The Commonwealth v McCormack

In proceedings instituted in the Supreme Court of the Australian Capital Territory, the Commonwealth claimed from Mr. McCormack an amount of $75,000 which was alleged to have been paid to him by the Commonwealth under mistake of fact. In separate proceedings in the Supreme Court, Mr. McCormack claimed from the Commonwealth payment of $75,000 which had been withheld by the Commonwealth from the amount payable to him in respect of a resumption of land. The Commonwealth pleaded a set-off of the $75,000 which it claimed was owing to it by Mr. McCormack and which was the same amount as that which it sought to recover in the action in which it was plaintiff. The two actions were heard together and the trial judge found for Mr. McCormack in each of them. In accordance with his findings, he ordered that judgment be entered in the action in which Mr. McCormack was the plaintiff for $75,000 together with interest. The action in which the Commonwealth was the plaintiff was dismissed.

The Commonwealth subsequently appealed to the Full Court of the Federal Court in each of the two actions. In each its appeal succeeded. An appeal by Mr. McCormack to this Court in each of the two actions was unsuccessful: McCormack v. The Commonwealth [1] . This Court made orders having the effect of resolving the two actions in the manner in which, in the view of the Court, they should have been resolved by the learned trial judge. By dismissing the appeal in the action in which Mr. McCormack was plaintiff, it confirmed the order made by the Full Court entering judgment for the Commonwealth. In the action in which the Commonwealth was plaintiff, it was declared that the Commonwealth had been entitled to set off against the amount which it admittedly owed to Mr. McCormack in respect of a resumption of a parcel of his land the sum of $75,000 which it had allegedly paid to him under a mistake of fact. Appropriate orders for costs were made. On the information before the Court, the orders made were appropriate to confirm the Commonwealth's entitlement to retain the $75,000 it had withheld from the moneys due to Mr. McCormack.

The orders were taken out by the Commonwealth. Now the Commonwealth applies, pursuant to O. 29, r. 11 of the Rules of this Court ("the slip rule"), for a variation of these orders. The variation is sought to take account of a fact which was not adverted to by the Commonwealth at the time when the appeals were before this Court. The fact is that on 21 September 1982, that is in the period between judgment in the Supreme Court and the appeal coming on for hearing before the Full Court of the Federal Court, the Commonwealth paid $91,990.06 to Mr. McCormack's solicitors in satisfaction of the judgment for $75,000 and interest which had been given in his favour in the Supreme Court and which was subsequently set aside on appeal. The fact that the Commonwealth had made that payment was not disclosed either to the Full Court of the Federal Court or to this Court. Indeed, we are informed that senior counsel who appeared for the Commonwealth on the hearing of the appeal to this Court was not informed that the payment had been made. The Commonwealth has sought to obtain repayment of the $91,990.06 from Mr. McCormack but has not succeeded in its efforts. In the present notice of motion, the Commonwealth seeks an order either varying or adding to the orders already made which will have the effect that there is some final order obliging Mr. McCormack to repay to the Commonwealth the sum of money which was paid to him in satisfaction of the judgment of the Supreme Court which has now been set aside.

"Restitutio in integrum is the right of every successful appellant": per Lord Field in Cox v. Hakes [2] . An appellant who has satisfied a judgment for the payment of money is entitled, on the reversal of the judgment, to repayment of the money paid by him with interest: Rodger v. The Comptoir D'Escompte de Paris [3] ; Merchant Banking Co. v. Maud [4] . In the former case, Lord Cairns said [5] :

one of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the Suitors, and when the expression "the act of the Court" is used, it does not mean merely the act of the Primary Court, or of any intermediate Court of appeal, but the act of the Court as a whole, from the lowest Court which entertains jurisdiction over the matter to the highest Court which finally disposes of the case. Isaacs and Rich JJ. espoused the principle in Heavener v. Looms [6] . It follows that the Commonwealth is entitled to an order for the repayment of the amount which it paid in satisfaction of the judgment first entered against it in Mr. McCormack's action but reversed on appeal to the Full Court of the Federal Court. The Commonwealth does not seek an order for interest on the amount to be repaid. 1. (1890) 15 App. Cas. 506, at p. 547. 2. (1871) L.R. 3 P.C. 465. 3. (1874) L.R. 18 Eq. 659. 4. (1871) L.R. 3 P.C., at p. 475. 5. (1924) 34 C.L.R. 306, at pp. 323-324.

In Rodger v. Comptoir D'Escompte de Paris the order for repayment was not made by the Judicial Committee but by the Supreme Court of Hong Kong, in executing and carrying into effect an Order in Council reversing the judgment of the Supreme Court in satisfaction of which the payment had been made. The Supreme Court derived its jurisdiction to make the repayment order from its duty to execute the Order in Council. Had the Judicial Committee been moved to add a repayment order to the Order in Council, it might have done so. Its jurisdiction to make an order of that kind in order to give effect to the general principle expressed by Lord Cairns is illustrated by their Lordships' judgment in Central Electricity Board v. Bata Shoe Co. Ltd. [7] . In the present case, this Court had jurisdiction when it dismissed the appeal from the judgment of the Full Court of the Federal Court in Mr. McCormack's action, to make an order for the repayment of the amount paid in satisfaction of the Supreme Court's judgment before that judgment was reversed.

The omission of a repayment order from the order dismissing the appeal is due entirely to the failure of the Commonwealth to instruct counsel to inform the court of the circumstances which made such an order necessary. If the matter had been raised on the hearing of the appeals, such an order would have been made as of course for the reason that, without a repayment order made by one of the courts having jurisdiction to make it, the appeals to the Federal Court and to this Court would be nugatory. The Commonwealth would remain deprived of the money which it had paid in obedience to the judgment of the Supreme Court which the Federal Court and this Court have held to be erroneous.

Whether or not it is necessary to invoke the slip rule when an application is made for an order to give effect to the judgment of the Court, there is jurisdiction to make an appropriate order under that rule to remedy the situation which has arisen as a result of oversight by a party's legal representative notwithstanding the fact that the formal orders have been taken out: see L. Shaddock & Associates Pty. Ltd. v. Parramatta City Council [No. 2] [8] . Such an order should be made on the present notice of motion to give effect to the judgment which the Court has delivered and to accord the right of restitutio in integrum to the Commonwealth. The appropriate order is that there be added to the order in Mr. McCormack's action (No. S.C. 799 of 1979; No. A.C.T. G63 of 1982) the following:

Order of the Full Court of the Federal Court (No. A.C.T. G63 of 1982) varied by adding -

"Order that the respondent repay to the appellant the sum of $91,990.06 paid to him in satisfaction of the judgment hereby set aside." 1. (1982) 151 C.L.R. 590.