Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale [1969] HCA 63; (1969) 121 CLR 137 (12 December 1969)

HIGH COURT OF AUSTRALIA

BELL BROS. PTY. LTD. v. SHIRE OF SERPENTINE-JARRAHDALE [1969] HCA 63; (1969) 121 CLR 137

Money Counts - Local Government

High Court of Australia

Barwick C.J.(1), McTiernan(2), Kitto(3), Menzies(4) and Windeyer(5) JJ.

CATCHWORDS

Money Counts - Money had and received - Voluntary and involuntary payments to local authority - No authority to charge fees for licences - Money received colore officii.

Local Government - Rates and charges - Recovery of fees charged without authority.

HEARING

Perth, 1969, September 11;

Sydney, 1969, December 12. 12:12:1969

APPEAL from the Supreme Court of Western Australia.

DECISION

December 12.

The following written judgments were delivered:-

BARWICK C.J. The applicant seeks special leave to appeal against a judgment of the Full Court of the Supreme Court of Western Australia (1969) 19 LGRA 79; (1969) WAR 104 dismissing its appeal to that Court from a judgment of a single judge of that Court (1968) 19 LGRA 70; (1969) WAR 104 which dismissed its claim to recover fees paid to the respondent for licences to quarry on private land within the local government area controlled by the respondent. The applicant's claim was that the respondent had no authority to demand such fees for the grant of such licences without which the applicant could not lawfully quarry on such land. (at p140)

2. I have had the advantage of reading the reasons for judgment prepared by my brother Kitto in which he concludes that the applicant's claim ought to have succeeded in the Supreme Court. I entirely agree with my brother's reasons for that conclusion and agree that the payments by the applicant were obtained by that kind of extortion commonly covered by the description of payments exacted colore officii. I agree that the appeal should be allowed. (at p140)

McTIERNAN J. The respondent shire acting in purported exercise of the powers conferred upon it by the Road Districts Act, 1919 (W.A.), instituted by means of by-laws a scheme for the licensing of quarrying operations. The two by-laws relevant to this appeal are as follows:



"1. No person without first obtaining the license of the said

Board shall on any other than Crown land within the

Serpentine-Jarrahdale Road Board District -

(a) quarry for stone, gravel, sand, clay or other material;

or

(b) carry on, for the purpose of recovering any stone, gravel,

sand, clay or other material, any operation whereby an

excavation is made, created or enlarged.

7. The fee payable to the Board for any such license shall

be the sum calculated at the rate of 3d. per cubic yard of the

total area in respect of which any such license may be granted.

. . . . " (at p140)



2. The latter by-law was declared by this Court in Marsh v. Shire of Serpentine-Jarrahdale [1966] HCA 77; (1966) 120 CLR 572; 13 LGRA 216 , to be invalid as being in excess of the powers conferred upon the respondent by s. 204 of the Road Districts Act, 1919 (W.A.). (at p140)

3. As soon as the appellant became aware of the decision in Marsh's Case it instituted proceedings to recover back moneys which it had paid to the respondent shire under the invalid by-law. (at p141)

4. The claim as put in the statement of claim is for:

". . . moneys payable by the defendant to the plaintiff for

moneys had and received by the defendant for the use of the

plaintiff being (a) moneys unlawfully demanded by the

defendant colore officii and paid by the plaintiff involuntarily

in that it was illegally exacted from the plaintiff by the defendant

as the condition of a license issued to the plaintiff to win

gravel and stone which license the plaintiff ought to have been

granted without such payment; (b) or alternatively, being

moneys paid by the plaintiff to the defendant by mistake." (at p141)

5. The action was dismissed by the trial Judge who found that the plaintiff failed in both its contentions (1968) 19 LGRA 70; (1969) WAR 104 . The Full Court of the Supreme Court of Western Australia upheld that decision and dismissed the appeal (1969) 19 LGRA 79; (1969) WAR 155 . The action was fought on the basis of a statement of agreed facts to which were annexed the by-laws in question and the correspondence between the parties and their legal representatives which was considered relevant. (at p141)

6. The following are admitted facts: Both parties at all material times believed the by-laws under which the charges were levied to be valid (par. 5). Subject to the issue of a licence to quarry the plaintiff had a right to do the acts and things contemplated by its applications for licences (pars. 7 and 11). All the amounts paid were paid "as the fee required in the terms of by-law 7" (par. 9) or "as the fee for the licence" (par. 13). The correspondence when viewed with the by-laws may not support these admissions, but the parties wished the case to be heard on the basis of those admissions. (at p141)

7. I am of opinion that it is enough in a case such as the present for the plaintiffs to show the relationship of the parties. This case falls squarely within the dictum of Abbott C.J. in Morgan v. Palmer (1824) 2 B & C 729, at pp 734-735 [1824] EngR 553; (107 ER 554, at p 556) :

"It has been well argued that the payment having been

voluntary, it cannot be recovered back in an action for money

had and received. I agree that such a consequence would

have followed had the parties been on equal terms. But if

one party has the power of saying to the other, 'That which

you require shall not be done except upon the conditions

which I choose to impose', no person can contend that they

stand upon anything like an equal footing",

to which Bayley J. added:

"I entirely agree with the observations of my Lord Chief Justice,

which shew, that the payment was by no means voluntary" (1824) 2 B

& C., at p. 735 (107 E.R., at p. 556). .

Lowe J. said in Deacon v. Transport Regulation Board [1958] VicRp 73; (1958) VR 458, at p 460 :

"Nor do I think that the statement attributed to Platt and Martin

BB., in the headnote to Steele v. Williams [1853] EngR 556; (1853) 8 Ex 625 (155

E.R. 1502). that money paid under illegal demand colore officii

can never be voluntary is universally true. It finds a proper

application where the payer is denied a right except on payment of

the money demanded, as for instance in Brocklebank Ltd. v. The King

(1925) 1 KB 52 and Sargood Bros v The Commonwealth [1910] HCA 45; (1910) 11

C.L.R. 258. ." (at p142)

8. Those statements point to the feature which distinguishes this case from Mason v. New South Wales [1959] HCA 5; (1959) 102 CLR 108 . The respondent shire in this case was validly empowered to license persons wishing to quarry. It was only the payments by-law which was invalid. (at p142)

9. In Mason's Case [1959] HCA 5; (1959) 102 CLR 108 however both the licensing and the payments enactments were held to be invalid as contrary to s. 92 of the Constitution. A person could therefore legally disregard both enactments. In this case the appellants could not legally disregard the licensing by-law. Applying the words of Lowe J. the payments made to secure a licence in this case can never in law be voluntary and it is therefore irrelevant to attempt to show lack of protest, or acquiescence. (at p142)

10. In my opinion the application for special leave to appeal should be granted and the appeal allowed. (at p142)

KITTO J. The applicant for special leave to appeal sued the respondent council (formerly the Serpentine-Jarrahdale Road Board) in the Supreme Court of Western Australia to recover certain moneys which the applicant had paid to the respondent as fees pursuant to by-law 7 of the by-laws made on 17th June 1960 under the Road Districts Act, 1919 (W.A.), for controlling quarrying and excavating within the respondent's district. (at p142)

2. The by-laws provided that no person without first obtaining the licence of the respondent should on any land within the district carry on, for the purpose of recovering (inter alia) any stone or gravel, any operation whereby an excavation should be made, created or enlarged (by-law 1); that all applications for a licence should be accompanied by a plan of the area proposed to be excavated (by-law 2); that the duration of any licence should be one year (by-law 3); that the fee payable to the respondent for any such licence should be the sum calculated at the rate of 3d. per cubic yard of the total area in respect of which any such licence might be granted (by-law 7); and that if any person should commit a breach of any of the by-laws he should be liable to a penalty not exceeding 20 pounds (by-law 16). A licence was not required to be in any particular form, or even to be in writing. (at p143)

3. By a letter dated 22nd September 1961, to which a plan of an area on certain private property within the respondent's district was attached, the applicant applied for a licence for a period ending on 31st August 1962, to excavate gravel to a depth of eighteen inches from the delineated area, the cubic content of the proposed excavation being approximately 3,000 cubic yards. On 18th October 1961 the respondent replied:

"Official approval is given to your company to quarry for

gravel as per application, subject to compliance with council

by-laws. The royalty payable is 3d. per c. yard and on the

area given will amount to 37 pounds 10s. If more than 3,000

yards are taken, it can be calculated at 3d. per yard." (at p143)

4. On 26th September 1962 the applicant applied to the respondent for a licence to quarry stone from other property in the district, and by letter of 25th October 1962, the respondent approved the application "subject to compliance with by-laws". Neither in the application nor in the approval was the area, the depth or the period specified, but the terms of the respondent's letter imply that the proposed excavation had been identified in the course of discussions, and of course the period could not have been other than one year. (at p143)

5. The applicant carried out excavation work in accordance with each approval, and after the expiration of the year in each case it continued to excavate for gravel and stone on the respective properties, though apparently without any more than the tacit approval of the respondent. In the argument before us it was assumed by both parties that the respondent's letters and its tacit approvals were effectual as licences under the by-laws, and the assumption seems to me to be correct. The agreed fact is that the whole of the moneys which the applicant seeks to recover were required by the respondent under the authority of by-law 7 to be paid by the applicant as fees for licences to carry out the excavation work which the applicant in fact carried out. Quite plainly the respondent was at all material times asserting that without its "approval", that is to say its licences, the applicant's proposed excavations would be illegal and would therefore entail a penalty under by-law 16, and that acceptance of the licences by the applicant would be taken as acceptance of the obligation under by-law 7. Equally clearly the applicant by proceeding with its excavations after having received the respondent's letters was submitting to the demand for fees because it needed the licences and could not obtain them otherwise. (at p144)

6. On 4th November 1966 this Court, in litigation to which the plaintiff was not a party, held that, although by-law 1 forbidding any excavating without the defendant's licence was valid, by-law 7 was invalid, and that consequently the respondent had no authority to charge fees for licences under the by-laws: Marsh v. Shire of Serpentine-Jarrahdale [1966] HCA 77; (1966) 120 CLR 572; 13 LGRA 216 . Thereupon the applicant demanded the return of the moneys it had paid as fees under by-law 7. Being met with a refusal, it sued the respondent for moneys had and received, basing its claim upon alternative propositions: (1) that the payments had been unlawfully exacted by the respondent colore officii, and (2) that they had been paid by the applicant and received by the respondent under a mutual mistake of law and were recoverable by force of s. 23 of the Law Reform (Property, Perpetuities and Succession) Act, 1962 (W.A.). The trial judge and the Full Court rejected the claim, and the applicant now seeks special leave to appeal from the Full Court's judgment. (at p144)

7. I need not discuss the second of the applicant's propositions, for in my opinion the claim should have succeeded upon the first. The contrary opinion of the learned judges of the Supreme Court resulted from a reading of the judgments delivered in this Court in Mason v. New South Wales [1959] HCA 5; (1959) 102 CLR 108 as involving that money which has been paid in order to obtain a licence which the payer needed, and which the recipient had power to grant but no authority to charge for, is not recoverable unless a conclusion be drawn from additional circumstances that the payment was involuntary. But the case was not of that kind, and the judgments do not support the proposition. A State, under legislation passed by its parliament, had taken fees for permits to carry goods on interState journeys, but the purported prohibition of carrying goods on such journeys without a permit was constitutionally invalid and consequently persons who had paid fees for permits could not rest their case for recovery on the ground that a need to obtain permits to make desired journeys had rendered payments of fees for such permits involuntary. It was argued against them that having in truth no need of permits they yet had paid the fees, freely choosing to do so rather than to proceed on their inter-State journeys and resist any prosecution for not having permits. To answer that argument it was necessary for them to show circumstances of compulsion, and in order to do so they pointed to the existence of statutory provisions giving power to officials of the State to seize the vehicles of persons acting in breach of the purported prohibition, and to the conduct of such officials thereunder. The Court considered that in the circumstances it was reasonable for them to apprehend, as they did, that seizure of their vehicles would follow any exercise of the right to make their journeys without permits, and the conclusion followed that they had not been on equal terms with the State, and that for that reason the payments had not been voluntary and were recoverable. (at p145)

8. In a passage in the judgment of Dixon C.J. which was relied upon in the Supreme Court in the present case, his Honour (1959) 102 CLR, at p 117 accepted modern English authority as saying that "moneys paid to the Crown as and for taxes cannot be recovered from the Crown upon its turning out that the moneys were not exigible notwithstanding that they were demanded by the Crown, unless the circumstances were such that they would be recoverable as between subject and subject, e.g., as involuntary payments or payments made under a mistake of fact". This may be agreed; and it follows that where moneys have been paid to the Crown, or to a body such as the respondent, for licences to pursue a course of conduct which is lawful without a licence, it is necessary to investigate the case further in order to ascertain whether or not there have been circumstances, e.g., of compulsion or mistake, which give rise to a right of recovery. But where a person or body having power to grant or withhold a permission for another to pursue a course which he cannot lawfully pursue without that permission has used the power in order to exact a payment which he or it is not authorized to exact, the case is entirely different. The law holds that the involuntariness of the payment is established, because the parties were not on equal terms. As Abbott C.J. said in Morgan v. Palmer:

". . . if one party has the power of saying to the other, 'That

which you require shall not be done except upon the conditions

which I choose to impose', no person can contend that they

stand upon anything like an equal footing."

(1824) 2 B & C, at p 735 (107 ER, at p 556)

In the same case Littledale J. said:

"I am of opinion that this defendant has no right to retain

the money which was paid to him by the plaintiff. He had

not any legal authority to make the charge. . . . The granting

a licence was a public duty imposed by law, and for the

execution of that he had no right to any payment. . . . Here,

the plaintiff was merely passive, and submitted to pay the

sum claimed, as he could not otherwise procure his licence"

(1824) 2 B & C, at pp 737-739 (107 ER, at pp 557-558)

. (at p146)

9. These quotations exactly fit a case like the present. Portions of them were quoted with approval in Brocklebank Ltd. v. The King (1925) 1 KB 52 , and that case is a clear authority in favour of the applicant here. The by-laws validly prohibited the applicant while unlicensed from carrying out the excavation work which it wished to carry out, and entrusted the respondent with a power to grant licences. The respondent, not being of opinion that the licences the applicant needed should be refused, and therefore being under a duty to grant them, demanded without lawful authority (though in good faith) that the applicant pay fees for the licences. The applicant, it is true, paid the fees without protest; but it had no real alternative, for save by submitting to the respondent's terms it could not get the licences and therefore could not lawfully proceed with its excavations. In my opinion this fact makes the case truly one of money exacted colore officii, and the money is recoverable. To adapt the language of Martin B. in Steele v. Williams [1853] EngR 556; (1853) 8 Ex 625, at p 633 [1853] EngR 556; (155 ER 1502, at p 1505) , it matters not whether the money was paid before or after the licences were granted. As Isaacs J. said in Sargood Bros. v. The Commonwealth:

"The right to recovery after a demand colore officii rests upon

the assumption that the position occupied by the defendant creates

virtual compulsion, where it conveys to the person paying the

knowledge or belief that he has no means of escape from payment

strictly so called if he wishes to avert injury to or deprivation

of some right to which he is entitled without such payment. . . .

The essence of the statement is the inability to obtain, otherwise

than by absolute payment, those services which the recipient is

bound to render without it" [1910] HCA 45; (1910) 11 CLR 258, at p 301 (at p146)

10. In my opinion special leave to appeal should be granted and the appeal allowed. (at p146)

MENZIES J. I agree with Kitto J. (at p147)

WINDEYER J. I need not repeat the facts. As I see them they establish without any doubt that the moneys which the applicant paid to the shire as "royalties" were paid as a result of extortion, as that word is used in this branch of the law. That conclusion follows, I consider, from the judgments in Mason's Case [1959] HCA 5; (1959) 102 CLR 108 Certainly I can see nothing in that case that should lead to any other conclusion. For myself I said there that "a plaintiff's right to recover in an action for money had and received such as this depends upon proof that the moneys were paid by him involuntarily, that is, as the result of some extortion, coercion or compulsion in the legal sense. Exactions colore officii are a form of extortion". It seemed to me that the payments there in question had not been made simply as the result of demands made colore officii in the strict sense. Rather they were made, I thought, as the result of fears based on the seeming authority of a statute. That case thus fell within the genus extortion by reason of coercion, not simply because it was an unlawful or excessive demand made by an official under colour of his office. The facts of this case are different. It resembles in essence a claim to recover moneys paid colore officii. Adopting, and adapting, Lord Kenyon's remark in Cartwright v. Rowley (1799) 2 Esp 723,at p 274 (170 ER 509, at p 510), concerning one of the early cases of this kind: the applicant here could not do without the licence "so that the money was paid through necessity and the urgency of the case". A long list of cases in which, before and after Steele v. Williams (1853) 8 Ex 625 [1853] EngR 556; (155 ER 1502), the same principle was applied may be found in Messrs. Goff and Jones' The Law of Restitution (1966), p. 153. This case falls squarely within that class. The case of Hooper v. Exeter Corporation (1887) 56 LJQB 457, is a useful analogy. (at p147)

2. I hesitate to use the phrase colore officii of this case, but only because that term was originally used to describe demands by an individual the holder of an office rather than extortion by corporations. But the principle is the same. The words which express it are not material; and to question them may be pedantic since Lord Macmillan recognized the use of the phrase colore officii in R. & W. Paul Ltd. v. Wheat Commission (1937) AC 139, at p 161, of the defendant there, a body corporate. (at p147)

3. I agree that the applicant should have special leave to appeal and, the case having been fully argued, that the appeal should be allowed. (at p148)

ORDER

Special leave to appeal granted. Appeal allowed with costs. Order of the Full Court of the Supreme Court of Western Australia set aside and in lieu thereof order that the appeal to that Court be allowed with costs and that judgment be entered for the plaintiff in the amount $1,686.02 with costs to be determined by the Supreme Court.