Sims v Commonwealth of Australia

1. [1]

   BELL CJ: This appeal concerns the juristic nature of a claim for recovery by the Commonwealth for moneys paid ultra vires to or in favour of the Appellant after he had separated from the Royal Australian Navy in which he served as an Able Seaman. That such a cause of action exists is not in doubt. It was confirmed by the Privy Council in Auckland Harbour Board v The King (Auckland Harbour Board). [1] What is in question is whether it is a cause of action founded on “quasi contract” within the meaning of s 14(1)(a) of the Limitation Act 1969 (NSW). This is because proceedings for the recovery of the ultra vires payments were commenced by the Commonwealth more than six years after several hundred thousand dollars had been paid out.

2. [2]

   A question has also been raised by the Commonwealth as to whether its right to recovery of ultra vires payments is implied by ss 81 and 83 of the Constitution and, if so, whether such a constitutionalised right of restitution (if one exists) is inconsistent with s 14(1)(a) of the Limitation Act.

3. [3]

   The facts of the case are largely straightforward. The Appellant was an Able Seaman in the Royal Australian Navy (the Navy) between September 2000 and 21 September 2009 however the Respondent (the Commonwealth) mistakenly continued to pay his salary, superannuation and certain other payments on his behalf until 26 March 2015.

4. [4]

   Those mistaken payments exceeded $300,000 (the Commonwealth’s calculation of the total amount has varied over time) although individual amounts making up this total were paid on a periodic basis (as they had been prior to the Appellant separating from the service of the Navy).

5. [5]

   Of the total amount of overpayments, periodic payments in instalments amounting to $100,800 were made to the Appellant’s spouse or former spouse, Ms Dalton, presumably on the basis of a direction the Appellant had made prior to his separation from the Navy. Ms Dalton was not a party to the proceedings and the amounts paid to her were sought to be recovered from the Appellant.

6. [6]

   An amount of $554.11 was also paid to Jones King Lawyers, with the final component of this payment being made on 4 February 2010. The primary judge noted that the Appellant had nominated that firm to receive those amounts from his salary. Recovery of this amount was sought from the Appellant and not Jones King Lawyers which, like Ms Dalton, was not a party to the proceedings.

7. [7]

   A further component of the claimed overpayments comprised amounts withheld by the Department of Defence on account of “pay as you go” (PAYG) tax and credited on the Appellant’s running account with the Australian Taxation Office. The primary judge relevantly summarised these amounts as follows: [2]

   1. (1)

      amounts totalling $8,400 for the 2010 tax year (being the approximate amount paid on the Appellant’s behalf for the period 22 September 2009 to 30 June 2010);

   2. (2)

      amounts totalling $11,396 for the 2011 tax year;

   3. (3)

      amounts totalling $12,076 for the 2012 tax year;

   4. (4)

      amounts totalling $12,332 for the 2013 tax year; and

   5. (5)

      amounts totalling $12,892 for the 2014 tax year.

8. [8]

   Although these credits were made from 2009, they did not translate to an actual benefit to the Appellant until 2018 when the Appellant filed an income tax assessment and obtained a tax refund in respect of amounts of tax previously withheld. Of course, those withheld amounts were in respect of a salary to which the Appellant was not entitled.

9. [9]

   Various demands by the Commonwealth for repayment of amounts varying as between $318,810.38 and $349,038.00 were made between June 2015 and February 2018. These were not acceded to by the Appellant.

10. [10]

    Proceedings were commenced by the Commonwealth against the Appellant on 7 May 2019 with the Statement of Claim being amended on 2 September 2020. The Amended Statement of Claim (ASOC) contained a detailed Annexure setting out dates and amounts of payments and particular payees from 1 October 2009 until 26 February 2015.

11. [11]

    The Commonwealth pleaded that the payments subsequent to 21 September 2009 were made under a mistake of fact and had led to the unjust enrichment of the Appellant at the Commonwealth’s expense. The Commonwealth sought an order that the Appellant pay the Commonwealth $315,988.95 or alternatively “restitution in an amount of $315,988.95.”

12. [12]

    The Commonwealth also pleaded in the alternative that what were correctly characterised as the “Mistaken Payments” were made “without any legislative authority and are ultra vires”. The Commonwealth contended that these payments were repayable in accordance with the decision of Privy Council in Auckland Harbour Board. That principle is discussed further below but, in short, is to the effect that “where moneys are paid out of Consolidated Revenue without authority they may be recovered in an action by the Government”: Commonwealth v Crothall Hospital Services (Aust) Ltd (Crothall). [3] As will be seen, it has been held that no defence of change of position or estoppel against the Crown lies in answer to any such recovery action.

13. [13]

    The Commonwealth also contended that the Limitation Act did not present any bar to recovery. It will already be apparent from the facts set out above that a very large number of the periodic payments were made more than six years prior the commencement of the proceedings on 7 May 2019. Unsurprisingly in these circumstances, the Appellant pleaded by way of defence that the causes of action in respect of the individual payments said to comprise the ultra vires and mistaken overpayments were not maintainable in respect of each payment made more than six years prior to the commencement of proceedings. In this context, the Appellant relied upon s 14(1)(a) of the Limitation Act, which relevantly provides:

14. [14]

    As Meagher JA has explained, the underlying proceeding involved, and this appeal involves, the exercise of federal jurisdiction conferred by s 39(2) of the Judiciary Act 1903 (Cth) given that the Commonwealth is a party. The Limitation Act, as a law relating to procedure, is a law which is “picked up” and applied in that exercise of jurisdiction pursuant to s 79(1) of the Judiciary Act. [4]

15. [15]

    At first instance, the Commonwealth contended that a claim for repayment of moneys pursuant to the so-called Auckland Harbour Board principle was a sui generis cause of action based on public policy and was not restitutionary. Even if it were restitutionary in nature, the Commonwealth contended that its claim was not a cause of action “founded on quasi contract” for the purposes of s 14(1)(a) of the Limitation Act.

16. [16]

    The Commonwealth also pleaded further or alternatively that, if any limitation period applied to any of the claims pleaded in the ASOC, the limitation period should be postponed by reason of s 56 of the Limitation Act and should only commence to run “on or about 26 March 2015 when the plaintiff first discovered that the Mistaken Overpayments had been paid to the Defendant”.

The primary judgment

1. [17]

   It was common ground at first instance and on appeal that the moneys paid to the Appellant, Ms Dalton and Jones King Lawyers were paid without parliamentary authority, and thus, were ultra vires.

2. [18]

   The primary judge first considered whether a claim for repayment of moneys under the Auckland Harbour Board principle was restitutionary in nature or sui generis, as contended by the Commonwealth. The ultimate question for his Honour was whether the claim for repayment could be characterised as a claim in quasi contract within the meaning of s 14(1)(a) of the Limitation Act. In this context, it was also common ground that there was no authority which assisted in determining whether a claim based upon the Auckland Harbour Board principle was subject to any form of limitation defence.

3. [19]

   The primary judge concluded that the claim under the Auckland Harbour Board principle was “not a mainstream restitutionary claim, as it does not arise from any form of unjust enrichment”. [5] That conclusion depends, in part, upon one’s understanding of unjust enrichment but his Honour was certainly correct in proceeding upon the basis that the Auckland Harbour Board principle did not depend upon establishing a mistake (whether of fact or law) bearing in mind that, in 1924 when the Privy Council gave its decision, mistakenly made payments were only recoverable if those payments were made on the basis of a mistake of fact and not a mistake of law: see, generally, David Securities Pty Ltd v Commonwealth Bank of Australia (David Securities). [6]

4. [20]

   The primary judge also differentiated the Auckland Harbour Board principle on the basis that orthodox defences to restitutionary claims such as change of position and estoppel have been held not to be available in answer to claims brought under that principle. There is undoubtedly authority to this effect, most notably in the decision of Newton J in Commonwealth of Australia v Burns (Burns) [7] and this Court’s decision in Attorney-General v Gray (Gray), [8] both of which are discussed further below.

5. [21]

   The primary judge held that the cause of action was one “based in public policy, and … not in restitution.” [9] His Honour relied upon the decision of the Full Court of the Federal Court in Crothall for the proposition that the Auckland Harbour Board principle was “a stand-alone common law cause of action, and not a mere precursor to a restitutionary claim”. [10]

6. [22]

   The primary judge further held that, if a claim based upon the Auckland Harbour Board principle could be characterised as restitutionary, it was nevertheless not a claim in “quasi contract” within the meaning of s 14(1)(a) of the Limitation Act. He rejected the Appellant’s submission that the section should be given “ambulatory effect” in the sense that the expression “quasi contract” employed by the legislature at the time of enactment of the Limitation Act, namely 1969, should now bear the meaning of the legal expression “restitution”, as explained by the High Court in Pavey & Matthews Pty Ltd v Paul (Pavey). [11]

7. [23]

   His Honour preferred the Commonwealth’s contention that the expression “quasi contract” in the Limitation Act was inapt to describe all restitutionary claims, and appeared to rely upon this Court’s decision in Coshott v Lenin (Coshott) [12] as authority for the proposition that, in the context of its use in the Limitation Act, “quasi contract” was confined to claims based on the common money count for work done, namely quantum meruit. In Coshott, [13] Mason P, with whom Spigelman CJ and Campbell JA agreed, held that:

8. [24]

   In relation to the payments made by the Commonwealth to Ms Dalton, the primary judge inferred that Ms Dawson was at all material times the Appellant’s estranged wife or ex-wife, and went on to hold that: [14]

9. [25]

   Similarly, in relation to the payment to Jones King Lawyers, the primary judge found that the payment was made at the Appellant’s direction and in order to discharge the Appellant’s liability to Jones King Lawyers for services rendered to him. [15]

The Notices of Appeal and Contention

1. [26]

   The Appellant appealed from the decision of the primary judge on the following grounds:

2. [27]

   The orders sought by the Appellant include judgment for the Commonwealth in the sum of $75,104.36 being entered. This reflects the fact that, in respect of the amounts paid directly to the Appellant within six years of the commencement of the proceedings, the Appellant raises no defence and accepts that restitution must be made in that amount.

3. [28]

   The Commonwealth filed a Notice of Contention which is in the following terms:

4. [29]

   Leave was given in the course of the hearing of the appeal to amend the Notice of Contention so as to contend that, in the event that the Auckland Harbour Board principle did not sustain the primary judge’s finding with regard to the payments to Ms Dalton, the judgment in that respect should nevertheless be upheld on the basis that the payments to her were mistaken and reversible in accordance with David Securities.

Section 78B notice

1. [30]

   The Commonwealth also issued a notice under s 78B of the Judiciary Act, describing the constitutional matter:

2. [31]

   It should be noted that these constitutional arguments were not raised at first instance, however Mr Duggan, who appeared for the Appellant, did not object to their introduction as they involved pure questions of law and were not productive of any incurable prejudice to the Appellant.

3. [32]

   Before turning to the arguments raised on appeal and by the Notice of Contention, it is first desirable to consider in a little more detail the Auckland Harbour Board principle and the cases which have followed and applied it.

The Auckland Harbour Board principle and its sequelae

1. [33]

   The statement of principle which is recognised as the Auckland Harbour Board principle is that by Viscount Haldane: [16]

2. [34]

   No authority was referred to by Viscount Haldane for this statement of principle although the authorised report of the Privy Council’s decision makes reference to Dodington’s Case [17] as having been referred to in argument on the appeal to the Privy Council. The report of Dodington’s Case is illuminating and warrants full reproduction:

3. [35]

   The report made reference to s 6 of 8 & 9 Will 3, c 28, to the effect that none of the monies in the receipt of the Exchequer shall be deemed to be lawfully issued or paid but by or in pursuance of some grant or authority from the King under the Great Seal, or by virtue of some sufficient authority under the Privy Seal, or pursuant to some Act of Parliament.

4. [36]

   Importantly for present purposes, Dodington, as executor of Sir Walter Mildmay, was ordered to account for (“answer for”) the unauthorised moneys paid to Sir Walter “as a debt”. Later in these reasons, it will be seen how the action to account came to be treated as one in indebitatus assumpsit and thus as part of that body of law that came to be known as the law of quasi-contract.

5. [37]

   The unelaborated proviso by Viscount Haldane in the passage from Auckland Harbour Board set out above – “and may be recovered by the Government if it can, as here, be traced” – is somewhat problematic. It led Lord Goff, albeit in obiter and again without elaboration in Woolwich Equitable Building Society v Inland Revenue Commissioners, [18] to describe an Auckland Harbour Board claim as being “proprietary in nature”.

6. [38]

   In the 4th edition of Goff and Jones’ The Law of Restitution (Goff & Jones) published in 1993 and under the sole editorship of Professor Jones, it was said that the statement in Auckland Harbour Board in relation to tracing of the moneys was “puzzling”. [19] Although Professor Jones made reference to Woolwich, he also drew attention to the decision of Newton J in Burns who concluded that Lord Haldane in Auckland Harbour Board was referring to tracing the identity of the recipient of the moneys (rather than the moneys themselves).

7. [39]

   What Newton J said in Burns [20] was as follows:

8. [40]

   Newton J’s reading of Viscount Haldane’s apparent tracing requirement has been supported by Professor Birks [21] and by then Professor now Lord Burrows. [22] It is also supported as “the better view” in the 9th edition of Goff & Jones [23] and is consistent with what was said by the High Court in Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation [24] as to the non-proprietary nature of restitutionary claims.

9. [41]

   The Auckland Harbour Board principle has firmly taken root in Australian jurisprudence. Apart from the decision in Burns, it was referred to in passing but without question by Gibbs J (as he then was) in Maguire v Simpson. [25] In the same year, in Gray, [26] the principle was applied by this Court which also held that estoppel would not lie as a defence to any claim for the recovery of moneys paid without authority by the Crown:

10. [42]

    To similar effect was the observation of Glass JA who observed that “the general principle is that an estoppel cannot avail to release the plaintiff from an obligation to obey a statute enacted for the benefit of a section of the public”. [27]

11. [43]

    In Crothall, [28] Ellicott J summarised the Auckland Harbour Board line of authority in the following manner:

12. [44]

    In Sandvik Australia Pty Ltd v Commonwealth, [30] French J, when a judge of the Federal Court, acknowledged the existence of the Auckland Harbour Board principle and that it could be used to circumvent the then common law bar which precluded recovery of money paid under mistake of law in settlement of an honest claim. His Honour described the general principle referred to by Viscount Haldane as supported by ss 81 to 83 of the Constitution but did not otherwise explore the jurisprudential underpinnings or character of the claim to which the principle gave effect.

13. [45]

    A claim for moneys had and received was the form of action which Gummow and Bell JJ in Williams v Commonwealth [31] contemplated would be the appropriate cause of action if the Commonwealth were to seek recovery of payments made without authority to the Scripture Union of Queensland.

14. [46]

    In Commonwealth v Davis Samuel Pty Ltd (No 7), [32] the Commonwealth invoked the Auckland Harbour Board principle successfully to sustain a claim which had been pleaded as one for moneys had and received. So, too, in The Environment Centre NT Inc v Minister for Resources and Water (No 2), [33] Griffiths J considered that a claim for recovery of money paid by the executive without statutory authority would be a claim for moneys had and received.

15. [47]

    The Auckland Harbour Board principle may thus be said to be well recognised and established in Australian law, and so much was not gainsaid on the current appeal.

16. [48]

    To the extent that judges have sought to identify the principle’s juristic basis, it is not founded on mistake (whether of fact or law) but on quasi-constitutional notions of ultra vires. This provides the basis for repayment but, to the extent that the form of recovery has been touched upon in the Australian authorities, it has been as an action for moneys had and received. The recipient of moneys paid ultra vires is treated as falling under an obligation to repay those moneys and that obligation is not one which, at least in Australia, may be resisted by pleas of change of position or estoppel or even misleading conduct.

17. [49]

    In England, the Auckland Harbour Board principle has been characterised as restitutionary in nature although, unlike the position in Australia, a change of position defence has been held to be available. [34]

18. [50]

    In Canada, although not referring to Auckland Harbour Board, the decision of the Supreme Court in Breckenridge Speedway Ltd v Her Majesty The Queen in Right of Alberta [35] should be noted. Although there was a split in the ultimate decision, all judges were agreed that an action to recover moneys lent ultra vires by the Crown would lie on the basis of the action for moneys had and received. Thus, Martland J, speaking for the plurality, observed that: [36]

19. [51]

    Attention is now turned to the central question raised on appeal, namely whether a claim based upon the Auckland Harbour Board principle is a claim in “quasi contract” for the purposes of s 14(1)(a) of the Limitation Act.

Consideration

1. [52]

   Twentieth century scholars including Jackson, [38] Winfield [39] and Stoljar [40] have wrestled with the rather amorphous body of case law that was once gathered under the heading of the law of quasi-contract.

2. [53]

   A feature of Anglo-Australian jurisprudence and academic scholarship over the last 50 years has been vigorous debate between academics, both inter se as well as with jurists (writing both judicially and extra-judicially), as to whether this vast body of case law can be collectively and coherently analysed under a general organising or overarching theory known variously as the law of restitution or the law of unjust enrichment. The literature is vast and the dialectic has been, at times, robust with Professor Birks [41] in particular contending for a unified account. Some of the history is traced by French CJ in Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [42] and the observation of the plurality that “the concept of unjust enrichment is not the basis of restitutionary relief in Australian law” [43] has been the subject of swingeing criticism by the leading Australian text on the subject. [44]

3. [54]

   It is not surprising that the Auckland Harbour Board principle and the line of cases which has followed it has been appropriated by the authors of many modern texts treating the topic of restitution or unjust enrichment as falling within its bailiwick. [45] This is because, at least in the most general of senses, a claim by the Crown to recover public moneys paid out without authority is a claim for the restoration of those moneys to the public purse. As has been said, ultra vires has a “special sting” when it involves money because it strikes at Parliament’s hard won control of the fisc. [46] The recovery of such moneys also has the consequence that the recipient of those funds does not benefit by their retention in circumstances where he, she or it never had any entitlement to such payment.

4. [55]

   But it is important to emphasise that the issue in the present case is not how the Auckland Harbour Board principle is now characterised or classified, but whether the Commonwealth’s claim in the present case was one which fell within the description of a claim in “quasi contract” within the meaning of s 14(1)(a) of the Limitation Act. Ultimately, this involves a question of statutory construction with the precise question being whether an Auckland Harbour Board claim was one that, at the time of the passage of the Limitation Act in 1969, would have been so characterised.

5. [56]

   The Limitation Act was introduced following an October 1967 report of what was then known as the New South Wales Law Reform Committee chaired by Justice Manning of the Supreme Court. [47] In relation to s 14(1)(a), the Law Reform Committee’s report said that “the words about quasi contract stem from section 5(1)(a) of the Victorian Limitation of Actions Act 1958.” [48] The report continued:

6. [57]

   Section 5(1)(a) of the Limitation of Actions Act 1958 (Vic) relevantly referred (and still refers) to “actions founded on simple contract (including contract implied in law)”. The Limitation Act 1939 [49] referred to in the Law Reform Commission report as the Imperial Act came into operation on 1 July 1940 and was founded upon the Fifth Interim Report of the Law Revision Committee of 1936. [50] It was noted in that report that the reference in s 3(a) of the Limitation Act 1623 [51] which continued to apply in England at that time provided a six year limitation period “for actions founded on simple contract” and that “the six year period of the Act has been applied by the courts to certain quasi-contractual actions”. [52] In its summary of recommendations, the report recommended a six year limitation period for “all actions founded in tort or simple contract (including quasi-contract)”. [53]

7. [58]

   Section 2 of the Limitation Act 1939 did not specify in terms any limitation period in respect of causes of action in or founded on quasi-contract but, like its 1623 predecessor, imposed such a limitation period for “actions founded on simple contract or on tort”. This section was the subject of commentary by Mr Franks in his 1959 text Limitation of Actions (Sweet & Maxwell), cited by the New South Wales Law Reform Commission. A commentary note by Mr Unger in the 1940 Modern Law Review in relation to the 1939 Act noted that: [54]

8. [59]

   Eight years later, the Court of Appeal in In re Diplock [55] said that:

9. [60]

   This passage from In re Diplock was also referred to in the 3rd edition of Preston & Newsom on Limitation of Actions. [56] Those authors expressly discussed whether the 1939 Limitation Act which relevantly only referred to a six year limitation period for matters of “simple contract” applied to cases of quasi-contract. Thus, they observed that: [57]

10. [61]

    In the case of In re Rhodes; Rhodes v Rhodes, [58] referred to in the passage extracted in the previous paragraph, Cotton LJ considered whether there can be an implied contract on the part of a “lunatic” to repay out of her property sums expended for necessaries supplied to her. His Honour observed that: [59]

11. [62]

    In the same case and to the same effect, Lindley LJ said: [60]

12. [63]

    The authors of Preston & Newsom proceeded to observe that “[a]fter the forms of action were abolished, English law might have accepted the logical, but alien, classification of the civilians, and treated these cases as forming a kind or class neither ex contractu nor ex delicto but quasi ex contractu”, but pointed out that the English courts ultimately did not take this step. [61] They referred to the observation of Lord Haldane in Sinclair v Brougham [62] that:

13. [64]

    Lord Haldane went on to detail the history of the action in assumpsit, ultimately derived from Moses v Macferlan, [63] and noted that “[t]he promise to pay which created the right of action might have been a pure fiction of law” and that “[i]n many cases, no such promise could possibly have been established”. [64] Viscount Haldane concluded that it was “just the fiction of attributing a promise in a multitude of cases where in reality there was none which finally gave the action its comprehensive range, and made it available even where no fact importing or implying privity of contract could be proved”. [65]

14. [65]

    As seen in [56] above, the New South Wales Law Reform Commission Report of 1967 concluded its discussion on what was to become s 14(1)(a) of the Limitation Act and the reference to quasi contract in that section by stating that “[a]lthough ‘quasi contract’ is an unhappy name, we think that it has a clearer meaning than ‘contract implied in law’ and we have therefore adopted ‘quasi contract.’”

15. [66]

    The Law Reform Commission did not make any reference in its 1967 report to the then recently published first edition of Stoljar. It may, however, be that the Commission had that work in mind when it described the term “quasi-contract” as an “unhappy name”, for the learned author had commenced his text with the following paragraph: [66]

16. [67]

    A little later in his text, Professor Stoljar wrote, in terms which perhaps echo the words of Lord Haldane in Sinclair v Brougham: [67]

17. [68]

    Two years after the publication of Stoljar’s first edition and the year prior to the Law Reform Commission’s Report, the first edition of Goff & Jones was published. In the first edition, the authors’ thesis was that the law of restitution included quasi-contractual claims and that quasi-contractual claims were those which fell within the scope of actions for moneys had and received or for money paid, or of quantum meruit or quantum valebat claims “and which are founded on the principle of unjust enrichment”. [68]

18. [69]

    Neither of the first editions of Stoljar nor Goff & Jones, the two leading texts at the time, made any reference to Auckland Harbour Board in their discussion of quasi-contract and restitution respectively, although references were made to this case and the principle for which it stood in the second edition of both texts. [69] It did not follow, however, from the failure to include any reference to that case in the respective first editions that a cause of action engaging the Auckland Harbour Board principle was not founded on the law of quasi-contract.

19. [70]

    Dodington’s Case has already been noted as a forerunner to the Auckland Harbour Board principle. As also noted earlier in these reasons, Dodington, as executor of Sir Walter Mildmay, was ordered to account for the unauthorised moneys paid to Sir Walter “as a debt”. As AWB Simpson has explained, citing what he describes as the “very obscure decision” of Bonnel v Foulke, [70] the action in debt became concurrent with account “and therefore indebitatus assumpsit lies”. [71] What is of interest for present purposes is the temporal proximity of Bonnel v Foulke in 1657 and Dodington’s Case, decided four years earlier.

20. [71]

    Simpson explains the role played by the implied promise in relation to actions against debtors: [72]

21. [72]

    While liability generally arose consensually, in an important passage in his scholarly work, Simpson continues: [73]

22. [73]

    At another part of the text, Simpson points to a series of cases where debts arose by operation of law and the action of indebitatus assumpsit was allowed on a purely fictitious promise to pay. In Simpson’s words “since debt lay, a fortiori indebitatus assumpit lay on an implied promise”. [74] As Lord Wright was to explain in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd, [75] in a passage quoted by Mason CJ in Baltic Shipping Company v Dillon: [76]

23. [74]

    Professor Stoljar cast great light on the subject in his article “The Transformations of Account”, [77] explaining the circuitous translation of the forms of action from “on the case in assumpsit” to “indebitatus assumpsit” (also citing Bonnel v Foulke) to the frank statement in Arris & Arris v Stukeley [78] that “wherever the plaintiff may have an account, an indebitatus may lie”. Professor Stoljar observed that “[i]t is this species of indebitatus assumpsit which not only soon becomes better known as the count for moneys had and received, but because of certain procedural advantages, proved a spectacular success”. [79]

24. [75]

    The reach of the “new” action was broad: thus, Stoljar referred to Holt CJ’s observation in Martin v Sitwell [80] that “the money was received without any reason, occasion or consideration, and consequently it was originally received to the plaintiff’s use”. [81]

25. [76]

    Dodington’s Case (also referred to as Sir Walter Mildmay’s Case), which, as has been noted at [34] above, was relied upon in argument in the Auckland Harbour Board case, was referred to in Attorney General v Perry [82] in which it was said:

26. [77]

    Reference may also be made to the Earl of Devonshire’s Case. [83] In that case, consistent with Dodington’s Case, one can see early emanations of the Auckland Harbour Board principle. Thus, it having been observed that “without the King’s warrant no treasure shall be issued for any cause whatsoever, by any officer, ex officio”, it was resolved that “although the said Sir Walter received the King’s treasure to his own use; yet forasmuch as he received it without a lawful warrant, he knowing that it was the King’s treasure, the law makes a privity in the King’s case, and therefore he may charge him as an accountant”. [84]

27. [78]

    This analysis makes it tolerably clear that the so-called Auckland Harbour Board principle was not created in 1924 and was recognised as long ago as Dodington’s Case, if not earlier. It was originally given effect to by an account but that cause of action evolved into a claim in indebitatus assumpsit for moneys had and received to the Crown’s use. The modern Australian cases referred to at [45]-[46] above are entirely consistent with this analysis, and recognise the action to recover moneys paid out ultra vires as one for moneys had and received, a classic form of claim which, at the time of the passage of the Limitation Act in 1969, plainly formed part of the amorphous body described as the law of quasi contract.

28. [79]

    To the extent that the primary judge relied upon Coshott to confine the reference to “quasi contract” in s 14(1)(a) of the Limitation Act to quantum meruit actions, [85] such a narrow reading of that decision was not, in my opinion, warranted. Mason P’s reference in Coshott [86] to “claims to remuneration litigated at common law that were not based on contract” and quantum meruit in his discussion of the reference to quasi contract in s 14(1)(a) of the Limitation Act simply related to and reflected the nature of the claim in that case and in Pavey. The discussion did not imply that a claim in quantum meruit was the only form of action that was quasi-contractual in nature. As has been seen, there was a range of claims that fell within the broad and largely fictitious rubric of claims in quasi contract, including the action for moneys had and received, which was a subset of claims in assumpsit.

29. [80]

    In these circumstances, the claim in the current case based upon the Auckland Harbour Board principle was one in “quasi contract” within the meaning of s 14(1)(a) of the Limitation Act such that, subject to the Commonwealth’s argument based upon s 56 of that Act and the constitutional argument, the Commonwealth’s claim was statute barred in respect of payments made to the Appellant over six years prior to the commencement of proceedings in 2019.

Postponement of commencement of limitation period

1. [81]

   Because of his conclusion that the Auckland Harbour Board basis of recovery was not subject to a statutory limitation period, it was unnecessary for the primary judge to consider whether, if the Limitation Act did apply, the limitation period should be postponed pursuant to s 56 of the Act.

2. [82]

   Section 56(1) of the Limitation Act relevantly provides:

3. [83]

   By analogy with McDougall J’s consideration of s 55 of the Limitation Act in Ballard v Multiplex, [87] the Appellant submitted that the burden was on the Commonwealth to establish that it could not have, with reasonable diligence, discovered the mistake earlier than it did, namely in 2015, some six years after the Appellant had separated from the Navy. McDougall J had said that the party seeking the postponement must: [88]

4. [84]

   The Commonwealth relied upon the evidence of a Ms Farnham, an officer in the Department of Defence, to support its case for a postponement of the limitation period. The Appellant countered her evidence with the following submissions that were supported by concessions properly made by Ms Farnham under cross-examination: [89]

5. [85]

   The Appellant also relied upon the following passage of cross-examination of Ms Farnham (with emphasis added):

6. [86]

   This evidence demonstrated, in my view, that the Commonwealth’s basic error could, with reasonable diligence, have been picked up at any time following the Appellant’s separation from the Navy. That it may have become even easier to do so following the linking of two systems referred to in Ms Farnham’s evidence in 2015 (when it was able to be discovered within 12 minutes of the possibility having been raised) does not mean that the mistake could not reasonably have been discovered earlier.

7. [87]

   It follows that the Commonwealth did not establish any basis for postponing the commencement of the limitation period.

Constitutional argument

1. [88]

   The Commonwealth’s argument, reflected in its s 78B Notice, was, in effect, that the Auckland Harbour Board principle was constitutionalised by implication from ss 81 and 83 of the Constitution, with the consequence that the right of recovery of unauthorised payments by the Commonwealth could not be extinguished or limited by a State limitation statute.

2. [89]

   Section 81 of the Constitution provides:

3. [90]

   Section 83 of the Constitution provides:

4. [91]

   Although the High Court has discerned constitutional principle and, in some very limited cases, rights arising by implication from the structure of the Commonwealth Constitution, more often than not, constitutional implications operate as a restraint or limitation upon the exercise of Commonwealth power.

5. [92]

   The Commonwealth’s suggestion that sections 81 and 83 are the source of an implied right of recovery at the suit of the Commonwealth for unauthorised payment is a novel one, although it may be acknowledged that in Burns, [90] Newton J expressed the opinion that “the true position is that the application of the [Auckland Harbour Board] principle is confirmed by s81, s82 and s83 of the Commonwealth of Australia Constitution”.

6. [93]

   These observations are consistent with what was said by Mason J (as he then was) in Victoria v Commonwealth [91] (the AAP case), namely that:

7. [94]

   This statement of Mason J was subsequently approved unanimously by the High Court in Brown v West. [92] In that case, the Court described the underlying principle of Auckland Harbour Board, “that no money can be taken out of the consolidated Fund into which the revenues of the State have been paid, excepting under a distinct authorization from Parliament itself… [as] entrenched in our Constitution by ss. 81 and 83” [93] (emphasis added). Nothing said in either the AAP case or Brown v West, however, suggested that s 83 conferred a constitutional right of recovery on the Commonwealth. [94]

8. [95]

   In James v The Commonwealth, [95] Dixon J described the notion that s 92 of the Constitution gave rise to a private right to damages as “ridiculous”, noting that “prima facie a constitution is concerned with the powers and functions of government and the restraints upon their exercise”. [96] It would be curious if the Constitution conferred a right (let alone one arising by implication) on the Commonwealth to bring a claim for restitution or for moneys had and received in circumstances where that same legal instrument was not a source of such juristic rights in individuals whose freedom of trade or commerce between States had been interfered with by unconstitutional legislation.

9. [96]

   "[C]onstitutional questions should be considered and resolved in the context of the whole law". [97] To the extent that necessity forms part of any test of or for constitutional implication [98] and there has been said to be a need for any implication to be "securely based", [99] no such necessity existed or exists which would justify the drawing of a constitutionally sourced and entrenched implied right of recovery in respect of ultra vires payments, as contended for by the Commonwealth. As has been seen, there existed at the time of the enactment of the Constitution a cause of action in quasi-contract for the recovery of money paid without authority or ultra vires.

10. [97]

    There is no constitutional obstacle standing in the way of either s 14 and/or s 63 of the Limitation Act applying, albeit as picked up in federal jurisdiction, in an action by the Commonwealth based on the Auckland Harbour Board principle to recover an amount paid without constitutional authority. There is no relevant repugnancy, inconsistency or “other” constitutional provision which constrains that Act’s operation in the context of the claim made by the Commonwealth in the present proceedings.

11. [98]

    For these reasons, ground 2 of the Notice of Contention fails.

Payments made to Ms Dalton and Jones King Lawyers

1. [99]

   Of the $100,800 in payments made to Ms Dalton (in fortnightly instalments of $700) following the Appellant’s separation from the Navy, a total of $65,800 was paid more than six years prior to the commencement of proceedings on 7 May 2019.

2. [100]

   To the extent that the Appellant may have been otherwise liable to make restitution to the Commonwealth in respect of payments to Ms Dalton on the grounds of mistaken payment, he was entitled to rely upon s 14(1)(a) of the Limitation Act and the appeal should succeed to that extent. (The same conclusion follows with regard to the small sum paid to Jones King Lawyers in respect of which the Commonwealth sought recovery: the last instalment of that amount was paid on 4 February 2010.)

3. [101]

   In relation to the question whether the Appellant was liable to make restitution to the Commonwealth for the remaining $35,000 received by Ms Dalton from the Commonwealth after 7 May 2013, the flaw, with respect, in the primary judge’s reasoning, was his conclusion that the payments made to Ms Dalton were made at the Appellant’s direction. [100] It may reasonably be inferred that the payments were so made whilst the Appellant remained in the service of the Navy, but any direction for third party payment he may have made would have been co-extensive with his entitlement to be paid for that service and co-terminous with his engagement.

4. [102]

   It cannot therefore be said, contrary to the primary judge’s approach, that the Appellant requested the payments to Ms Dalton at any time after 2009 when he left the Navy. Any prior direction could not sensibly have been construed as having been intended to continue after that time. That the Commonwealth continued to pay Ms Dalton was not due to any direction by the Appellant but to the Commonwealth’s mistake in overlooking the fact that the Appellant was no longer in the service of the Navy and that his direction was a continuing one. Ms Dalton was the beneficiary of those payments and any action for restitution lay against her, whether under the principles associated with recovery of mistaken payments articulated in David Securities or under the Auckland Harbour Board principle.

5. [103]

   To the extent that the primary judge also held that the payments to Ms Dalton operated to discharge a legal obligation owed by the Appellant to her, I would also accept the Appellant’s complaint that the primary judge’s conclusion on this point was speculative. There was no evidence either way as to whether or not the payments the subject of the original direction were made to Ms Dalton pursuant to any legal obligation whatsoever.

6. [104]

   It was not established on the facts that the Appellant benefited from those payments by reason of the discharge of a legal obligation the Appellant was otherwise under to Ms Dalton. He may or may not have been under a relevant obligation at the time the original direction was made and he may or may not have been under the same obligation following his separation from the Navy. Whether he was or was not was utterly speculative, and the onus lay on the Commonwealth to establish that the payments to Ms Dalton discharged an obligation owed by the Appellant to her, and thus constituted a benefit by which he was unjustly enriched.

7. [105]

   In these circumstances and for the above reasons, ground 2 of the notice of appeal must succeed.

Payments credited to Appellant’s account with Australian Tax Office

1. [106]

   As noted at [7] above, a further component of the claimed overpayments comprised amounts withheld by the Department of Defence on account of PAYG tax and credited on the Appellant’s running account with the Australian Taxation Office. Because of the primary judge’s finding that there was no applicable time bar, it was not necessary for him to deal with the dispute insofar as it applied to amounts withheld by the Commonwealth from the Appellant’s fortnightly salary for income tax purposes in the years prior to 2013. These amounts totalled $42,148.67.

2. [107]

   Any benefit conferred on the Appellant by the mistaken crediting of his running account with the ATO was contingent in the sense that no actual benefit flowed to him until he filed a tax return entitling him to a refund of amounts withheld. As also noted at [8] above, this did not occur until 2018, which meant that the Commonwealth’s claim was well within the limitation period, even for amounts which were credited to the ATO account more than six years prior to the commencement of proceedings in 2019.

3. [108]

   I accept the Commonwealth’s submission that:

4. [109]

   It follows that the Appellant was obliged to make restitution to the Commonwealth of the amounts of money mistakenly withheld and credited to the ATO for which he received the benefit in his income tax refund in 2018.

Conclusion and Orders

1. [110]

   It follows that the appeal succeeds in part.

2. [111]

   The parties should formulate orders in accordance with these reasons and, due to their mixed success, file and serve submissions as to costs in writing of no more than three pages by 11 October 2022 with any submissions in reply of no more than three pages to be filed by 18 October 2022.

3. [112]

   MEAGHER JA: The principal question in this appeal is whether the Commonwealth’s claim to recover from the appellant salary payments made out of consolidated revenue without lawful appropriation, and on the mistaken basis that he was a member of the Royal Australian Navy, is subject to a 6-year limitation period by the application of Limitation Act 1969 (NSW), s 14(1)(a). Those payments were made between 21 September 2009 and 26 March 2015, and the proceedings to recover them commenced on 7 May 2019.

Background

1. [113]

   Subsection 14(1)(a) provides:

2. [114]

   The answer to this question turns on the meaning of the expression “founded on… quasi contract” and whether the Commonwealth’s claim answers that description.

3. [115]

   There are two subsidiary questions. Some of the moneys believed to be due to the appellant were paid directly to his wife or estranged wife, Ms Dalton. A very small amount was also paid to his lawyers, Jones King Lawyers. In addition, some moneys were ‘paid’ by the Department of Defence to the Australian Taxation Office as PAYG withholding tax. As to the former, the issue is whether those payments to Ms Dalton and the lawyers are recoverable from the appellant as made at his direction and for his benefit. In relation to the latter, there is an issue as to when those withholding tax moneys are to be treated as having been paid to the appellant so as to cause the limitation period to commence to run.

4. [116]

   Section 83 of the Constitution provides that “No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law”; and the payments to the appellant were not the subject of any valid appropriation. The Commonwealth’s amended statement of claim pleaded two bases for recovery. The first was as moneys paid from consolidated revenue illegally and without lawful authority; and the second as moneys paid under a mistake.

5. [117]

   The Limitation Act binds the Crown in right of the Commonwealth so far as the “legislative power of Parliament permits”. Certain actions are excepted, but not an action for recovery of moneys paid out of consolidated revenue without lawful appropriation (Limitation Act, ss 10, 11(1)).

6. [118]

   Because the Commonwealth is a party, the underlying proceeding involved, and this appeal involves, the exercise of federal jurisdiction conferred by s 39(2) of the Judiciary Act 1903 (Cth). The Limitation Act, as a law relating to procedure, is a law which is “picked up” and applied in that exercise of jurisdiction pursuant to Judiciary Act, s 79(1) (Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23). That application of s 79(1) is subject to an exception, namely where “the Constitution or the laws of the Commonwealth” provide otherwise. Whilst s 83 prohibits the payment of moneys from consolidated revenue without lawful appropriation, it contains no bar or limit on the time for recovery of moneys paid contrary to that prohibition and does not state that there should be no such bar or limit. That being the position, the exception has no application and the Limitation Act applies to the Commonwealth’s proceeding. (This last question is the subject of the Commonwealth’s s 78B notice, which seeks to contend otherwise.)

7. [119]

   The long-standing general principle relied on as giving rise to the appellant’s common law obligation to repay those moneys is as stated by Viscount Haldane LC in Auckland Harbour Board v R [1924] AC 318 at 327: “Any payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can, as here, be traced.”

8. [120]

   That principle has been applied to money claims for the recovery of such payments in Commonwealth of Australia v Burns [1971] VR 825 (Newton J); and, on appeal from the District Court, in Attorney-General v Gray [1977] 1 NSWLR 406 (Hutley, Glass and Samuels JJA). Whilst acknowledged as providing a cause of action for recovery of money where there has been a payment out of the revenue fund without authority, the principle was held not to be engaged in the circumstances in Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567 at 580 (Ellicott J, Blackburn and Deane JJ relevantly agreeing). Finally, see the obiter statements of French J (as his Honour then was) as to the application of this principle in Sandvik Australia Pty Ltd v Commonwealth of Australia (1989) 89 ALR 213 at 229-230; [1989] FCA 551.

9. [121]

   Before considering the primary judge’s reasoning, it is important to note two matters. First, neither party contended that the claim based on the Auckland Harbour principle was “proprietary in nature”: cf Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 177 (per Lord Goff); and see Law Commission of England and Wales, Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments (1994), at [17.12]. The parties proceeded on the correctness of the view expressed by Newton J in Commonwealth of Australia v Burns at 828 that Viscount Haldane’s reference to “tracing” in this context was not to tracing “in the equitable or proprietary sense, but to tracing the identity of the recipient of the money”. Accordingly, the Commonwealth’s claim is a personal one for money.

10. [122]

    Secondly, it is not controversial that the appellant’s obligation to repay the moneys arose at common law, and was not founded on any contract or actionable wrong.

The primary judgment

1. [123]

   The primary judge (Weber SC DCJ) upheld the Commonwealth’s claim in reliance on the Auckland Harbour principle. As a result it was unnecessary to consider the factual circumstances underlying the alternative claim for the recovery of moneys paid under a mistake: Commonwealth of Australia (Royal Australian Navy) v Sims [2021] NSWDC 690 at [10].

2. [124]

   With respect to the limitation question, the Commonwealth contended that an action brought pursuant to the Auckland Harbour principle “was not a restitutionary claim in the strict sense, but rather was a stand-alone common law cause of action”. It was said that if that contention “was correct, then there was no applicable statute of limitations” (J[16]). Considering that contention, his Honour described the claim founded on that principle as not being a “mainstream restitutionary claim” because it did not arise from “any form of unjust enrichment” (J[19]). Nor was it subject to “defences such as estoppel” or “change of position”, they being “orthodox defences to restitutionary claims”. The primary judge also observed that the absence of the availability of those defences was consistent with the cause of action being “based in public policy, and… not in restitution” (J[20]); cf the discussion of the Auckland Harbour principle in J Edelman and E Bant, Unjust Enrichment in Australia (2006, Oxford University Press) at 301.

3. [125]

   At J[24], his Honour concluded that the recovery of moneys pursuant to the Auckland Harbour principle “should not be considered to be restitutionary”. Having done so, the primary judge nevertheless considered what the position would be if it was treated as a “restitutionary” remedy (J[28]). His Honour accepted the Commonwealth’s contention that the expression “quasi contract” was inapt to describe all restitutionary claims (J[30], [32]); and considered the reasoning of Mason P (Spigelman CJ and Campbell JA agreeing) in Coshott v Lenin [2007] NSWCA 153 to confirm the correctness of that contention (J[31]-[32]). It followed in his Honour’s view that the Commonwealth’s claim for recovery of illegal and ultra vires salary payments was not subject to any limitation period (J[33]).

4. [126]

   The first premise of this reasoning is that the expression quasi contract refers only to claims or remedies characterised as “restitutionary”. His Honour concluded that a claim based on the Auckland Harbour principle did not answer that description. The second premise upon which his Honour’s reasoning depends is that quasi contract describes some restitutionary claims or remedies, but does not describe all of the claims that might be so characterised. His Honour concluded that the restitutionary claims within that description do not include a claim based on the Auckland Harbour principle.

5. [127]

   Neither of these propositions addresses the defining characteristics of the money claims which in 1760 were described by Lord Mansfield as “founded in the equity of the plaintiff’s case, as it were upon a contract”; and in 1914 by Viscount Haldane (adopting some of Lord Mansfield’s language) as based on a fictitious promise to pay where the law is “ready to imply a debt in such cases arising quasi ex contractu”: Moses v Macferlan (1760) 2 Burr 1005 at 1008; 97 ER 676 at 678; and Sinclair v Brougham [1914] AC 398 at 416. Instead, each of these propositions assumes that the broad terms “restitutionary” and “unjust enrichment” inform the character of those money claims as founded in “quasi contract”. They do not. As Mason P emphasised in Coshott v Lenin, the adoption of that expression to describe those claims preceded modern restitutionary principles and analysis. The claims answering that description as it is used in the Limitation Act 1969 (NSW) are identified by the forms of action by which they were originally made – principally the action in indebitatus assumpsit for money had and received – and the non-contractual and remedial nature of the payment obligation which the common law imposed.

Coshott v Lenin

1. [128]

   Coshott v Lenin concerned a solicitor’s claim for remuneration founded either on a contract to perform services which did not stipulate the remuneration to be paid, or an obligation to pay imposed in circumstances where the respondent had freely accepted the services. This Court concluded that Limitation Act s 14(1)(a) applied, its language being satisfied either way the solicitor’s quantum meruit claim was put. As Brennan J had observed in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 234; [1987] HCA 5: “… quantum meruit is sometimes used to describe an action to recover a reasonable sum which is due under a contract and sometimes to describe an action to recover a reasonable sum when the obligation to pay it is imposed by law independently of actual contract” (emphasis added). In the former case the action would be founded on contract, and in the latter on quasi contract.

2. [129]

   At [14]-[16], Mason P (Spigelman CJ and Campbell JA agreeing) said:

3. [130]

   There is nothing in this reasoning which supports a conclusion that the Commonwealth’s claim in the present case was other than quasi-contractual. It was founded on an obligation to pay or repay because, from the perspective of the payer, the payments sought to be recovered were made illegally and without authority. Those payments were also made under a mistake of fact and for no consideration.

4. [131]

   Under the approach advocated by Lord Mansfield in Moses v Macferlan (at 1012; 681), in such circumstances the law imposed an obligation to pay or refund money, that obligation arising “by the ties of natural justice and equity”. Whereas under the implied contract theory subscribed to by Viscount Haldane, that remedial obligation arose from a fictitious promise to pay imposed other than where the substantive law made “the defendant incapable of undertaking contractual liability” (Sinclair v Brougham at 417). In other words, under that theory the fictitious promise to pay was only imposed if a contract containing that term “would be valid if it really existed” (at 415).

The common law of quasi contract

1. [132]

   In the introduction to the second edition of their work (The Law of Restitution (2nd ed, 1978, Sweet & Maxwell) at 3-4), Goff and Jones wrote that quasi contract stems from the common indebitatus assumpsit counts for money had and received and for money paid, and from quantum meruit and quantum valebat claims. To similar effect, Mason and Carter in their work Restitution Law in Australia (4th ed, 2021, LexisNexis) at [112] emphasise that the law of quasi contract emerged during the development and growth of the action in assumpsit.

2. [133]

   The early forms of personal action at law were either actions upon contracts (ex contractu) or actions for wrongs (ex delicto). The action in assumpsit commenced its life as an action of trespass on the case. As the use of assumpsit evolved, the indebitatus assumpsit counts supported not only actions to recover debts which were founded in contract, but also actions to recover money where the originating debt did not arise from any contractual transaction. In these actions the plaintiff stated that the defendant was “indebted to the plaintiff for money had and received to his use, and being so indebted promised to pay”. Unlike the other common counts, the originating obligation was not described in contractual terms: cf the quantum meruit and quantum valebat claims and claims for money paid, where the obligation was described as contractual even where no express promise had been made (M Lobban, “Restitutionary Remedies” in The Oxford History of the Laws of England – 1820-1914: Private Law (2010, Oxford University Press) at 563-565).

3. [134]

   However, this development of the writs and forms of action was not informed by any “coherent theory of money claims”. As Professor Baker points out in his essay “The History of Quasi-Contract in English Law” (in WR Cornish et al (eds), Restitution: Past, Present and Future (1998, Hart Publishing) at 39, the early common lawyers “did not need one. The formulary system required that a plaintiff find an original writ with wording to suit his facts rather than a conceptual pigeonhole in which to put them. And the original writs, even if they reflected the elementary concepts of the time in which they were first devised, had developed piecemeal without much recourse to abstract theorising.”

4. [135]

   In his Lectures on Legal History (1913, Harvard University Press) at 166, Professor Ames (in a passage cited by Viscount Haldane in Sinclair v Brougham at 417) summarised the development of the writ of assumpsit in its various forms:

5. [136]

   The manner in which the use of the fictitious promise allowed the development of the principal forms of assumpsit to the position as it was in the early 19th century is summarised by Professor Baker at 41-42:

6. [137]

   In Moses v Macferlan (1760), in response to an argument that no claim in indebitatus assumpsit for money had and received to the plaintiff’s use lay “except upon an express or implied contract”, Lord Mansfield proposed his theory as to the principles underpinning that claim. His answer to that objection was that if “the defendant be under an obligation, from the ties of natural justice, to refund; the law implies a debt, and gives this action, founded in the equity of the plaintiff’s case, as it were upon a contract (‘quasi ex contractu’, as the Roman law expresses it)” (at 1008, 678).

7. [138]

   Before the Common Law Procedure Act 1852 (UK) it was necessary to specify in the writ the particular form of action relied on. When framed in indebitatus assumpsit the declaration in the writ pleaded the alleged basis for the money claim (indebitatus), and the breach of the promise (assumpsit) to pay it. In a claim in quasi-contract that promise was implied and fictitious, and was not required to be proved as a fact. The 1852 Act removed the requirement to specify any form of action (s 3); permitted different causes of action to be joined in the same suit (s 41); abolished the need for the pleading of promises that were not required to be proved, such as those in indebitatus counts (s 49); and provided that the common indebitatus counts could be sufficiently pleaded by adopting shortened forms including for goods sold and delivered, work done, money had and received, and money paid (ss 91 and Schedule B).

8. [139]

   These shortened forms of action continued to be referred to as the indebitatus counts, money counts or common counts. The 3rd edition of Bullen and Leake (Precedents of Pleadings in Personal Actions in the Superior Courts of Common Law (1868, Stevens and Sons) at 35) noted that although the quantum meruit and quantum valebat counts had been adopted where there was no fixed price for work done or goods sold, ultimately they had been superseded by the general application of the indebitatus counts.

9. [140]

   Thus as early as the mid-18th century a cause of action founded on quasi contract described a claim to enforce an obligation to pay money imposed by law which arose “upon the circumstances of the plaintiff’s case” and was founded on “the ties of natural justice and equity”; and independently of any actual contract (Moses v Macferlan at 1012, 681; see also Pavey & Matthews at 234 per Brennan J). Those circumstances included a qualifying or vitiating factor such as mistake, duress or illegality (David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; [1992] HCA 48). In Moses v Macferlan (at 1012, 681), Lord Mansfield had described those underlying circumstances as including “money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express, or implied); or extortion; or oppression; or undue advantage taken of the plaintiff’s situation, contrary to laws made for the protection of persons under those circumstances”.

10. [141]

    That is a sufficient description of the defining characteristics of a cause of action founded on quasi contract for the purposes of applying s 14(1)(a) in this case. That description does not adopt any reference to restitutionary principles. The fact that the basis for those causes of action might now be described by reference to notions of unjust enrichment is not to the point.

11. [142]

    The controversy as to the principled basis which explains the development of the quasi-contractual money counts no longer rages. In 1978, Goff and Jones said of that debate in their introductory summary “The Legacy of History: The Implied Contract Theory” (at 8):

12. [143]

    Mason CJ later noted in Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 356-357; [1993] HCA 4:

13. [144]

    The ultimate rejection of the implied contract theory in favour of restitutionary principles is considered in some detail in Allsop CJ’s extra-judicial writing “Restitution: Some Historical Remarks” (2016) 90 ALJ 561 at 570-575. As his Honour observes, the speech of Viscount Haldane in Sinclair v Brougham (at 416-417) contains a clear statement of the implied contract theory.

14. [145]

    In Pavey & Matthews, the High Court rejected that theory as explaining quasi-contractual claims. In doing so the Court concluded, in relation to the action on a quantum meruit with which that case was concerned, that it “rests, not on implied contract, but on a claim to restitution or one based on unjust enrichment, arising from the respondent’s acceptance of the benefits accruing to the respondent from the appellant’s performance of the unenforceable oral contract” (at 227 per Mason and Wilson JJ).

15. [146]

    Subsequently, in David Securities the Court expressly affirmed the statement of Deane J in Pavey & Matthews (at 256-257) that to identify the basis of actions such as for money paid under a mistake of fact or law “as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate”. Instead, as the Court had emphasised in David Securities (at 379), “recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality”.

Quasi contract and the Limitation Act 1969 (NSW)

1. [147]

   That the foregoing analysis describes the sense in which the expression “quasi contract” is used in s 14(1)(a) is made clear by the Report on the Limitation of Actions of the New South Wales Law Reform Commission, (October 1967) at [103]:

2. [148]

   It is convenient at this point to pursue the reference to the Limitation Act 1939, 2&3 Geo 6, c 21, which provided by s 2(1) that the limitation period for “actions founded on simple contract or on tort” was 6 years from the date on which the cause of action accrued. Although not obvious from that language, the obligations treated as founded upon simple contract for limitation purposes included liabilities in quasi contract (M Franks, Limitation of Actions (1959, Sweet & Maxwell) at 87-88, and 166-167, the latter passage extracted in the Law Reform Commission Report at [103]). In support of that proposition, Franks cites the decision in In re Diplock; Diplock v Wintle [1948] Ch 465 at 514, where the Court of Appeal (Lord Greene MR, Wrottesley and Evershed LJJ) said:

3. [149]

   The reference to the Statute of James I is to the Limitation Act 1623, 21 Ja 1, c 16. Section 3 of that Act imposed a six-year limitation period for actions on the case, sometimes called trespass on the case, which included assumpsit.

4. [150]

   Observations to the same effect are made by GH Newsom and L Abel-Smith in Preston and Newsom on Limitation of Actions (3rd ed, 1953, Solicitors’ Law Stationery Society). The expression ‘simple contract’ “also seems to embrace those actions which are based upon an obligation arising neither from agreement nor from wrong-doing, sometimes referred to as quasi-contract; they were formerly actions of assumpsit” (at 25). Having noted of the claims brought in assumpsit that “none of them was based on contract in the strict sense, and some of them could only with difficulty be considered as based on implied contract” (at 34), the authors conclude (at 35):

Application of s 14(1)(a)

1. [151]

   The Commonwealth’s claim is to recover from the appellant moneys drawn from Treasury by the Department of Defence without lawful appropriation. In those circumstances the common law imposes a remedial obligation which operates to restore to the Commonwealth what was illegally and without authority transferred from it to the appellant (Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 at [26]). That obligation does not arise in contract or in tort or by virtue of any statute. It arises out of the circumstances in which the money was paid and received to the use of the appellant. In the language of the common money counts, the Commonwealth’s claim would have been formulated as being for money had and received; and in a taxonomy which adhered to a rigid dichotomy between personal actions founded in contract and tort, the claim would have been treated as founded in quasi contract as that term is used in s 14(1)(a) of the Limitation Act. It follows that grounds 1(a) and (b) should be upheld.

Remaining issues in the appeal

1. [152]

   I have had the benefit of reading the judgment of the Chief Justice in draft. I agree with his Honour’s reasons for rejecting the Commonwealth’s contention that if the Limitation Act otherwise applied the applicable six-year period should be postponed pursuant to s 56. I also agree for the reasons his Honour gives that the two subsidiary questions to which I have referred above should be resolved as his Honour proposes.

2. [153]

   WHITE JA: I agree with the reasons of Bell CJ and Meagher JA.

3. [154]

   I would add the following observations on the main issue in the appeal, namely, whether a claim by the government to recover moneys paid without statutory authority based on Auckland Harbour Board v The King [1924] AC 318 was a cause of action in quasi-contract within the meaning of s 14(1)(a) of the Limitation Act 1969 (NSW).

4. [155]

   The Commonwealth submitted that at the time of the enactment of s 14(1)(a) in 1969 an Auckland Harbour type claim had never been recognised “taxonomically speaking” as lying within the territory of quasi-contract. Reliance was placed on the absence of any mention of the claim in the first edition of Professor Stoljar’s The Law of Quasi-Contract (1964) or in Bullen and Leake’s Precedents of Pleadings, 3rd ed (1868) or any subsequent edition.

5. [156]

   As the reasons of the Chief Justice and Meagher JA show, an Auckland Harbour Board claim falls squarely within the principles on which a claim for money had and received could be brought. It has subsequently been treated as a restitutionary claim. The report of the NSW Law Reform Committee quoted by the Chief Justice at [56] stated that actions in quasi-contract encompassed cases where the common law implied an obligation (not a contract in fact) to pay or repay money. (See also Holdsworth’s History of English Law Vol 8 p 96).

6. [157]

   The likely reason such claims are not addressed in Bullen and Leake’s Precedents of Pleadings is that the claims would have been brought in the Court of Exchequer and not the Courts of King’s Bench or Common Pleas. (The Earl of Devonshire’s Case was referred to the judges of the Court of King’s Bench by the King and the report contains no reference to a writ containing a form of action).

7. [158]

   In the Court of Exchequer the Crown had many procedural advantages. The most common remedy sought by the Crown was for the recovery of a debt due to the Crown, which claim was brought by information (Holdsworth, op cit Vol 10, p 344; Vol 13 p 588). Dodington’s Case (1653) Cro Eliz 545; 78 ER 791 was brought by information in the Court of Exchequer.

8. [159]

   Under s 64 of the Judiciary Act 1903 (Cth) in a suit to which the Commonwealth is a party, the rights of the parties shall, as nearly as possible, be the same as in a suit between subject and subject.

9. [160]

   Considered as a claim between subject and subject the Commonwealth’s claim based on the Auckland Harbour Board principle falls squarely within a claim for money had and received, but to which a defence of change of position is not available. It is therefore a claim in quasi-contract to which s 14(1)(a) applies.

10. [161]

    I agree with the orders proposed by the Chief Justice.