Mason v New South Wales

Mason v New South Wales - [1959] HCA 5 - HCA 1959 case summary — Zoe

[11]

The amounts which the plaintiffs seek in this action to recover from the State of New South Wales were all paid during the period between the decision of the High Court and that of the Privy Council. The plaintiffs bought their truck and, so to speak, the inter-State trade attaching to the vehicle in April 1953 and the first journey from Melbourne was made on 1st June 1953. They bought the truck from a carrier who had contracted with a large undertaking, the custom of which, as it was rightly believed, would go with the vehicle. The vendor explained the situation in his own way to the male plaintiff. The latter had learned from various carriers who patronized him in his former trade of a petrol vendor that a law case was to come on in England which, it was expected, would decide that inter-State carriers were not subject to the State Transport (Co-ordination) Act 1931 N.S.W.. Some carriers had had painted upon the sides of their vehicles the encouraging formula - "Section 92 states that trade between the States must be absolutely free". In selling the vehicle and the custom to the plaintiffs, the vendor had told the male plaintiff that the carriers' association to which the vendor belonged had advised him to pay any moneys for permits under protest but had said that rather than have the vehicle seized he must pay. He produced a copy of the Act and showed the plaintiff the provision (s. 47) under which an authorized officer might seize a motor vehicle in respect of which he suspected that an offence had been or was being committed. The plaintiff seems to have been greatly struck by its significance on reading in the section that it was possible for an employee of the Railway Commissioner or Road Transport Commissioner to act thus if authorized by his respective commissioners. Beginning on 1st June 1953 the male plaintiff carried on a more or less regular business in carrying goods between Melbourne or sometimes Yallourn and Sydney or Newcastle. He used the one vehicle and for each journey obtained a permit under s. 22 of the Act. On applying for a permit he appears usually to have made a protest against having to do so and to pay the amount levied which was in most cases the maximum of three pence a ton mile of the weight of the vehicle and the weight of the load it could carry. In about a twenty to twenty-five per cent of the cases he wrote his protest on his cheque. The issuing clerks to whom he expressed his protest made various replies, but the effect of all of them was that a protest was as familiar as it was futile. He noticed many other carriers lodging forms of protest with the money. He gave some evidence of occasional challenges during the period in question to himself and other carriers by inspectors by the roadside. He saw one carrier held and not allowed to proceed because he could not produce a permit, saying that a companion following bore both permits.

[13]

The proofs are anything but exact or cogent or persuasive but no evidence was called in answer. The question is what inferences in favour of the plaintiffs may safely be drawn from these scanty materials. If it were not for the general circumstances which, so to speak, lie behind the specific facts proved in evidence I should have great hesitation in adopting any affirmative inference such as the plaintiffs would need in order to succeed if the matter had arisen between subject and subject. But as it is I think one may safely infer that had the plaintiffs attempted to carry goods between points in New South Wales and points in Victoria without a permit under s. 22, being also without a licence under s. 15, the vehicle would have been stopped and seized. It is necessary to bear in mind that since 1935 when the transport cases had been decided there had been a regular enforcement against inter-State carriers as well as other carriers of the provisions of the State Transport (Co-ordination) Act. The resurgence some fifteen years later of the attempt to obtain a reconsideration of the old decisions meant no weakening of the administrative enforcement of the law. See for example the statement of facts in Deacon v. Grimshaw [1] . The appeal to the Privy Council was obviously a thing in which the whole road transport industry took a lively interest. The question what should be done pending news of the result was one which obviously concerned State transport authorities as much as it did the carriers themselves. The plaintiffs made it plain enough that they paid for permits only under a sense of constraint and with the intention of making a claim for a refund of the money if the decision of the Privy Council should uphold the contention that consistently with s. 92 the State could not enforce its demand for the money. In all these circumstances I think that it is a proper inference that, in the case of each journey in question, the plaintiffs paid the money unwillingly and only because they apprehended on reasonable grounds that without the permit which could not otherwise be obtained officers acting under the authority of the State of New South Wales would or might stop the motor vehicle and refuse to allow it to proceed upon the journey. It may further be inferred that responsible officers of the government concerned with the administration of the Act were aware that it was on this basis that moneys were being paid by inter-State carriers; if not by all, at all events by a great number of them. So far as the male plaintiff went, the actual receiving clerks may be taken to know that his payments were made under protest. Doubtless there were occasions on which he failed to express his protest formally. But he had repeatedly stated his protest and he had made his position sufficiently clear. We are not in this case dealing with a claim against a public officer for the repayment of money he has exacted without authority nor with a claim against a corporate body which has so acted by its servants or agents. We are dealing with a claim against the Crown in right of the State. The moneys collected fell within s. 25 of the Act and under that provision and s. 26 they went into a fund in the Treasury called the State Transport (Co-ordination) Fund where the money is subject to certain specific appropriations and otherwise to appropriation by Parliament. (See s. 26 (8) and (9)). As to the vesting of the moneys in the "board" by s. 26 (3) see the history of the transport authority administering the Act briefly stated in Hughes and Vale Pty. Ltd. v. New South Wales [1] and further dealt with in Barton v. Commissioner for Motor Transport [2] .

[25]

The statement of claim contains an allegation that the amounts claimed were demanded by the defendant colore officii. I can see no support at all for that allegation. Extortion in the discharge of an office occurs where illegal or excessive fees are demanded by an officer for the performance of a duty to which the payer is entitled: see Werrin v. The Commonwealth [4] . The plaintiffs had no right to the issue of a permit under the Act. It was beyond the constitutional power of the defendant to apply the provisions of the Act relating to permits to transportation among the States. Their right to recover back what they paid for the permits which were, in fact, issued to them depends upon whether the evidence proves that they paid under compulsion. The only witness was the plaintiff, Mason. He was the driver of the vehicle in respect of which the permits were issued. His evidence is fully set out in the transcript of proceedings before me and I do not repeat it here. This evidence proves these facts. Before the plaintiffs began carrying goods between Victoria and New South Wales, Mason said he had conversations with other drivers from whom he learned that they objected to paying for permits and his evidence shows that he affected to believe that it was unconstitutional to apply the provisions of the Act to inter-State transport. He knew that inter-State hauliers had adopted a policy of paying under protest. His predecessor in business, Mason said in evidence, drew his attention to the provisions of s. 47 (2) and told him that if the plaintiffs did not obtain permits their motor vehicle could be detained. The plaintiffs arranged with the consignors or consignees, on whose behalf they carried goods, to include in the price they paid for carriage the fees, or a substantial part of them, which would be payable for permits. Mason, on all occasions when he drove into New South Wales or was about to drive back to Victoria, applied for permits covering the journeys to be travelled within the former State. On most occasions he paid under protest for the permits. What he generally said amounted to this: that he should not have to pay at all and that he expected that the pending case about the Transport Act would be successful and the money would be refunded to him. Other details of Mason's evidence were that inspectors asked drivers of motor vehicles carrying goods to show their permits and checked them. Mason gave evidence of a specific occasion when a vehicle was stopped by an inspector because the driver had no permit and of one occasion when the witness, himself, was asked to show his permit. According to Mason's evidence the inspector told him that the consequence of not having a permit would be that he would be prosecuted. This is the only evidence of any express threat. However, Mason did have a permit and the inspector's statement would appear to be gratuitous. The law does not regard money paid under a threat of legal proceedings as received to the use of the payer and hence recoverable by him. There is no evidence that Mason was forced to apply for a permit on any of the occasions in question or even that any officer of the defendant made any express demand for payment before Mason handed over the money. On the contrary, the evidence clearly proves that Mason, on his own initiative, carried out every detail of the procedure involved in obtaining a permit, from weighing the loaded vehicle to paying the cheque for the fees payable on the issue of the permit. The only evidence of opposition on his part was that he paid under protest. Payment under protest is consistent with voluntary payment. "I do not think that the mere fact of a payment under protest would be sufficient to entitle the plaintiff to succeed; but I think that it affords some evidence, when accompanied by other circumstances, that the payment was not voluntarily made to end the matter": see Maskell v. Horner [1] , per Reading L.C.J. [2] . In Union Pacific Railroad Co. v. Dodge County Commissioners [3] , this was said: "There are, no doubt, cases to be found in which the language of the court, if separated from the facts of the particular case under consideration, would seem to imply that a protest alone was sufficient to show that the payment was not voluntary; but on examination it will be found that the protest was used to give effect to the other attending circumstances" [4] . There is no evidence here that any payment made under protest was attended by any circumstances that amounted to constraint or pressure to pay, so that it could be said that payment was made to end a deadlock and the protest was made to show that the payer did not regard the payment as closing the transaction. Therefore, I think that the protests provide no ground on which the plaintiffs can succeed. I think that it is clear from the general tenor of the protests which Mason made that he was merely reserving his right to claim back the money if the pending appeal to the Privy Council should succeed. The appeal was Hughes and Vale Pty. Ltd. v. State of New South Wales [5] .

[27]

The evidence that inspectors were on duty on the roads to see if drivers had correct permits shows, of course, that the State was administering the Act. But such evidence no more proves that Mason paid under compulsion than does the evidence of the issuing of permits and the collection of fees for them. Presumably all the carriers knew that the Act was not a dead letter. If it matters that Mason was told by his predecessor in business about s. 47 (2), that he saw inspectors on the roads and had his permit checked, the result might be to put the plaintiffs in a better position to recover back the payments which Mason made for permits, than a carrier who had not had s. 47 (2) brought to his notice, or had never met an inspector on the roads. But would not that be a strange result? All carriers, as I have said, must be taken to have known that the State was administering the Act. If the fact that the State was doing so proves that it was exacting money by duress, then no carrier could be held to have paid voluntarily. Obviously that would be too large an assumption to make. I think that it would be giving a false character to s. 47 (2) or to any other sanctions provided by the Act and to the mere fact that the Act was being administered, to say that these things constituted a threat or an intimidatory announcement. The material question is whether any officer of the defendant threatened to use the powers in s. 47 (2) against Mason if he did not obtain permits. There is no evidence that any officer ever made a threat to Mason to compel him to pay for a permit. Of course, if there were, it would be reasonable to conclude that thereafter Mason did not make any payment for a permit voluntarily. Proof that any other carrier's vehicle was stopped because its owner had no permit and that he thereafter paid involuntarily for a permit (if he did), does not prove that Mason (who had never had his vehicle seized or threatened with seizure) did not always pay voluntarily. Where a person complies with the law you cannot presume that he does so in fear of the possible consequences of disobeying it. Voluntary obedience to a law is compatible with knowledge that it contains drastic means of dealing with disobedience. All Mason's overt acts, except possibly his protests, tend to show that he voluntarily paid the sums of money expended on permits. I have stated my view as to the insufficiency of the protests as proof of compulsion. The protests are evidence of dissatisfaction, no doubt, but that is not enough. The inter-State carriers as a body decided in advance to pay under protest, and Mason was merely following that policy. There is no evidence that any officer constrained Mason by any action or threat of action to pay for any permit, and that in order to secure the use of the motor vehicle Mason obtained a permit and protested in order to show that the transaction was not closed and that he reserved his rights to rip up the transaction and recover back what he paid. Mason knew before he embarked on the business of carrying goods between Victoria and New South Wales that it involved, as the law then stood, paying for permits. If he was not willing to pay for permits it was open to him to sue for an injunction quia timet to restrain the defendant from seizing his motor vehicle in the event of his not obtaining permits: see Cam & Sons Pty. Ltd. v. Chief Secretary of New South Wales [1] . The evidence does not prove that Mason was constrained by any action or threat of action to apply for the permits. The reasonable inference, as I have already said, is that payment was his own free choice. The plaintiffs had profitable orders or contracts for the carriage of goods to execute. They must be taken to have regarded the fees to be paid for permits as a normal expense of the business. Accordingly, they arranged to cover the fees as far as possible by the price they charged. They paid the charges for fees under business necessity to enable them to proceed with their orders and contracts for the carriage of goods inter-State. It is not a reasonable conclusion that having arranged to obtain from their customers money with which to pay for permits they were coerced into applying it to pay for permits. In my opinion, there is no evidence which satisfies me that Mason paid any of these sums of money under duress or compulsion of any kind. There is no evidence that he was subjected to any such constraint or pressure, and that in order to enable the inter-State carrying business to be carried on without interference his only reasonable alternative was to pay and to protest against payment in order to save the plaintiffs' rights. Upon the sum of the evidence the circumstances are comparable with those in Werrin's Case [1] . The plaintiff in that case alleged that he was compelled by pressure and duress to pay an amount of sales tax on second-hand goods. He brought the action in consequence of a decision of this Court that second-hand goods were not within the scope of the Sales Tax Acts as they then stood. The case stated found that the Commissioner of Taxation had written to the plaintiff informing him that the amount of tax in question was payable under the Sales Tax Acts and that it "must be paid". According to that case stated the plaintiff there paid with reluctance. In that case there was an express demand to pay sent with the apparent force of the Acts behind it and the plaintiff paid with reluctance. In the present case, however, there is no evidence of any express demand to pay any amount sued for; on the contrary, payment is shown to have been made on the initiative of Mason, albeit under protest. In Werrin's Case [1] Latham C.J. and I were of the opinion that the facts were not sufficient to prove that the amount of sales tax was not paid voluntarily. In my opinion the reasons for that opinion apply here, for in my view, despite all the detail in Mason's evidence, it proves only that the sums of money in question were collected by the defendant upon the supposed authority of a statute when actually, according to the subsequent decision of the Privy Council, no authority existed. I think it is appropriate to quote here a passage from the judgment of Skerrett C.J. in Julian v. Auckland Corporation [2] : "I decide it upon the simple proposition, which appears to be well established, that where money is paid at a time when the law is in favour of the payee it cannot be recovered by reason of a subsequent judicial decision reversing the former understanding of the law: see Henderson v. Folkestone Waterworks Co. [1] " [2] . A statement of Gibbs J. in Brisbane v. Dacres [3] is important and relevant here: "We must take this payment to have been made under a demand of right, and I think that where a man demands money of another as a matter of right, and that other, with a full knowledge of the facts upon which the demand is founded, has paid a sum, he never can recover back the sum he has so voluntarily paid. It may be, that upon a further view he may form a different opinion of the law, and it may be, his subsequent opinion may be the correct one. If we were to hold otherwise, I think many inconveniences may arise; there are many doubtful questions of law: when they arise, the defendant has an option, either to litigate the question, or to submit to the demand, and pay the money. I think, that by submitting to the demand, he that pays the money gives it to the person to whom he pays it, and makes it his, and closes the transaction between them. He who receives it has a right to consider it as his without dispute: he spends it in confidence that it is his; and it would be most mischievous and unjust, if he who has acquiesced in the right by such voluntary payment, should be at liberty, at any time within the statute of limitations, to rip up the matter, and recover back the money. He who received it is not in the same condition: he has spent it in the confidence it was his, and perhaps has no means of repayment" [4] . There is no satisfactory evidence that any of the sums was paid under any duress, express or implied. It is therefore not established that the defendant received any of these amounts to the use of the plaintiffs. I would dismiss the action.

[37]

These observations, accurately reflecting, as I believe they do, the common law of England, seem to me to have special force in the case of a payment made to a government in order to obviate adverse consequences which a statute invalidly purports to provide as the alternative. The proposition need not be questioned that where an Act purports, invalidly, to require a payment to be made, leaving the liability to be enforced by means of an action in which the invalidity of the statute is an available defence, a person who might have relied upon that defence but has paid without raising it should not be held, just because he was obeying the de facto command of a legislature, to have made the payment involuntarily. But even in the case of such an Act, if there are superadded provisions which attach to non-payment consequences other than a bare liability to be sued, there can be no justification for refusing to have regard to those consequences and to consider whether the existence of the provisions creating them has placed the payer under such pressure that the payments have not in truth been voluntary. Holmes J. observed in Atchison, Topeka & Santa Fé Railway Co. v. O'Connor [5] : " when, as is common, the State has a more summary remedy, such as distress, and the party indicates by protest that he is yielding to what he cannot prevent, courts sometimes perhaps have been a little too slow to recognize the implied duress under which the payment is made" [6] . There is no reason, however, why they should be slow to see compulsion in the statute itself, whether it results from a provision for distraint or from any other provision facing people with a substantial prospect of harm if they do not pay, and whether or not in particular cases the making of a protest has underlined the fact that a payment constitutes a yielding to the pressure of such a prospect. It seems to me of great importance to preserve the distinction which the United States Supreme Court insisted upon when it said in Gaar, Scott & Co. v. Shannon [1] : "Neither a statute imposing a tax, nor the execution thereunder, nor a mere demand for payment, is treated as duress. It does not necessarily follow that there will be a levy on goods. Or, if there is, the citizen, to avoid the consequences of the levy, may pay the money, regain the use of his property and maintain a suit for the recovery of what has been exacted from him. The legal remedy redresses the wrong. But he has the same right to sue if he pays under compulsion of a statute, whose self-executing provisions amount to duress. An act which declares that where the franchise tax is not paid by a given date a penalty of twenty-five per cent shall be incurred, the license of the company shall be cancelled, and the right to sue shall be lost, operates much more as duress, than a levy on a limited amount of property. Payment to avoid such consequences is not voluntary but compulsory, and may be recovered back" [2] .

[39]

The statutory provisions which we have here to consider were not provisions purporting to require payments to be made. The moneys which the plaintiffs seek to recover are wrongly described as levies by the State. By providing for a permit to be granted on payment of a fee, the Act simply offered a means of purchasing a limited freedom from the prohibition of ss. 12 and 28. In its application to inter-State operations the prohibition was unconstitutional and void; but it was accompanied by provisions which, void though they were, offered to persons like the plaintiffs threats of such seriousness that money paid to avoid them was money paid under pressure. The Act in its application to inter-State trade had been upheld by this Court in April 1953. Thereafter and until the Privy Council should decide otherwise it was useless for anyone attacked under the Act to rely for protection in any Australian court upon s. 92 of the Constitution. That was how matters stood throughout the period covered by the payments in question here, for the Privy Council's decision in Hughes and Vale Pty. Ltd. v. State of New South Wales [3] was not rendered until 17th November 1954. But even if this Court had not already spoken, the situation would have been compelling enough. This was no mere instance of a difference of opinion as to the construction of an admittedly valid Act and a payment made by way of acquiescence in preference to testing the point in the courts. The State of New South Wales by its legislature had announced that whenever a person should operate a motor vehicle as the plaintiffs in the course of their business wished to operate theirs, and had neither licence, exemption nor permit, he would be guilty of an offence (ss. 12 and 28), and that not only might he be subjected to an obligation to pay moneys not exceeding the sums that could have been made payable for a licence (s. 37) but he would be liable to a penalty not exceeding £500 (s. 36) recoverable summarily (s. 38). That meant that upon conviction such a person might be adjudged not only to pay the penalty and costs but to be imprisoned in default of payment: Justices Act, 1902-1955 N.S.W., s. 82. Moreover the Act provided by s. 47 (2) that any authorized officer might seize any motor vehicle in respect of which he should suspect that an offence had been or was being committed against the Act, and might detain it pending investigation and legal proceedings. The continuance of the plaintiffs' business would necessarily mean repeated breaches of s. 12. The evidence shows that the government of the State had prescribed the fees to be charged for permits, and that it was actively engaged in receiving applications for permits and issuing them upon payment of such fees, and in causing vehicles to be stopped on the roads for inquiry as to whether they were being operated in compliance with the Act.

[64]

On these facts it seems to me that the case presents no legal difficulty. The payments were not voluntary and the compulsion under which they were made was something other than legal compulsion. To put it bluntly, the charges were unlawfully exacted. Cases such as Morgan v. Palmer [2] ; Steele v. Williams [3] ; Hooper v. Exeter Corporation [4] and Great Western Railway Co. v. Sutton [5] show that money paid in such circumstances is recoverable. In Sutton's Case [5] Lord Chelmsford said: "Now if the defendants were bound to charge the plaintiff for the carriage of his goods a less sum, and they refused to carry them except upon payment of a greater sum, as he was compelled to pay the amount demanded, and could not otherwise have his goods carried, the case falls within the principle of several decided cases, in which it has been held that money which a party has been wrongfully compelled to pay under circumstances in which he was unable to resist the imposition, may be recovered back in an action for money had and received" [1] . Again, in Lancashire & Yorkshire Railway Co. v. Gidlow [2] Lord Chelmsford said: "My Lords, there was a question raised here and argued, but, as my noble and learned friend said of another point, only faintly argued, that is, that the money for these terminal charges having been paid without objection, the plaintiff had no right to bring an action to recover it back. Now there can be no doubt that where a person pays money which he is not bound to pay, with a full knowledge of the facts, he cannot recover it back in an action for money had and received. But there has always been an exception made in cases where a party has paid money under compulsion. It has been decided that where a carrier refused to deliver goods until a payment was made by the person to whom the goods belonged, amounting to more than the carrier had a right to charge, the customer might in an action for money had and received recover back the money so paid. There can be no doubt whatever that the plaintiff here paid this money under duresse; he was compelled to do it, or his coals would not have been carried by the company; and, therefore, that is the answer to that argument" [3] . The same principle has been applied to support the recovery of moneys paid pursuant to a demand colore officii. Thus in Sargood Bros. v. The Commonwealth [4] O'Connor J. said: "Where an officer of Government in the exercise of his office obtains payment of moneys as and for a charge which the law enables him to demand and enforce, such moneys may be recovered back from him if it should afterwards turn out that they were not legally payable even though no protest was made or question raised at the time of payment. Payments thus demanded colore officii are regarded by the law as being made under duress. The principle laid down in Morgan v. Palmer [5] , Steele v. Williams [6] , and adopted in Hooper v. Exeter Corporation [7] clearly establish that proposition" [8] . This was said in a case where there was a well-recognized power of seizure to enforce the demand which was made.

[68]

There were three cases relied upon by Mr. Wallace to which I should refer. They are Slater v. Burnley Corporation [3] ; William Whiteley Ltd. v. The King [4] and Twyford v. Manchester Corporation [5] . Slater's Case [3] was a case where it was decided that an excessive payment to a water company on demand was not recoverable notwithstanding that the company had power to cut off water, because there was no threat to do so. The payment was held to have been made voluntarily and not under compulsion. The distinction between that case and the present is that in the present case the payments were, as I have found, compulsory and not voluntary. It may be that had nothing been proved beyond the mere existence of s. 47 in the Act this would not have been enough to prove that the payments were involuntary but the findings I have made go a long way further. In William Whiteley Ltd. v. The King [4] it was decided that duties wrongly demanded under the Revenue Act and paid were not recoverable because they were paid voluntarily and not under duress. The duress relied upon was that a revenue officer had told the taxpayer that if duties were not paid proceedings would be taken for penalties. As to this Walton J. said that to the knowledge of the suppliant the Commissioners of Inland Revenue "could take no action if the duties were not paid except by legal proceedings. They could not distrain." [6] This decision, which in Werrin v. The Commonwealth [7] was held to be indistinguishable, is clearly distinguishable here. The distinction is the simple one that in that case there was no compulsion beyond the threat of legal proceedings; in this case on my findings there is. Finally, in Twyford v. Manchester Corporation [5] the plaintiff failed in an attempt to recover moneys which the corporation had wrongly charged as fees for recutting monumental inscriptions in a cemetery but the basis of the decision was that there was no duress in the sense that the plaintiff was led to apprehend exclusion from the cemetery unless the payments were made.

[74]

The plaintiffs, who are husband and wife, were, at the relevant times, partners in a business of carrying goods by road between Melbourne and places in New South Wales. They claim to recover from the State of New South Wales £5,560. This is the total of amounts paid by them as charges levied under the New South Wales State Transport (Co-ordination) Act 1931, as amended to 1952, for the issue of permits authorizing them to use their motor vehicle within New South Wales for carrying goods for hire. The provisions of the Act requiring permits to be obtained were, in so far as they related to inter-State trade, later held by the Privy Council to be invalid as in conflict with s. 92 of the Constitution. But when - on various dates from December 1953 to November 1954 - the plaintiffs sought permits and paid the moneys they now seek to recover back, the legislation had not been held to be invalid. Indeed in April 1953 this Court had, by majority, held that the charges were validly imposed. The decision of the Privy Council was not announced until 17th November 1954. In the interval the State authorities, naturally and properly, took steps to require compliance with a law which had been upheld by this Court. It was, however, generally known that an appeal to the Privy Council was pending; and its probable outcome and the validity of charges for permits for vehicles travelling across the State border were topics of lively speculation and interest among persons concerned in the road carriage of goods. The plaintiffs, along with others similarly interested, for the time being accepted the position that permits were in practice required and that the prescribed fees had to be paid. Under the Act it was an offence to operate a motor vehicle without a permit. And any authorized officer might seize any motor vehicle in respect of which he suspected an offence had been or was being committed; and might detain it pending investigation and legal proceedings. The plaintiffs were aware of all this. The male plaintiff, who was himself the driver of their vehicle, used to attend at the Transport Office at Albury to obtain permits for his journeys. On many occasions he was stopped on the road at various places in New South Wales and production of his permit demanded by inspectors. Like other persons who sought permits, he was accustomed to make some sort of protest whenever he paid the charges required. To the clerks who took the money and issued the permits he made such remarks as: "I should not be paying these moneys at all because I do not think the law is right, and I hope one day to get it back"; and "Permits should not be charged for goods travelling inter-State"; and "I protest against paying this money because in my opinion section 92 of the Constitution says that it is not law"; and "It's all right for me to be paying this money but I expect to get it back later on because I have been told the law is a bad one". These remarks sometimes elicited no response, sometimes statements by the issuing officers that the plaintiff was wasting his own time and theirs. Sometimes there were replies such as: "I do not think you will get it back. We have to take it"; and "I have heard that from a lot of others" and "Well we are taking it. Good luck to you if you do get it back". The effect of these conversations was debated; but it is not disputed that such somewhat informal protests became more or less a formality whenever the plaintiff paid the charges for permits. From April 1954 onwards the oral protests were supplemented by endorsements indicating that payment was made under protest, which the male plaintiff wrote on many, but not all, of the cheques he gave in payment for permits. He admits that he was throughout aware that if he had driven his vehicle without obtaining a permit he could, in any proceedings taken against him for a contravention of the Act, have raised the question of its validity. But he knew too that to adopt this course would cause him to lose customers and involve expense which he considered it unnecessary to incur. The plaintiffs wished to be carriers, not litigants. They had no wish at that stage to give their name to a leading case. They were content that Messrs. Hughes and Vale should do that; and they hoped they would pull the chestnuts from the fire for them. This attitude was quite reasonable; and the male plaintiff's statement, that he expected that, in the event of the Privy Council's deciding the charges were invalid, the State of New South Wales would readily refund them without the necessity for proceedings, seems probable and understandable. Yet the plaintiffs could have had, and in fact had, nothing more than a hope that the appellants before the Privy Council would be successful. They, therefore, charged their customers, for carrying their goods, amounts which would be sufficient to recoup them in part for the sums they had paid out to obtain permits. In that sense, the permit charges were "passed on". But they were not passed on nominatim. None of the plaintiffs' customers was required to pay expressly any amount for the plaintiffs' permits. Charges paid for permits were simply an expense of the plaintiffs' business which, in a greater or less degree in different cases, was reflected by the charges they made for carrying goods.

[85]

Yet, although all forms of extortion will ground an action for money had and received, all forms of extortion by officials are not properly described as being by colour of office. Extortion by colour of office occurs when a public officer demands and is paid money he is not entitled to, or more than he is entitled to, for the performance of his public duty. Examples of such exactions are overtolls paid to the keepers of toll-bridges and turnpikes, excessive fees demanded by sheriffs, pound-keepers, &c. The parties were not on an equal footing; and generally the payer paid the sum demanded in ignorance that it was not due. In Steele v. Williams [7] , the most frequently cited case on this topic, the defendant was a parish clerk who had demanded and received from the plaintiff's servant more than the statutory fee for permission to search the parish register. The amount asked for had been unprotestingly paid; and it was paid after the search was complete, so that there had been no withholding of the right of search until payment was made. Baron Parke said that "The defendant obtained the money by an improper exercise of his power as parish clerk; that is an illegal act, and therefore he must refund" [1] . After saying also that "in effect, the defendant told the plaintiff's clerk, that if he did not pay he should not be permitted to search", he added "I by no means pledge myself to say that the defendant would not have been guilty of extortion without that species of duress, viz. the refusal to allow the party to exercise his legal right, but colore officii. Dew v. Parsons [2] certainly goes to that extent" [3] . In Dew v. Parsons [2] a sheriff had been paid more than he was entitled to have, the party paying being ignorant that it was not due. Similarly in Hooper v. Exeter Corporation [4] , the plaintiff paid in ignorance that he was not liable for harbour dues. Morgan v. Palmer [5] is commonly cited along with Steele v. Williams [6] as an instance of money demanded colore officii being recoverable; and properly so, although, in relation to a technical requirement of notice of action, Bayley J. said that the money was not there taken colore officii. In both cases the payment was made after the event had occurred for which it was paid. Neither was a case of duress by the actual withholding of a right until payment. The payment was made simply because it was demanded under colour of office. In Morgan v. Palmer [5] money was paid to the mayor of Yarmouth when the renewal of the plaintiff's publican's licence was announced. Similar fees had been regularly paid to the mayor for sixty-five years; and the defendant took the money in good faith, believing himself entitled to it by custom. This decision, and a statement of Collins J. in Shoppee v. Nathan & Co. [7] show that in an action for money had and received colore officii it is not necessary to show that the defendant acted in bad faith, as it is in criminal proceedings for similar extortions. Nevertheless the phrase bears an imputation of imposition by a person in authority upon another person ignorant of his rights.

[92]

The plaintiffs are not to fail on their action, however, because the pleader has used inappropriate words to formulate their claim. But it is not just a matter of a wrong Latin label. The importance of the matter is that the plaintiffs cannot succeed simply because of the superior position of the defendant. They must go further and establish that there was, in a legal sense, compulsion by something actually done or threatened, something beyond the implication of duress arising from a demand by persons in authority, which suffices in a true colore officii case. Further the plaintiffs must establish that they actually paid because of this compulsion, and not voluntarily despite it. "Voluntary payment" has a special meaning here. Clearly it does not import a payment by way of gift. And equally clearly it means more than payment willingly, in the sense of without reluctance. One writer has said that, in this context, "it is merely a shorthand way of saying that there is no approved ground on which restitution of benefits can be awarded" (Dawson, Unjust Enrichment). In most jurisdictions in the United States the difficulties of the question whether a payment is compulsory or voluntary have led to its being decided by the judge and not left to the jury (see Field, The Effect of an Unconstitutional Statute - chap. x, The Recovery of Unconstitutional Taxes reproducing an article in Harvard Law Review 45501). And in Steele v. Williams [1] the parties had agreed at the trial that this question was one for the judge. Yet it is, I think, ultimately a question of fact, as Lowe J. said in Deacon v. Transport Regulation Board [2] . Coleridge J. in Traherne v. Gardner [3] said, "we are in the character of jurymen" [4] . Nevertheless it is a question for the resolution of which much citation of authority can be employed, as this and other cases have shown. In my view, a payment may be said to be voluntary, in this context and for present purposes, when the payer makes it deliberately with a knowledge of all relevant facts, and either being indifferent to whether or not he be liable in law, or knowing, or having reason to think, himself not liable, yet intending finally to close the transaction. And I respectfully agree with the criticism by Lowe J. in Deacon's Case [5] of the statement attributed to Platt and Martin BB., in the headnote to Steele v. Williams [1] . It seems plain that a man compelled by pressure colore officii or any other form of duress may yet say "well I have really no option but to pay, nevertheless I will not dispute the matter further. I will pay to put an end to the question".

[96]

The plaintiffs pointed to the penal provisions of the Act. But the mere fact that the Act provided penalties for using the roads without a permit and made vehicles liable to seizure does not mean that anyone can recover from the Crown moneys he paid under the Act. The Crown is not to be assumed to have extorted money merely because the Parliament of New South Wales armed it with a power to do so. No doubt it is the duty of the Crown to enforce the will of Parliament; and, moreover, a statute may be well-known to reflect the policy of the government; but the mere appearance on the statute book of a measure providing for penalties and forfeitures does not mean that all moneys collected pursuant to the statute are extorted by the Crown. It is, in my view, necessary for the plaintiffs to do more than point to the provisions of the statute. They must show that the Crown by its servants was exercising, or threatening to exercise, powers under the statute in such a way as to constitute compulsion in law. A threat of proceedings for a pecuniary penalty does not make a payment made thereafter involuntary; for the payer might have defended the proceedings and relied upon the unlawfulness of the demand (William Whiteley Ltd. v. The King [3] and Werrin v. The Commonwealth [4] ). But a payment made under pressing necessity to avoid a seizure of goods, or to obtain the release of goods unlawfully detained, or to prevent some interference with or withholding of a legal right, is compelled and not voluntary and is recoverable in an action for money had and received. Shaw v. Woodcock [5] ; Hills v. Street [6] ; Great Western Railway Co. v. Sutton [7] ; Maskell v. Horner [8] ; Nixon v. Furphy [9] ; White Rose Flour Milling Co. Pty. Ltd. v. Australian Wheat Board [10] and In re Hooper & Grass' Contract [11] per Fullagar J., are examples of the application in different circumstances of the same general principle. There need be no actual interference with a legal right. Money paid under the constraint of threats to interfere with a legal right is recoverable, Valpy v. Manley [1] .

At a glance

Court

Decision date

Before

Source

Judgment (102 paragraphs)

Parties