the Rules or by law, is given to the Committee of the Principal Club, namely, Racing Victoria Ltd. There is also a power in the Principal Club's committee to delegate the relevant power under AR 7(q), whereby discretionary power is given to "appoint such persons as the Committee thinks fit for the purpose of hearing and deciding appeals as provided for in its Rules or by law" and to delegate to those persons any of the committee's powers for that purpose. But it is important to notice that there was no such delegation in the present case, or at least no delegation was referred to either in the materials before the Court or to which the Court was otherwise referred, so far as I can ascertain. The documents whereby the appeal was brought by the owner of Mistegic (dated 11 January 2002), although directed in the one case to "the Manager of Racing Operations" of Racing Victoria and in the other to the "Chief Executive" of the Victoria Racing Club, clearly referred to an appeal to the Racing Appeals Board and it appears to have been treated as such. A deposit of $500 was sent in compliance with LR 6B(1) and there is otherwise no suggestion of an appeal to the "Committee" of Racing Victoria Ltd. Incidentally it should be noted that there was in form no such "Committee" of that corporation, for it was set up with a Board of Directors (also defined), but which by LR 1 was made the subject of a cross-reference so that "'the Committee' of a principal Club means the directors" of Racing Victoria Ltd.

78 The respondents also contended that there must in effect be a deemed delegation because the Racing Appeals Board could have no greater powers than those of the committee of the Principal Club. No doubt it is correct to say that the Principal Club might, by virtue of amending its rules, in particular the local Rules of Racing in this State, alter the constitution and powers of the Racing Appeals Board, but it does not follow that in every case the Board must be treated as a delegate of that club. Although the Racing Appeals Board performs functions which might otherwise be performed by that committee in certain circumstances, namely, where appeals are provided for in the rules, there is no reason to believe that the rules have been amended pursuant to AR 7(h)(i) to that end.

79 The argument put on behalf of the respondents for this purpose was intended to show that the expression "the Committee of the Club" was wide enough to comprehend decisions made by the Racing Appeals Board because, so it was said, it is the delegate of the Committee of the Principal Club, that is, the first respondent. However, as the Racing Appeals Board is not dependent upon any delegation, and certainly no such delegation was established, then the decision must be dealt with as if it were the decision of the separately constituted Racing Appeals Board, howsoever that might be altered in the future. I therefore reject the contention based on delegation put on behalf of the respondents.

80 Moreover, on the face of it, the respondents' position under the Rules generally appears to be difficult in that only two bodies are referred to directly in AR 173, namely "the Stewards" and "the Committee of the Club". There is a further significant difficulty which faces any direct attempt to relate a decision of the Committee of Racing Victoria to any finding made by the Racing Appeals Board, namely, that the expression "the Committee of the Club" is by the definition previously set out in para.[75] confined to clubs which are registered with a principal club, thereby excluding any "Principal Club" from the subject matter of the express terms of rule AR 173.

81 The respondents then sought to overcome this difficulty by asserting that the terms of AR 173 were manifestly deficient, so that they should be read as including also a finding by the Racing Appeals Board. The difficulty, they said, arose because AR 173 was in fact in existence and part of the rules before the provisions relating to the Racing Appeals Board were inserted in about 1996 in terms of Local Rules 6A to 6E. The oversight was such, so it was argued, that the rule should be read as incorporating the addition of the reference to the Racing Appeals Board because otherwise the terms of the rule were so illogical that they were either absurd or inconsistent. For this purpose they called in aid the authority of the well known judgment of Dixon, C.J. and Fullagar, J. in Fitzgerald v. Masters[133]. Their Honours there stated[134]:

[35]

Thereby the respondents would have read the word "inconsistent" to mean "consistent", so as to give it a meaning which was sensible. The present is far removed from Fitzgerald. There may seem little purpose in excluding findings of Racing Appeals Board from the provisions of AR 173, for the present case shows how desirable it would be to have a right to recover any overpaid sum. The rule had a specific purpose in the first place and unfortunately those responsible for drafting the relevant Local Rules as to appeals forgot to add a reference to the Board in AR 173, or so it was asserted. The rule nevertheless is entirely intelligible in its present form and it may be thought to be the more intelligible, if one takes account of the final argument with which it is necessary now to deal. I would therefore not consider it an appropriate case for reading the rule as amended to insert a reference also to the Board.

82 However, the issue is how one should define the subject matter of AR 173 which on its face is confined to findings of the stewards or of a committee. If one were to treat a decision of the Racing Appeals Board as entirely independent of the decisions of the bodies or persons from whom an appeal may be brought, then clearly the rule could have no application in the present case; but merely because the Board is given a power to conduct a rehearing does not necessarily lead to the conclusion that its finding may be treated as independent of the persons or body from which the appeal is brought.

83 The powers of the Racing Appeals Board include, by LR 6D(1), a power to "confirm, set aside or vary the decision appealed against", as well as to "quash, set aside, mitigate, reduce, alter, vary, increase or add to the punishment imposed by the Stewards or Committee of the Racing Club". The structure of the rules, however, is such that the Board's primary decisions are not given recognition in their own terms but only by way of substitution for any decisions of the stewards or a committee which it has set aside, confirmed or varied. This is not perhaps surprising where the rules are merely the Local Rules relating to appeals, but it is consistent with the concept of an appellate or review tribunal, whether of an administrative or judicial kind, dealing with the decision of a body lower in the hierarchy but in a way which substitutes what it decides for the decision of that lesser body. In other words, if the determination of committee or stewards is set aside in whole or in part, the assumed order of the appellate body being the Racing Appeals Board is one whereby the decision or findings of the lesser tribunal are set aside and in its place, in lieu thereof, a new or different or varied decision or finding is made which thereafter is to be treated as the decision of the lesser body for all practical purposes, including those of subsequent implementation, enforcement and recognition. In the courts the setting aside and substituting of orders is intended to ensure that the body from whom the appeal is brought has all relevant powers to enforce the substituted order, rather than those being given to the appellate court as such.

84 Here, all the consequences of disqualification and the like, which frequently have a future bearing on what the owner can do or the horse is permitted to do, must be seen as flowing from a decision of the body or persons from whom the appeal is brought. In the present case it was essential that the decision of the stewards be set aside, otherwise the disqualification would stand as part of the record of owner and horse. If there had been a different form of disqualification ordered by the Racing Appeals Board, then likewise it was important that the records should show that the earlier finding or decision was varied to that extent. For example, under AR 195 the "Secretary of every registered Club ... shall immediately forward to the Secretary of the Principal Club a certificate of every disqualification or suspension made by the Committee or Stewards thereof, with a statement of the facts on which it is founded". It is unnecessary to examine each of the provisions relating to disqualifications and punishments set out in AR 179 to AR 200 (and elsewhere in the Rules), but the primary authority of the stewards to conduct inquiries comes from both LR 7C and AR 10, as well as a number of other specific rules. In general terms the relevant decisions of stewards and committees of registered clubs must be communicated to the first respondent as the Principal Club which has the power, if not the duty under AR 7(f), to "confirm, adopt or enforce" any of the punishments imposed by the stewards, but that is clearly a different power to the power to hear appeals. Once adopted, disqualifications and suspensions are to be notified to other clubs and given appropriate force. In this scheme of things, so far as I have been able to ascertain from a reading of the rules, the Racing Appeals Board has no direct part in the sense that nowhere is there a direct reference to the effect or enforcement of its orders save to the very limited extent appearing in LR 6A to 6E.

85 In my opinion the simple and most obvious explanation for this is that any

orders substituted by the Racing Appeals Board are, as I have previously suggested, to be treated as the orders of the stewards (or committee) from which the appeal has been brought. Conceptually the stewards' decision of 4 January should be treated as having been set aside and in its place there should be substituted the order of the Racing Appeals Board, which should be taken as having the force and effect of a new decision of the stewards. As explained above in para.[7], the reasons of the Racing Appeals Board merely stated that the appeal had been allowed, but that appeared in its reasons published on 9 May 2002, whereas its decision had clearly been made some time earlier, on 21 March of that year. The precise formal determination was not made available to the Court, but from the relevant correspondence it appears that what they determined was that Mistegic was the winner of the Schillaci Stakes and "that the placings are to be amended", so as to restore Windigo to second place. From that it may be assumed that the stewards' earlier decision to that effect had been varied. That in my opinion was the substituted finding of the stewards in accordance with the appeal procedure and the records of the relevant clubs either were or ought to have been amended accordingly. From that it should be concluded that there had been a subsequent "finding" by the stewards of a kind sufficient to satisfy the terms of AR 173, so as to permit the recovery of the overpayment by the respondents from the appellant. Moreover, I consider that such an interpretation provides a common sense view of the rule having regard to the relatively complicated provisions governing stewards' findings, disqualifications and appeals.

86 For this reason also, namely that upon a proper interpretation of rule AR 173 the respondents were entitled to recover the relevant sum from the appellant, I would uphold the decision of the learned judge, albeit on a ground not relied upon by him for this purpose.

87 The result therefore is that the appeal should be dismissed.

[36]

88 I have had the very great benefit of reading, in draft, the reasons for judgment of Ormiston, J.A. I wish only to touch upon his conclusion that, if the matter be properly analysed, there seems ultimately little complexity in the case. I am in what follows indebted to him for that analysis.

89 Some truths, as Jane Austen observed in the words with which she opened her novel "Pride and Prejudice", are universally acknowledged. One of them is that (very sensibly) racing clubs do not, following a race, willingly present the first prize to the connections of the horse that not only ran second past the post, but whose position in second place will forever be confirmed in the records of racing.

90 Such a presentation was made in this case. The facts are fully set out in the judgment of Ormiston, J.A. For ease of reference only, I record some of them here.

91 On 13 October 2001, the second respondent (the Victoria Amateur Turf Club) conducted a race meeting at the Caulfield Racecourse. One of the races on the program was the Schillaci Stakes. First past the post, and the ultimate winner, was a horse called Mistegic. The appellant's horse, Windigo, came second. Later that day, a sample was taken of the winner's urine. It appeared to show a positive result. Stewards acting for the second respondent instituted an inquiry. The end of the year came, however, before the result of that inquiry was announced.

92 By this time, the period normally taken for the distribution of prize-money had long since expired. Because the result of the stewards' inquiry was not known, the first respondent - upon whom fell the responsibility of effecting payment of the prize-money - withheld the final distribution. A provisional distribution was, however, made in the meantime. The appellant was accordingly paid the amount which represented the second prize.

93 As a result of the stewards' inquiry, Mistegic was on 4 January 2002 disqualified. The placings for the race were revised. Windigo was proclaimed the winner. It turned out to be a Pyrrhic victory - or, more accurately, an ephemeral one.

94 On 7 January, in reliance upon the findings of the stewards, the Stakes Payment Officer of the first respondent (Mr. Victor Chung) distributed the balance of the prize money in accordance with the revised placings as determined by the stewards. The distribution included an additional payment to the appellant of $76,500.

95 There followed a step which, as the learned County Court judge who presided at the trial of these proceedings concluded, took the first respondent, or at least Mr Chung, by surprise. On 11 January 2002, the connections of Mistegic appealed from the stewards to the Racing Appeals Board. As the judge found, Mr Chung - who died before the trial - was ignorant of the (newly created) right of appeal.

96 In the event, the appeal was successful. On 21 March 2002, the Board determined that Mistegic was the winner of the Schillaci Stakes, with Windigo being relegated accordingly to its original position as runner-up. In these circumstances, the respondents on 15 April paid an amount representing the first prize of $110,390 to the connections of Mistegic. There was, before us, no suggestion that that payment is open to impeachment. The respondents however now submit that they are, or one or other of them is, entitled to a refund from the appellant of the sum of $76,500. The appellant submits that he is entitled to keep it.

97 The trial of the proceeding came on before His Honour Judge Fagan in the County Court at Melbourne on 17 February 2004. On 27 February that year the judge found against the appellant and in favour of the first respondent. Judgment was entered for the full amount of the claim, together with interest. In his carefully prepared reasons, his Honour held - and there has been no challenge on this point - that neither Mr. Chung nor any member of his staff was aware of a right of appeal from the stewards to the Board. This mistake led to the belief that there could be no appeal against the stewards' finding, and thus to Mr. Chung's decision to proceed with the distribution of the balance of the prize money.

98 In these circumstances there can be no doubt that the sum which the respondents now seek to recover was indeed paid to the appellant by mistake; and I respectfully agree with Ormiston, J.A. that there was therefore a relevant mistake of law involved in the payment such that it could not properly be characterised as voluntary in the sense understood in the law relating to claims in restitution. It would not have been made at all had the first respondent known, at the time of payment, that Windigo had after all been irrevocably relegated to second place. Likewise, the appellant could not then have compelled the respondents to pay to him the sum in fact received. Having received it, however, he submits that he should not be required to make restitution.

99 In David Securities Pty. Ltd. v. Commonwealth Bank of Australia[135] the majority of the members of the High Court who heard the case (Mason, C.J. and Deane, Toohey, Gaudron and McHugh, JJ.) accepted the principle that payments made under a mistake, whether of law or fact, should be prima facie recoverable. It follows that, once the payer has proved mistake, the recipient bears the onus of showing why an order for restitution should not be made. This involves "proving why an order for restitution would be unjust".[136] The majority accordingly rejected the proposition that a payer "should be required to prove that the retention of the moneys by the recipient would be unjust in all the circumstances before recovery should be granted".[137]

100 Once the learned trial judge had found that the first respondent paid out $76,500 in ignorance of the right of appeal from the stewards, it fell to the appellant to satisfy the court, if he could, that repayment should not be required because to do so would be unjust. In undertaking this task, he is "entitled to raise by way of answer any matter or circumstance which shows that his ... receipt (or retention) of the payment is not unjust."[138]

101 The appellant relies on the defence of honest receipt. The principle was formulated by Brennan, J. in David Securities in the following words[139]:

[39]

[1] [1992] HCA 48; (1992) 175 C.L.R. 353.

[2] [1994] HCA 61; (1994) 182 C.L.R. 51.

[3] With due respect to Lord Goff whose early lectures on the subject I had the privilege of attending as long ago as 1959.

[4] For example, LR 15 and LR 16 are to be found between AR 39 and AR 40, and LR 65 and LR 66 are to be found between AR 166 and AR 167.

[5] [1992] HCA 48; (1992) 175 C.L.R. 353.

[6] That is not precisely how the judge expressed it, but having regard to his reference to David Securities, especially at p.371, that is the way I would construe his conclusion.

[7] His Honour described the argument as one of "misdescription" but, as the next sentence referred to there being the absence of any element of "prediction", I see that merely as a typographical error.

[8] At 399.

[9] See p.xiv of the preface (1st ed). A second, posthumous edition has been published this year with even further changes in approach. His reasons for preferring the expression "unjust enrichment" appear succinctly also in his chapter (together with Charles Mitchell) on that subject in vol. II of English Private Law (Oxford 2000): see paras.15.01 to 15.10.

[10] By the majority (Mason, C.J., Deane, Toohey, Gaudron and McHugh, JJ.) at 378-379.

[11] See also per Mason, C.J., Wilson, Deane, Toohey and Gaudron, JJ. in Australia and New Zealand Banking Group Ltd. v. Westpac Banking Corporation (1988) 164 C.L.R. 662 at 673.

[12] At 378-379. See also per Dawson, J. at 406.

[13] See at 379.

[14] At 376.

[15] At 376-378.

[16] At 369.

[17] (1943) 59 Law Quarterly Review 327 at p.327.

[18] See also David Securities at 374.

[19] [1994] HCA 61; (1994) 182 C.L.R. 51, esp. at 83.

[20] At 374 (lines 2-4).

[21] At p.61, last para. of "para." [229]. One may wonder, after referring to the entries as to "voluntariness" in the index, whether this last paragraph was intended to be para.[230].

[22] See, e.g., P. Birks "Modernising the Law of Restitution" (1993) 109 Law Quarterly Rev. 164 at 167, and M. Bryan "Mistaken Payments and the Law of Unjust Enrichment" (1993) 15 Sydney Law Rev. 461 at 475ff, where it is described as "loosely asserted" and "obscure" (see also at p.482).

[23] At 394-398. He specifically rejected the majority's proposal that payments "in satisfaction of an honest claim" should be classified as voluntary: see at 396.

[24] At 373-374.

[25] I.e. the passages quoted in full at fnn.20 and 24.

[26] At 374.

[27] The full sentence is quoted in the text at fn.33 below in para.[27].

[28] See text at fn.24.

[29] See e.g. Mason and Carter at [439], but cf. at [415]. Compare Goff and Jones: The Law of Restitution (3rd ed. 1986) at pp.36-38 (and see 105-108), with their more carefully categorised discussion in the 6th ed. (2002) at [1-069] and [1-070] (see also [4-030] esp. at 202).

[30] Because of its uncertain scope it has also been defined in quite different ways. Cf. Restatement: Restitution (1937) SS45(b) p.186 and Stoljar: Law of Quasi-Contract (2nd ed.) at p.29.

[31] See text at fn.33.

[32] At 374.

[33] Ibid.

[34] See at 379ff. The expression was clearly intended to cover both (a) and (b) in the passage to be cited from Goff, J.

[35] [1980] Q.B. 677 at 695. The case primarily concerned a mistake of fact.

[36] At 373-374.

[37] At 374 (lines 2-4).

[38] At 381.

[39] Ibid.

[40] See at 401ff.

[41] At 403.

[42] At 404. See also generally at 403-404.

[43] Ibid. But, with respect, that appears to confuse the involuntariness of every payment actuated by mistake and the "defence" of voluntary payment.

[44] [1994] HCA 61; (1994) 182 C.L.R. 51.

[45] (2001) 208 C.L.R. 516.

[46] At 398-399.

[47] Second edition (1989).

[48] See at pp.28-31.

[49] See e.g. David Securities at 371, 374.

[50] See Stoljar at pp.31-32.

[51] See Stoljar at pp.32-35.

[52] [1856] EngR 621; (1856) 1 H. & N. 210. (See Stoljar at 32-35).

[53] See para.1-061ff (6th ed. 2002).

[54] These words appear in the heading to the relevant paragraphs (1-069 to 1-073) and their insertion seems more consistent with the discussion, as well as with some earlier editions (see, e.g. 3rd ed. at 30, 36).

[55] At 404.

[56] Published 1995: see at para.[415].

[57] As Mason & Carter have assumed: see para.[32].

[58] See at 370ff.

[59] At 372-374. The discussion of the first two of these cases is trenchantly criticised by Bryan: "Mistaken Payments and the Law of Unjust Enrichment": see at fn.22 above, at pp.478-480.

[60] [1938] HCA 3; (1938) 59 C.L.R. 150.

[61] [1957] HCA 69; (1957) 98 C.L.R. 65.

[62] [1982] FCA 78; (1982) 61 F.L.R. 108; 41 A.L.R. 539 (Blackburn, Deane and Ellicott, JJ.).

[63] At 374.

[64] At 376.

[65] At 379ff.

[66] See para.[28] above.

[67] At 381.

[68] Paragraphs 1-069 to 1-071 at pp.57-59 and paragraphs 4-030 to 4-032 at pp.200-202.

[69] At pp.17-38.

[70] Confusingly the majority in David Securities (at 375) refer to a proposal in the 1991 Consultation Paper as a recommendation, but the actual recommendation came three years later: see para.1.3 of the Report.

[71] Law Com. No. 227, November 1994.

[72] At paras.2.25 to 2.38.

[73] Contained in a table at 2.38.

[74] At 373-374, quoted in paras.[23] and [25] above.

[75] See at 374.

[76] 175 C.L.R. at 373-374, set out in para.[25] above.

[77] Ibid.

[78] (1870) L.R. 5 Q.B. 449.

[79] (1973) 47 A.L.J.R. 586; 1 A.L.R. 497.

[80] [1895] 1 Q.B. 399.

[81] Though even this is not necessarily impossible, for one can put forward by way of hypothesis the case of a donation (how more voluntary a transaction could one imagine?), but a principal actuating factor might well be its deductibility for tax purposes. The question would then be one of causation, although it is hard to believe that the courts would permit the recovery of such a payment, but would that be because the payment was "voluntary"? Recovery of gifts made on a mistaken factual basis has been allowed: see Lady Hood v. Mackinnon [1909] 1 Ch. 476 and Mason and Carter para.[417].

[82] At 374.

[83] Ibid (see above at para.[23]).

[84] Of course payments resulting from duress, other forces of compulsion, undue influence, necessity and the like are not voluntary and, if in any way they were, then they could not be recovered, but the Court was considering voluntariness as an answer to mistake.

[85] See the passage already cited at 374.

[86] At 373-374.

[87] At 393.

[88] Ibid.

[89] See Werrin at 159 per Latham, C.J., J. & S. Holdings at 123 and Kiriri Cotton Co. Ltd. v. Dewani [1960] A.C. 192 at 204 per Lord Denning.

[90] At 394.

[91] At 396.

[92] At 396.

[93] Ibid.

[94] At 398.

[95] At 399.

[96] 164 C.L.R. 670 at 672, cited in David Securities at 377. Interestingly, the same passage is cited in largely the same form in the judgment of Brennan, J. at 395, though for a different purpose.

[97] At 378.

[98] See also the principle expressed in similar terms at 376.4 and 379.6.

[99] At 378-379.

[100] See at 379ff.

[101] See at 398.

[102] See at 399.

[103] See at 396-400.

[104] See, e.g., para.4.7 of the Law Commission Report.

[105] [1998] UKHL 38; [1999] 2 A.C. 349 at 412-413.

[106] 182 C.L.R. at 89.

[107] See at 103.

[108] It is, however, not referred to at all (so far as I can see) in Mason & Carter, despite the fact that work was published later.

[109] At 89.

[110] 175 C.L.R. at 399.

[111] The former title of the Commissioner.

[112] At 90-92.

[113] See 182 C.L.R. at 66-68, referring in particular to David Securities at 378.

[114] Not all categories of payments were held to be recoverable under the law of restitution, Brennan, J. confining his observations as set out above to what were called items (i) and (ii)(b) which were clearly enough paid over by mistake.

[115] (1996) 22 Monash Univ. L.R. 209 esp. at pp.231-233.

[116] (1996) at 117 esp. at pp.120-121 and 127-128.

[117] Also in Restitution: Developments in Unjust Enrichment at 131 esp. at pp.133-134.

[118] (1995) 18 Univ. of Qld L.J. 318 esp. at 325. Doubtless there are other articles and comments on these cases to like effect, but there have been so many articles and the like dealing with these cases that it is impossible for practical purposes to trace through them all.

[119] 182 C.L.R. at 54-59.

[120] At 378-379. See argument: 182 C.L.R. at 59.

[121] In David Securities at 398-399, his Honour had said: "The principle will therefore be invoked to rebut a prima facie right to restitution."

[122] At 398-399.

[123] [1949] HCA 23; (1949) 80 C.L.R. 11, esp. at 63 per Dixon, J.

[124] (1st reprint, revised 1989) at pp.147-148.

[125] (1996) 22 Monash Univ. L.R. 209 at 218-222.

[126] See paras.[228] and [415].

[127] [2001] UKPC 50; [2002] 1 All E.R. (Comm.) 193 at para.[29].

[128] See also the discussion below as to the effect of AR 172 at paras.[65]-[67].

[129] An appeal ground denying that the Rules of Racing had no contractual effect was abandoned.

[130] [1977] HCA 68; (1977) 18 A.L.R. 77.

[131] It seems likely that (the otherwise irrelevant) LR 1 was inelegantly placed between the general definitions and the interpretation provisions of AR 1, but that is by no means clear from reading the relevant part of the document: see p.14 thereof.

[132] One ought fairly to assume that the "rules" in question are those constituted by the Australian Rules and the Local Rules, as published by the first respondent. Unfortunately, there are four definitions of "rules", plus a local interpretation rule, in LR 1. In the definition rule AR 1 there are definitions of "These Rules", meaning the Australian Rules of Racing, and of "the Rules" which confusingly means "these Rules together with the Local Rules of the Principal Club concerned". At the same time there appears to be a Local Rule definition inserted of the word "Rules" which perhaps by way of confirmation are said to mean "the Australian Rules and the Local Rules" for the time being in each case, "read, interpreted and construed together". There is also an earlier local definition of "Australian Rules of Racing" which is said to mean "the Rules made by the Australian Racing Board and herein printed and numbered in black type ...", as amended. The interpretation clause LR 1(2) adds a provision that if there is any inconsistency between the Australian Rules and a Local Rule, the Australian Rule shall prevail.

[133] [1956] HCA 53; (1956) 95 C.L.R. 420.

[134] At 426-427.

[135] [1991] HCA 24; (1992) 172 C.L.R. 353 at 384-385.

[136] At 384.

[137] At 378.

[138] At 379

[139] At 399.

[140] At 379.

[141] At 386.

At a glance

Court

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Before

Source

Judgment (39 paragraphs)

Parties

Legislation Cited (2)