The High Court has allowed an appeal against a decision of the Victorian Court of Appeal on the repayment of erroneous land tax payments. The appellant Commissioner wrongly assessed a double land tax payment of the respondent taxpayer’s land between 2008 and 2012, and repaid the excess amounts assessed. The Commissioner refused to repay similar excessive payments from 1990 to 2002. The Court of Appeal held that the earlier assessments contained the same duplication error as the later one. The Court of Appeal noted that that error was not disclosed on the face of the assessments and could not have been discovered by the taxpayer with reasonable diligence, though it was known to the Commissioner, and ordered repayments. The Court of Appeal also held that the Commissioner’s discretion could only be lawfully exercised one way, and thus a writ of mandamus was required to order the repayment, which the Court granted.

The High Court unanimously allowed the appeal. Bell and Gordon JJ (with whom Kiefel and Keane JJ and Gageler J agreed), held that the Court of Appeal erred in its reading of the text, context and purpose of the Land Tax Act 2005 (Vic). After reviewing the provisions, structure and purpose of the LTA (see [24]ff), Bell and Gordon JJ emphasised that s 90AA provided for a three year limit on taxpayers seeking a refund or recovery of tax paid or purportedly paid on land under the LTA in Victoria’s administrative tribunals and courts, with an express carve out of circumstances in which this limitation would not apply (viz, where a provision of the LTA under which tax was paid was invalid): at [35]–[37].  Bell and Gordon JJ ultimately concluded (at [46]) that the scheme operates in the following way:

The scheme of the LTA was that, once an assessment was made by the Commissioner, the amount specified in that assessment would become a debt, payable as land tax on the date specified in the assessment for payment. That amount remained payable for land tax on the date specified in the assessment even if the assessment was challenged by a taxpayer who was dissatisfied with an assessment and who served an objection on the Commissioner in accordance with the LTA. The fact that an objection was pending did not affect the assessment, and the tax assessed could be recovered by the Commissioner as if no objection had been served by the taxpayer. The provisions of the LTA that dealt with collection and recovery of land tax constituted a scheme that covered the field and ‘implement[ed] a long-standing legislative policy to protect the interests of the revenue’, the operation of which may, in some cases, be harsh.

Turning to the Court of Appeal’s reasoning, Bell and Gordon JJ held, contrary to the Court of Appeal, that the excess amounts were tax paid under the LTA because while it was erroneously demanded, it was, in the language of s 90AA, ‘purportedly paid’ under the LTA (see [49]–[54]). Bell and Gordon JJ then rejected the Court of Appeal’s holding that where the Commissioner knows that an assessment was inaccurate, the Commissioner is under a duty to exercise the power in s 19 to amend the assessment and refund the excess: instead, the section is discretionary and ‘may’ be exercised, and only in response to an objection lodged within the time limits in s 90AA (at [55]ff). Because the respondent’s claim was not lodged within the three year time limit set by s 90AA, both proceedings for mandamus and restitution were time barred (see at [70]ff). Finally, the Court of Appeal erred in concluding that there had been conscious maladministration by the Commissioner on the basis of the refusal to amend the assessments: firstly, this finding was not sought by the respondents, and secondly, given there was no duty to amend under s 19, there cannot have been any maladministration in refusing to do so (see at [80]ff). Allowing both appeals, Bell and Gordon JJ ordered the respondent taxpayer to repay the amount paid by the Commissioner under the orders of the Court of Appeal, with interest (see [89ff).

Kiefel and Keane JJ agreed with the conclusions and reasoning of Bell and Gordon JJ, but added further observations on the issue of conscious maladministration and the scope of s 19. Their Honours emphasised that no suggestion or factual basis that the Commissioner had acted otherwise than in good faith in exercising his powers or in refusing to exercise his discretion under s 19 in favour of the respondent (at [4]–[5]). On s 19, Kiefel and Keane JJ emphasised that the Court of Appeal’s view of the Commissioner being under an obligation to exercise the s 19 power failed to appreciate the clear legislative intention that the repayment of money overpaid should only occur through the process in s 90AA, and neither a commissioner nor a court is able to ignore that statutory mechanism (at [6]ff).

Gageler J agreed with the conclusions and reasoning of Bell and Gordon JJ, and with the additional observations of Kiefel and Keane JJ, and also added his views on the respondent’s arguments on the interaction between ss 19 and 90AA. On the respondent’s argument that a mandamus proceeding is not covered by s 90AA because the amount sought is not tax paid under or purportedly under the LTA and a mandamus order operates ‘ab initio’ to establish that the amount paid was not the amount required under the Act (see [98]), Gageler J noted that this approach overstated the legal effect of exercising the power under s 19, and understated the comprehensiveness of the bars in s 90AA (at [101]). Amendment under s 19 has no greater effect than what the LTA gives to the assessment: a later amendment does not change the historical fact of the issuing of the original assessment, and the s 90AA bar refers to that historical fact (see [102] and [104]–[105]).