Plaintiff v Defendant [2013] VSC 687 | Case summary

Supreme Court of Victoria|2013-12-16|Before: KYROU J

TAX - Claim for repayment of landfill levy paid into a designated bank account - Whether claim statute barred - Overpaid amount held not to be attributable to a tax - Claim for overpaid amount not statute barred - Limitation of Actions Act 1958 s 20B.

**1 This judgment is supplementary to my principal judgment, which was published on 29 October 2013,[1] and adopts some of its defined terms. The principal judgment should be read in conjunction with this supplementary judgment for a proper understanding of the latter.

2 At the time that the principal judgment was published, I did not make final orders. I gave the parties the opportunity to make further submissions in respect of two matters. The first matter concerns who is entitled to the Overpayment referred to at [11] to [13] below. The second matter, which related to the use of immobilised and treated Cat C soil in the Firewall, is no longer in contention. The parties were also invited to make submissions on the precise form of the final order, and costs. Written submissions were filed, followed by oral submissions on 10 December 2013.

3 For the reasons that follow, I have concluded that the plaintiff is entitled to be repaid the Overpayment and that the Environment Protection Authority ('EPA') should pay 50% of the plaintiff's costs of the proceeding.**

Summary of issues and findings in the principal judgment

**4 The principal judgment dealt with whether the plaintiff is liable to pay to the EPA a landfill levy on contaminated soil that the plaintiff uses in the construction of the Firewall. The issues considered in the principal judgment and my findings on them are briefly summarised below.

5 Section 50S of the Environment Protection Act 1970 ('EP Act') requires the payment of a landfill levy for 'prescribed industrial waste' deposited on land ('Levy'). However, that liability does not apply in certain circumstances, including where the waste is 'exempt material' or has a 'direct beneficial reuse and has been consigned for [that] use'.

6 The plaintiff contended that it is not liable to pay the Levy, or, alternatively, that it is liable to pay a discounted Levy, on two bases. The first basis, upon which the plaintiff principally relied, was that its use of the Cat C soil in the Firewall constitutes a 'direct beneficial reuse' ('DBR') as defined in reg 5(1) of the Environment Protection (Industrial Waste Resource) Regulations 2009 ('2009 Regulations') and that it was consigned for that use.

7 The plaintiff's second, alternative, basis had two limbs. The first limb was that the exemption that the plaintiff was granted by the EPA on 19 March 2008 ('2008 Exemption') under the Environment Protection (Prescribed Waste) Regulations 1998 continued in force under reg 48(c) of the 2009 Regulations as a secondary beneficial reuse ('SBR'). The 2008 Exemption permitted the plaintiff to pay the Levy on five out of every eight tonnes of Cat C soil used in the Firewall ('Discounted Levy') instead of paying the Levy on all tonnes of Cat C soil ('Full Levy'). The second limb was that the EPA's amendment to the 2008 Exemption on 11 March 2011 to insert an expiry date of 30 June 2011 ('Amendment to the 2008 Exemption') was invalid.

8 In the period that is relevant to this proceeding, namely from 9 June 2010 until 30 June 2013, the plaintiff made the following payments in respect of the Levy for Cat C soil used in the Firewall:

(a) For the period from 9 June 2010 until 31 March 2011, the plaintiff paid to the EPA Discounted Levy amounts totalling $3,198,821 in accordance with the 2008 Exemption.

(b) For the period from 1 April 2011 until 30 June 2011, the plaintiff paid the amount of $2,379,299 into an account with National Australia Bank ('Designated Account') which was established pursuant to a consent order made by Emerton J on 28 November 2011 ('Emerton J's order').[2] This amount equates to the value of the Discounted Levy payable in accordance with the 2008 Exemption for this period.

(c) For the period from 1 July 2011 until 30 June 2013, the plaintiff paid into the Designated Account the amount of $11,513,020 in respect of the Full Levy.

As at 30 June 2013, the balance in the Designated Account was $13,892,319.

9 The plaintiff sought repayment of the amount of $3,198,821 on the basis that it was paid under a mistake of law. The plaintiff also asserted an entitlement to the amount of $13,892,319 in the Designated Account.

10 The EPA denied the existence of any mistake of law and submitted that, even if there were such a mistake, the plaintiff's claims could not be maintained due to s 20B of the Limitation of Actions Act 1958 ('LA Act'). By counterclaim, the EPA sought an order that it be paid the amount of $13,892,319 in the Designated Account.

(a) The Amendment to the 2008 Exemption is invalid and therefore the 2008 Exemption continues in force.

(b) The use of Cat C soil in the Firewall constitutes a DBR but the soil was not consigned for use as a DBR.

(c) Subject to a possible exception, s 20B of the LA Act precludes the plaintiff from recovering any amount it paid to the EPA or into the Designated Account. The possible exception relates to the difference between the Full Levy and the Discounted Levy for the period commencing on 1 July 2011 ('Overpayment').**

**12 The Overpayment has arisen because, at the EPA's insistence, the plaintiff paid into the Designated Account amounts equivalent to the Full Levy for use of Cat C soil in the Firewall since 1 July 2011 whereas I have found in the principal judgment that the plaintiff was only obliged to pay amounts equivalent to the Discounted Levy. That finding followed from my conclusion that the 2008 Exemption continues in force.

13 The parties have agreed that the Overpayment totals $4,032,357.

14 As the parties did not anticipate the precise findings that I made in my principal judgment, they did not make detailed submissions at trial about the applicability and effect of s 20B of the LA Act in relation to the Overpayment.**

Outstanding issue under s 20B of the Limitation of Actions Act

15 Section 20B of the LA Act provides as follows:

20B Limitation on recovery of tax or amount attributable to tax

(1) A proceeding to which this section applies is only maintainable to the extent that the person bringing the proceeding (the claimant) satisfies the court that recovery of the money would not result in a windfall gain to the claimant.

(2) For the purposes of subsection (1), recovery of money would not result in a windfall gain to the claimant if -

(a) the claimant has not charged to, or recovered from, and will not charge to or recover from, any other person an amount in respect of that money, whether or not that amount was itemised or otherwise separately identified in any invoice or other document issued by the claimant;

...

(3) This section applies to -

(a) a proceeding between parties of any kind for the recovery of money paid by way of -

(i) tax or purported tax; or

(ii) an amount that is attributable to tax or purported tax -

under a mistake (either of law or of fact) or under colour of authority;

...

(4) In this section -

...

proceeding includes -

(a) seeking the grant of any relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction;

...

16 As set out in the principal judgment, in respect of all the plaintiff's claims, the following matters were common ground between the parties:

(a) section 20B of the LA Act applies according to its terms and therefore general law principles of restitution do not apply;

(b) the phrase 'of any kind' in s 20B(3)(a) refers to parties of any kind rather than to a proceeding of any kind;

(d) the Levy falls within the definition of 'tax' in s 20B(4).

17 In the principal judgment, I made the following relevant findings about s 20B of the LA Act in the context of the parties' claim to the amount of $13,892,319 in the Designated Account:

(a) This is a proceeding to which s 20B applies because:

(i) the amount of $13,892,319 was 'paid' by the plaintiff;

(ii) this proceeding was for the 'recovery of money paid';

(iii) the payments into the Designated Account totalling $13,892,319 were each made under colour of authority;

(iv) the Full Levy payable under s 50S of the EP Act and the Discounted Levy payable under the 2008 Exemption are taxes rather than purported taxes;

(v) for the period commencing 1 July 2011, the Discounted Levy payable under the 2008 Exemption applied to the Cat C soil used in the Firewall to the exclusion of the Full Levy payable under s 50S of the EP Act; and

(vi) to the extent that the plaintiff was seeking to recover that part of the amount of $13,892,319 that related to the Discounted Levy, ('Discounted Levy Component'), this proceeding was for the recovery of money paid by way of an amount that is attributable to tax.

(b) The plaintiff failed to satisfy me that recovery of the Discounted Levy Component in the Designated Account would not result in a windfall gain to the plaintiff.

(c) The plaintiff's claim for recovery of the Discounted Levy Component in the Designated Account was barred by s 20B(1) of the LA Act.

18 In my opinion, the reasoning in the principal judgment for the findings at paras (a)(i) to (v) and (b) above applies with equal force to the plaintiff's claim in this proceeding for recovery of the Overpayment.

19 The only contentious issue is whether, insofar as it relates to the Overpayment, this is a proceeding for the recovery of money paid by way of an amount that is attributable to tax. If it is, the proceeding is barred by s 20B(1) of the LA Act. If it is not, s 20B(1) would not prevent the plaintiff from recovering the Overpayment.

20 At the hearing on 10 December 2013, the plaintiff sought, in the alternative, to re-argue some of the findings set out at [17(a)] above. There is no basis for me to reconsider the correctness of those findings.

21 At the same hearing, the EPA submitted that the Overpayment is attributable to a purported tax, that is, the Full Levy, because it was paid due to a mistake about the amount lawfully payable. This submission was misconceived for two reasons. First, as the principal judgment made clear, in relation to payments into the Designated Account, the plaintiff did not mistakenly believe that any tax was payable on Cat C soil used in the Firewall. The Payments into the Designated Account were made under colour of authority on the express basis that the plaintiff maintained that no tax was payable. Secondly, a lawful tax cannot be a purported tax.**

Is the Overpayment 'an amount that is attributable to tax'?

**22 According to the Shorter Oxford English Dictionary, 'attributable' means 'able to be attributed to, owing to' and one of the meanings of 'attribute' as a verb is 'ascribe to'.

23 The authorities establish that, while the phrase 'attributable to' requires a causal connection between two subjects, it need not be a sole, dominant, direct or proximate causal connection.[3]

24 In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd,[4] the High Court was required to determine whether the respondent insurance company was entitled to recover overpaid duties. The Stamps Act 1958 had been amended in 1985 to include certain exemptions for duty paid on insurance premiums. The respondent was ignorant of the amendments, and between 1985 and 1989 paid nearly $2 million more than it was liable to pay. The Court applied the general law of restitution, finding that the overpaid amounts were recoverable. Section 20B of the LA Act did not come into operation until 2004. However, the Court was required to consider whether s 20A(1) of the LA Act applied so as to bar recovery of the overpayments.

25 At the relevant time, s 20A(1) of the LA Act provided:**

20A Actions to recover moneys paid as taxes etc.

(1) No action shall be brought to recover, from the Crown or the State of Victoria or any Minister of the Crown, or from any corporation officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount of any tax, fee, charge or other impost paid under the authority or purported authority of any Act, after the expiration of twelve months after the date of payment.

26 Mason CJ found that s 20A(1) of the LA Act did not apply. His Honour stated that the payments of duty sought to be recovered:

were not made under [the] authority or purported authority [of any Act] for the simple reason that the duty was not payable; instead of imposing duty on the relevant categories of premium the Act abrogated the liability to pay duty. It is not possible to read the words 'under the authority or purported authority' as denoting 'under a mistaken belief as to authority'.[5]

27 Brennan J, with whom Toohey and McHugh JJ agreed, was also of the view that recovery of the overpayments was not barred by s 20A(1) of the LA Act as the payments were not made under a provision of the Stamps Act 1958 which imposed or purported to impose a duty to pay those amounts.[6] Similarly, Dawson J found that s 20A(1) had no application in the circumstances of that case, because there 'simply was no Act conferring or purporting to confer authority with respect to the duty overpaid by Royal.'[7]

**28 The EPA submitted that the Court should consider the entire amount paid into the Designated Account as a whole, rather than as two separate amounts. The EPA contended that the total in the Designated Account should be treated as being 'indivisible' because the amounts in that account were not segregated in any way. Further, the plaintiff paid amounts into the Designated Account at the insistence of the EPA, and it can therefore be said that the amounts were paid in response to the EPA's demands for payment of the Full Levy.

29 The EPA submitted that the Overpayment is money paid by way of an amount attributable to a tax, on the basis that there is a 'causal connection' between the payments into the Designated Account and the Full Levy. The EPA relied on s 50S of the EP Act for the proposition that the Overpayment was paid by way of an amount attributable to a 'tax'.

30 The EPA also relied on the fact that the plaintiff's case at trial did not seek to draw any distinction between the Overpayment and the balance in the Designated Account, and contended that the final order should reflect the case as pleaded.

31 The plaintiff submitted that s 20B of the LA Act does not apply to the Overpayment because it is not 'attributable', in the sense of being contributorily or causally connected, to the Full Levy. While the Full Levy was a valid tax, it was not payable by the plaintiff in the circumstances. The plaintiff further submitted that the Overpayment is not attributable to the requirement to pay the Discounted Levy, as the amounts comprising the Overpayment were levied under the 2008 Exemption which applies only to five out of every eight tonnes of Cat C soil used in the Firewall.

32 The plaintiff submitted that the EPA is not entitled to be paid the Overpayment because the principal judgment includes a finding that the 2008 Exemption continues in force. According to the plaintiff, neither s 20B of the LA Act nor Emerton J's order created a right in the EPA to the Overpayment. Section 20B established a statutory defence rather than creating a new cause of action, and the purpose of Emerton J's order was to secure payment of the money if the plaintiff was obliged to pay it. If s 20B precludes the plaintiff from recovering the Overpayment, so it was said, the Court would be unable to order that it be paid to either party, thus producing an 'absurd' outcome. The plaintiff submitted that s 20B ought to be interpreted in a way which avoids an absurd outcome.[8]

33 In response to the EPA's submissions, the plaintiff stated that it had always pleaded that it had the benefit of the 2008 Exemption as an alternative to its argument that it had the benefit of a DBR. The plaintiff submitted that there is no basis to treat the Overpayment as being indivisible from the balance of the Designated Account.**

Decision: The plaintiff is entitled to be repaid the Overpayment

**34 In my opinion, the amount of the Overpayment is not 'an amount that is attributable to tax or purported tax' for the following reasons.

35 I have already found that the Full Levy under s 50S of the EP Act and the Discounted Levy under the 2008 Exemption are taxes rather than purported taxes. Accordingly, the plaintiff will not be precluded by s 20B of the EP Act from recovering the Overpayment unless the amount of the Overpayment is attributable to tax.

36 The amount of the Overpayment is not attributable to either the Discounted Levy or the Full Levy. It is not attributable to the Discounted Levy, as it relates to the three out of the eight tonnes of Cat C soil that are not subject to the Discounted Levy ('Levy Free Tonnes'). It is not attributable to the Full Levy because, as a result of the continuing operation of the 2008 Exemption, the Full Levy has been displaced by the Discounted Levy in relation to Cat C soil used in the Firewall.

37 As the Levy Free Tonnes do not attract either the Full Levy or the Discounted Levy and the EPA has not suggested that any other actual or purported tax is applicable to those tonnes, the Overpayment cannot be attributed to any tax. This is because the Overpayment relates exclusively to the Levy Free Tonnes.

38 Accordingly, while all the other elements of s 20B(3)(a) of the LA Act may be satisfied in relation to the Overpayment - in the sense that this is a proceeding for the recovery of money paid under colour of authority - as the Overpayment relates to the Levy Free Tonnes that are not subject to the Discounted Levy or the Full Levy, it is not an amount that is attributable to any tax or any purported tax.

39 My conclusion is supported by Royal Insurance, which is discussed at [24] to [27] above. It is true that that case dealt with s 20A(1) of the LA Act and did not concern the meaning of the words 'attributable to tax or purported tax' in s 20B(3)(a)(ii) of that Act. However, the High Court's decision that the payment of a tax pursuant to an inapplicable Act cannot constitute a payment 'under the authority or purported authority of any Act' supports the proposition that the payment of an amount that is not payable under any applicable tax or purported tax is not 'an amount that is attributable to tax or purported tax'.

40 There is nothing in the EPA's pleading point. The plaintiff claimed the entire amount in the Designated Account, including the Overpayment.**

**41 In McFadzean v Construction, Forestry, Mining and Energy Union,[9] the Court of Appeal was required to decide whether to disturb a costs order made by the trial judge, which required the appellants to pay 40% of the respondent's costs. The Court acknowledged that the usual rule is that a plaintiff who is only successful on one of a number of pleaded causes of action is entitled to costs. However, there may be circumstances warranting a departure from this course. The Court stated that '[t]he Rules of Court are wide enough to permit an apportionment of costs according to issues or causes of action.'[10]

42 An order apportioning costs between the parties where there is a multiplicity of parties, causes of action, issues and mixed success, may avoid the need for an expensive and complex taxation of costs.[11] In making such an order, the Court can rely on its overall assessment of the proportion of time spent on particular issues rather than seeking mathematical precision.[12]

43 The EPA submitted that this is a case in which it would be fitting for the Court to apportion costs so as to more accurately do justice between the parties. This is because the plaintiff failed on its 'principal case' - it was unsuccessful in its application for a declaration that the deposit of Cat C soil in the Firewall satisfied all the DBR requirements in the 2009 Regulations - and failed to recover most of the money it paid by way of the Levy. As such, the plaintiff's success was said to be far outweighed by the issues upon which it failed.

44 The EPA further submitted that the plaintiff filed substantial evidence dealing with subject matter that was not in issue in the proceeding, and that only a small proportion of time was devoted to issues in respect of which the plaintiff was ultimately successful. The EPA contended that it has been largely successful in obtaining the relief it has sought in its counterclaim.

45 The EPA contended that it would be appropriate for the Court to order that the EPA pay three eighths - or 37.5% - of the plaintiff's costs.

46 The plaintiff's primary submission was that, as it had been successful in obtaining judgment for a substantial amount of money, costs should follow the event, and the EPA should be ordered to pay all of the plaintiff's costs.

47 The plaintiff contended that, if the Court did not accept its primary submission and decided to apportion costs, it should be awarded 80% of its costs. This was because, so it was said, the plaintiff was successful in a number of its central claims, including that the Amendment to the 2008 Exemption was invalid, that the 2011 Classification was invalid and that the use of the Cat C soil in the Firewall was a DBR, notwithstanding that the soil was not consigned for use as a DBR. The plaintiff listed a series of issues in respect of which the EPA was unsuccessful and also contended that the EPA had relied on evidence which was either tendered at a late stage of the hearing or which the Court held was unhelpful.

48 In my opinion, although the plaintiff has succeeded in obtaining judgment for a substantial amount of money, it would be inappropriate for costs to follow the event. This is because the plaintiff failed on its principal claim which took up a large part of the hearing, namely that it was not obliged to pay any part of the Levy because it satisfied all of the applicable DBR provisions in the 2009 Regulations. The plaintiff was only successful in respect of the Overpayment which comprises 29% of the amount sought by the plaintiff based on its secondary argument, namely that the Amendment to the 2008 Exemption was invalid.

49 As a result of the above, this is an appropriate case to apply the apportionment principles discussed in McFadzean. I estimate that 60% of the hearing was devoted to issues upon which the plaintiff was unsuccessful. However, the hearing overall was unnecessarily prolonged by the EPA's reliance on policy and other tendered documents which were irrelevant and unhelpful, by evidentiary disputes arising from the EPA's late tendering of waste transport certificates and by the EPA's reliance on discretionary and other grounds which were devoid of any merit.

50 In all the circumstances, it is appropriate that the EPA be ordered to pay 50% of the plaintiff's costs of the proceeding. This will include both the costs of the plaintiff's claim and the EPA's counterclaim because the issues arising under them were intertwined.**

**51 I will make an order to give effect to the findings in the principal judgment and this supplementary judgment. In formulating that order, I will have the benefit of the detailed submissions made by the parties on the form of order that the Court should make.

[1] Maddingley Brown Coal Pty Ltd v Environment Protection Authority [2013] VSC 582 (29 October 2013) ('principal judgment').

[2] Emerton J's order is set out in the principal judgment at [336].

[3] Roncevich v Repatriation Commission [2005] HCA 40; (2005) 222 CLR 115, 126 [27], 133 [56]; Gilkinson v Repatriation Commission [2011] FCAFC 133; (2011) 284 ALR 226, 228-9 [6]; NSW Coal Compensation Board v NSW Coal Compensation Tribunal [1997] NSWCA 231 (29 July 1997) 7.