Commonwealth of Australia v Hamilton [1991] QSCFC 98 [1992] 2 Qd R 257

IN THE SUPREME COURT OF QUEENSLAND 10 FULL COURT BEFORE : PrEVISED COFIES ISSUED ! Court Reporting Bur T Date: 'V6 S^P W 1 Appeal No. 124 of 1990 Acting Chief Justice (Mr Justice McPherson SPJ)t/ Mr Justice Shepherdson Mr Justice Williams BRISBANE 28 AUGUST 1991 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) 20 BETWEEN: COMMONWEALTH OF AUSTRALIA (Plaintiff) Appellant 20 -and- ALAN RODNEY HAMILTON (Defendant) Respondent JUDGMENT 30 40 50 60 MR. JUSTICE McPHERSON: I would allow this appeal with costs; set aside the judgment below and order that judgment be given in favour of the plaintiff against the defendant for $14,176.20 with interest at 12 per cent per annum from the service of the plaint until payment is made. The defendant should pay the plaintiff's costs of the action other than the costs of the trial itself. The defendant should have an indemnity certificate under the Appeal Costs Fund Act in respect of the costs of the appeal. I publish my reasons. MR. JUSTICE SHEPHERDSON: I agree with the reasons of the learned presiding judge and with the orders he proposes. MR. JUSTICE WILLIAMS: Save that I would simply order that the defendant pay the plaintiff's costs of and incidental to the action, I agree with the orders proposed by the learned — G- ' s’~"S«r, Qld. 30 40 50 60 1 [1991] QSCFC 98 -- 1 of 39 -- 1 10 20 30 40 50 60 1 10 20 30 40 50 60 presiding judge. I publish my reasons. MR. JUSTICE McPHERSON: The order of the Court will be as I have stated it. v, Qld. 2 -- 2 of 39 -- f C ^< [ O'lg IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 124 of 1991 BETWEEN: COMMONWEALTH OF AUSTRALIA (Plaintiff) Appellant AND : ALAN RODNEY HAMILTON ( De fendant ) Respondent MCPHERSON SPJ SHEPHERDSON J WILLIAMS J Reasons for judgment delivered by McPherson ACJ and Williams J on the 28th August, 1991. Shepherdson J agreeing with the reasons and orders proposed by McPherson ACJ. "APPEAL ALLOWED WITH COSTS, JUDGMENT BELOW SET ASIDE AND ORDER THAT JUDGMENT BE GIVEN IN FAVOUR OF THE PLAINTIFF AGAINST THE DEFENDANT FOR $14,176.20 TOGETHER WITH INTEREST AT 12% •FROM THE DATE OF SERVICE OF THE PLAINT UNTIL .vTHE DATE ON WHICH PAYMENT IS MADE. FURTHER ORDER THAT THE DEFENDANT PAY THE PLAINTIFF 1 S COSTS OF AN INCIDENTAL TO THE ACTION, OTHER THAN THE COSTS OF THE TRIAL ITSELF, AS TO WHICH THERE BE NO ORDER IN FAVOUR OF EITHER PARTY. FURTHER ORDER THE DEFENDANT HAVE AN INDEMNITY CERTIFICATE UNDER THE APPEAL COSTS FUND ACT 1973 IN RESPECT OF THE COSTS OF APPEAL." -- 3 of 39 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 124 of 1990 Before the Full Court The Acting Chief Justice Mr Justice Shepherdson Mr Justice Williams BETWEEN: COMMONWEALTH OF AUSTRALIA (Plaintiff) - and - ALAN RODNEY HAMILTON (Defendant) Appellant Respondent JUDGMENT - MCPHERSON A.C.J. Delivered the Twenty-eighth day of August, 1991. CATCHWORDS Parliament - Control over public funds - Appropriation - Statutory authority for payment - Money paid in consequence of deception - Whether paid without appropriation. Social Services - Unemployment benefit - False representation inducing payment Action to recover as debt due to Commonwealth - Whether estoppel - Social Services Act 1947, ss.246(1), 251(2). Counsel: F.vGaffy Q.C., with him R. Trotter, for the Appellant R.J. Douglas for the Respondent Solicitors: Australian Government Solicitor t/a for Australian Government Solicitor, Townsville for the Appellant V.R. Moffatt & Associates for the Respondent Hearing Date: 18 July 1991. -- 4 of 39 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 124 of 1990 BETWEEN : COMMONWEALTH OF AUSTRALIA (Plaintiff) Appellant - and - ALAN RODNEY HAMILTON (Defendant) Respondent JUDGMENT - MCPHERSON A.C.J. Delivered the Twenty-eighth day of August, 1991 The defendant in this action was in full-time employment between 3 May 1983 and 13 January 1985. Despite his employment during that period he made application to the Commonwealth Department of Social Security for unemployment benefit to be paid to him, and on about 45 occasions thereafter lodged applications for continuation of that benefit. On each occasion he represented, contrary to the fact, that he was unemployed. In consequence, he was paid sums totalling some $14,676.20, of which he has since repaid $500.00. / * To recover the difference the plaintiff Commonwealth sued the defendant in the District Court at Mount Isa. The action was tried before-lhis Honour Judge Botting and a civil jury of four. In accordance with the practice in Queensland, the jury was not required to return a general verdict but to answer specific questions put to them by the learned judge. The questions put and the answers given are in writing and have been certified by the judge's clerk as ex. C. Once those answers were received, -- 5 of 39 -- 2 counsel for each party moved for judgment in the action. After considering their submissions, his Honour gave judgment for the defendant in the action. This is an appeal against that judgment. It should be observed that the notice of appeal does not seek to challenge any of the findings by the jury implicit in the answers given by the jury. Instead, each of the grounds of appeal is directed to what are said to be errors of law on the part of the learned trial judge in giving judgment for the defendant. In order to explain the course adopted at the trial by counsel for the parties in moving for judgment, it is necessary to say something of the practice in relation to jury trials in Queensland since The Judicature Act 1876. At common law, it was doubtful whether a jury could be required to answer particular questions as distinct from returning a general verdict in favour of one party or the other : see R. v. Cockerell (1879) Brisbane Courier Reports, Nov. 28, per Lutwyche J.; cf. Russell v. Victorian Railway Commissioners [1948] V.L.R. 118. The rule was changed by s.15 of The Judicature Act , which imposed on a jury the duty "to answer any questions of fact that may be left to them by the presiding judge at the trial". It may perhaps be open to question how far this statutory reform extended to District Courts in Queensland; but the practice is followed in -■4 that jurisdiction and no question with respect to its propriety is raised in these proceedings. The underlying purpose of the reform in 1876 was to confer on the Full Court greater latitude on appeal in reviewing, interpreting and supplementing verdicts of civil juries instead -- 6 of 39 -- 3 of directing that there be a complete new trial. To that end the Appeals and New Trials Rules of 1894 invested the Full Court on appeal with power to draw inferences of fact, and, if satisfied that it had before it all the materials necessary for finally determining the questions in dispute, to give judgment accordingly : see 0.57, r.26. The power conferred exceeded that found in the comparable contemporary English rules, which restricted the inferences that might be drawn on appeal to those that were "not inconsistent with the findings of the jury". In Clark & Fauset v. Brisbane Municipality (1895) 6 Q.L.J. 131, 142, affirmed by the Privy Council in a decision not reported until [1917] St.R.Qd. 322, it was held that, upon setting aside the findings of the jury, the Full Court was entitled to make all proper findings on the material before it and to enter the appropriate judgment : cf. Baird v. Magripilis (1925):37 C.L.R. 321 , 324. Curiously, this practice appears to have survived “the adoption in Queensland in 1900 of Rules which in 0.70, r.11 incorporated the precise terms of the English rules said to give rise to the very point of distinction between those rules and the earlier Queensland version. Alongside this new practice under The Judicature Act there existed a power at common law to enter judgment non obstante veredicto in favour of a plaintiff who had failed to secure the verdict and in spite of it. See Lush's Practice , 2nd ed. 1856, at 478-479. Originally, judgments in common law actions tried at nisi prius were entered not by the trial judge but on motion to the Full Court or Supreme Court in Banc. This procedure was altered by s.9 of The Supreme Court Act of 1892, which required -- 7 of 39 -- 4 all motions for judgment after trial, whether with or without a jury, to be made to the trial judge. In consequence, in Hendle v. Oualtrough (1899) 9 Q.L.J. 218, Chubb J. held that the power of entering judgment non obstante veredicto was exercisable by the trial judge and not only by the Full Court. Hendle v . Oualtrough was a case in which, in an action to enforce a trust, the learned judge set aside findings of the jury given in favour of the plaintiff and entered judgment for the defendant. He did so on the ground that the trust found by the jury was not evidenced in writing as required by the Statute of Frauds, with the consequence that the claim to enforce the trust could not as a matter of law succeed : see Hendle v. Oualtrough (1899) 9 Q.L.J. 218, 221 . The decision has been followed on many subsequent occasions. In District Courts in Queensland judgments are and have always been given by the trial judge himself whether sitting with' or without a jury. The power in those Courts to enter judgment non obstante veredicto may be founded on the practice of the superior courts of common law. It is treated as being of general application to actions at law by ss.19, 21 of The Common Law Pleading Act of1867; 31 Vic. No. 5; but its contemporary justification can be rested on r.227 of the District Court Rules 1968, which provides that the judge "shall be the sole judge in __ . -4 all actions or proceedings in the Court, and shall determine all questions of law..." (cf. The District Courts Act of 1891, s.106). If all questions of law are to be determined by the judge, it must follow that the judge has in appropriate cases the power to enter such judgment as may be required by law upon or -- 8 of 39 -- 5 even irrespective of the verdict or findings of the jury. On appeal from a judgment in that Court the power to draw inferences of fact, and to order judgment to be entered for any party, is conferred on this Court by s.93 of the District Courts Act 1967- 1969 in terms that are practically indistinguishable from those contained in 0.70, r.11 of The Rules of the Supreme Court, which is incorporated by r.34 of the District Court Rules. This rather lengthy introduction is necessary because of the course taken at the trial and the form of appeal that is now presented. The plaintiff, as I have said, claimed the amounts paid to the defendant by way of unemployment benefits between 1983 and 1985. Its right to recover that sum was founded on s.246(1) of the Social Security Act 1947, which provides :- " (1 ) Where in consequence of a false statement or representation ... an amount has been paid by way of...benefit under this Act which would not have been paid but for the false statement or representation... the amount so paid is a debt due to - the Commonwealth." By his defence the defendant admitted that during the period in question he had been engaged in employment; and also that during that period he had lodged forms with the Director of the Department of ^Social Security representing that he was unemployed. On the face of it, therefore, the plaintiff's claim under s.246(1) was complete, provided it established that the amounts clainfed were paid and that they would not have been paid but for the defendant's false statement or representation. These remaining matters, if at all in issue at the trial, are not in dispute on this appeal. That left for determination the single ground raised by the defence, which was one of estoppel. As to that, the defendant alleged that upon his -- 9 of 39 -- 6 pleading guilty on 26 June 1987 in the magistrates court at Mount Isa to 32 counts of false declarations in respect of false declarations in respect of payment of unemployment benefits, the plaintiff was represented by its prosecutor, a Mr Wheeler; that the defendant submitted to the court that he was willing to repay $200 per month in repayment of the unemployment benefits received; and that "the plaintiff, by the said Wheeler, represented to the court, in the presence of the defendant, that restitution of the said unemployment benefits by repayment was not sought by the plaintiff". There were then pleaded allegations of detriment sustained by the defendant in acting on the representation in the belief that no restitution was being or would be sought by the plaintiff. Particulars were furnished of the forms of detriment alleged to have been suffered by the defendant. It is not necessary to identify them in any detail, because the jury answered in the affirmative all the questions put to them by the learned judge. These included a question 3, which was that the plaintiff "by its agent Wheeler" had represented that it would not seek repayment of the overpayments made by the plaintiff to defendant; question 5 that ; the defendant had formed the belief that he would not be required to repay the overpayments; question 6 that this belief was induced by the representation of the plaintiff; and question 7 that the defendant, relying on the representation, had acted to his detriment. It was submitted on appeal that, having regard to the uncontradicted evidence at the trial of both Wheeler and the defendant, the answer to question 3 was insupportable because the -- 10 of 39 -- 7 testimony of both witnesses was that what Wheeler had said in the magistrates court was that restitution was not sought "at this stage", or "at this time". In view of that evidence, it seems difficult to sustain the finding implicit in the answer to question 3 that the defendant formed and acted upon a belief, arising from the representation made by Wheeler, that the plaintiff "would not [at any time] seek repayment of the overpayments made by the plaintiff to the defendant". Establishing that the plaintiff had represented that it would at no time in the future seek to recover the payments made to the plaintiff is fundamental to the defence of estoppel in this case. Answer 5 thus went beyond the evidence at trial, and so might be liable to be set aside on appeal as being contrary to the evidence or unreasonable. But the question that was put did not include the critical words in parentheses; no reframing of it or redirection to the jury were sought; and no application to set aside the finding in the answer to question 3 appears in the notice of appeal, or, indeed, in the appellant's written outline of submissions before us. In these circumstances, and in the absence of any application to amend the notice of appeal, I do not consider it 'competent for this Court to exercise any power it may possess under 0.70, r.11 to draw inferences or make findings that would be inconsistent with the findings of the jury. Whatever the precise current status of the decision in Clarke & Fauset v. Brisbane Municipality (1895) 6 Q.L.J. 131, 142, it is in these circumstances not now open to us to tamper with the findings of the jury. Any jurisdiction we have to do so is not invoked on this appeal. -- 11 of 39 -- 8 The remaining question, which was the subject of the submissions on appeal, was whether, apart from the matter referred to, the judgment given in favour of the defendant was capable of being sustained at law. This in turn depended upon whether the defence of estoppel was as a matter of law, and notwithstanding the findings of the jury, available to the defendant in answer to the plaintiff's claim. In its formal reply to defence, the plaintiff expressly denied that it was estopped and precluded from claiming that the unemployment benefits were repayable by the plaintiff to the defendant. In the light of what followed it may be doubted whether such a pleading altogether complied with the spirit of r.92 of the District Court Rules. On the cross-motions for judgment that followed the jury findings at trial, the plaintiff in support of a right to judgment in its favour relied on the principle stated by the Privy Council in Auckland Harbour Board v . The King [1924] A.C. 318, and applied in a series of subsequent cases in Australia, including Commonwealth v. Burns [1971] V.R. 825; Attorney-General v. Gray [1977] 1 N.S.W.L.R. 406; and Sandvik Australia Ptv. Ltd, v. Commonwealth (1989) 89 A. A.L.R. 213. Sde also Australian Alliance Assurance Co. v. Goodwvn [1916] St.R.Qd. 225. In Auckland Harbour Board v. The King [1924] A.C. 318, 326 Viscount Haldane said: "it has been a principle of the British Constitution now for more than two centuries. . .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...Any payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires , and may be recovered by the Government ..." -- 12 of 39 -- 9 In that case the principle was applied to the recovery of a sum the payment of which was under legislation passed in 1912 authorised to be effected only upon entry into a lease, which never took place. Acting on the same principle Newton J. in Commonwealth v. Burns [1971] V.R. 825 held the plaintiff entitled to recover the amount received by the defendant of sums mistakenly paid to her by way of repatriation pension for the benefit of her father after he had died. Again, in Attorney-General v. Gray [1977] 1 N.S.W.L.R. 406, the plaintiff recovered from a State school teacher so much of the salary payments made to him at a rate that exceeded that at which he was entitled to be paid under statute. In my opinion these cases are distinguishable from the present. In each of them the recipient of the payment out of consolidated funds failed to satisfy the statutory requirement which constituted the sole authority to make the payment or payments in question. In Auckland Harbour Board v. The King , the statutory authority for payment was conditional upon the happening of an event that never took place. In Commonwealth v. Burns the statutory qualification for payment of the pension is not precisely set out in the report of the case; but it is clear enough that the title of the defendant's father to receive it ceased at his death, and with it the authority to pay it either to him or to her on his behalf. In Attorney-General v. Gray the defendant did not possess the qualifications entitling him to payment at the rate appropriate under the relevant statutory provisions for teachers in a higher classification to which he -- 13 of 39 -- 10 did not belong. He was accordingly held liable to repay the excess. Before the principle of the Auckland Harbour case can be invoked it is necessary to identify the precise terms of the statutory authority to pay, and to ask whether the terms of that authority were exceeded. It applies only when it can be seen that no such authority exists, as where its operation is made to depend on the fulfilment of a statutory condition that is not satisfied; or on the absence in the recipient of a particular statutory characteristic or qualification that would entitle him to payment; or on some other defect in the source of authority to pay. It is in events like those that money paid out of consolidated funds under Parliamentary control will be recoverable according to this principle. As was recognised by Viscount Haldane in the passage set out above, and also by Gibbs C.J. in Maguire v. Simpson (1977) 139 C.L.R. 362, 388, the rule is an application of the ultra vires doctrine, which means that the payment must be shown to have been made without or contrary to or in excess of the statutory authority to make it. When one turns to that question in the present case, it is, V as the learned judge of District Courts held, plain that payment of the subject unemployment benefits to the defendant was not unauthorised Or outside or contrary to the relevant statutory authority. Section 238 of the Social Security Act 1947 (Cth) provides that payment of benefits under the Act shall be made out of the Consolidated Revenue Fund, which is appropriated accordingly. Before the extensive renumbering of sections of the legislation undertaken in 1987, and at the time when the subject -- 14 of 39 -- payments were made, the comparable provision of the Act was s.136, which was so far as material in identical terms. It identifies the public funds of the Commonwealth as the source from which payment is to be made, and it authorises money to be taken from that source for payment of benefits under the Act. The relevant benefit in this respect was unemployment benefit. Section 116(1) of the renumbered legislation now provides, so far as material, that a person: "is qualified to receive an unemployment benefit if, and only if - (a) (b) ... (c) the person satisfies the Secretary that - (i) throughout the relevant period he was unemployed. ..." Before being renumbered, the comparable statutory provision was s.107(1)(c), which was expressed in terms that are indistinguishable in substance from the current s.116(1)(c). The "Secretary" referred to in both provisions means the Secretary to the Department, which, although not nominated in the Acts, is the Commonwealth Department of Social Security. These provisions identify, by reference to criteria that are set out in the paragraphs of subsection (1 ), the persons who are qualified to receive unemployment benefit under the Act. Expressly or by implication, they authorise payments from the money appropriated under s.238 (new) or s.136 (old) to persons so qualified. Both in the new s.116(1)(c) and the old s. 107(1 )(c), the critical words of qualification are "satisfies the Secretary that. . .he was unemployed.. As the learned trial judge rightly perceived, the title to make and receive payment of unemployment benefit under the Act is not dependent on the -- 15 of 39 -- 12 recipient having in fact the qualification of being unemployed but upbn his satisfying the Secretary that he is unemployed, whether or not that is the fact. On that footing, the plaintiff cartnot succeed in its claim to recover the amount of unemployment benefit paid to the defendant as a payment not authorised by Parliamentary appropriation. Even if at the time the defendant received it he was not unemployed, he satisfied the Secretary that he was. No doubt it was an officer or officers of the Department rather than the Secretary himself who was or were so satisfied; but that makes no difference for present purposes. The case is not within the principle laid down by Viscount Haldane in Auckland Harbour Board v. The King or the otAer decisions that have applied it, because the payment or payments were made precisely in accordance with the statutory authority under the Act, and not contrary to or beyond it. The fact that the Secretary or his officers were deceived does not mean that he was not satisfied; but rather that he was, which is all that s. 116(1 )(cHi) requires. If that were the end of the matter, the plaintiff's claim would, as the trial judge held it should, certainly fail, and with it this appeal. But it is not the end of the matter. The provision by force of which the plaintiff makes its claim is s. 246(1). It) as I have said, ascribes to an amount paid by way y of benefit under the Act in consequence of a false statement or representation the character of a debt due to the Commonwealth. Its analogue under the previous legislation was s.140(1). It does not matter here which of those two provisions applies. Each enables the Commonwealth to recover as a debt due to it a benefit -- 16 of 39 -- 13 that was paid in specified circumstances that are independent of the Parliamentary authority to make the payment out of consolidated revenue in the first place. The plaintiff at the trial satisfied the requirements of s. 246(1 ).' Why, then, should it not be entitled to recover the amount paid as a debt due to the Commonwealth? The answer depends upon whether or not the doctrine of estoppel relied on by the defendant can prevail against the statutory provisions that gives rise to the debt in favour of the Commonwealth and its enforcement. In Deputy Commissioner of Taxation v. Moorebank Proprietary Limited (1988) 165 C.L.R. 55, the High Court held that the statutory scheme laid down by the Income Tax Assessment Act (1936) (Cth) for the collection of unpaid income tax were irreconcilable with the Limitation of Actions Act 1974 (Qld) restricting the time for instituting proceedings for recovery of debts that would or might otherwise have applied by virtue^ of s.64 of the Judiciary Act 1903 (Cth) to an action by the Commonwealth to recover such tax. The Income Tax Assessment Act contained no express provision imposing a limit of time within which proceedings for recovery of unpaid income tax were to be 'V commenced. It did, however, specifically provide that unpaid tax was a debt due to the Commonwealth (s.208); and there were various other - provisions which, taken as a whole, their Honours -f . considered to be so inconsistent with the application to such proceedings of the State Limitation of Actions Act as to leave "no room" for the operation of the latter. They included sections investing the Commissioner with power to grant extensions of time for payment of tax; permitting it to be paid -- 17 of 39 -- 14 instalments (s.206); and providing for payment of interest from a date to be determined by the Commissioner (s.207), as well as statutory procedures for challenging assessments under that Act (s.201 ). The Social Security Act presents some but not all of these features. Section 246(1) expressly makes the amount a debt due to the Commonwealth. In that respect it resembles s.208 of the Income Tax Assessment Act . Unlike the latter, it no longer contains an express provision comparable to that in s.209 of the Assessment Act on which their Honours placed some reliance in Moorebank . providing for recovery of the debt in a court of competent jurisdiction; formerly it did, but these words were in 1985 omitted from the old s.140 by-s. 71 (a) of the Social Security and Repatriation (Budget Measures) Amendment Act 1985 (No. 127 of 1985) in the course of an amendment that was evidently designed to ensure that benefits which ought not to have been paid should be capable of being deducted from benefits to come. The present form of the new s. 246(1) and, for the most part, of s. 246(2) is a rescript of the old s.140 as amended in 1985. In addition, s.251(2) and more particularly s.251(3) contain express provisions fixing "the time within which proceedings are to be commenced to recover an amount like that sued for here. Considered as a whole these provisions go far to support the submission of Mr Gaffy Q.C., who appeared for the plaintiff on this appeal, that the features of the statutory scheme for recovery by the Commonwealth of what I will call unmerited benefits are at least as strong, if not stronger, than those considered by the High Court in Deputy Commissioner of Taxation -- 18 of 39 -- 15 v. Moorebank Proprietary Limited . For present purposes what is more important is that there are in the Social Security Act provisions which are in direct conflict with the notion that a person sued, as is the defendant here, for recovery of such benefits is entitled to rely on estoppel as answer to a claim by the plaintiff under s.246(1). In particular, s.251(1) of the Act confers on the Secretary authority to:- "(b) waive the right of the Commonwealth - ( i ) to recover from a person the whole or part of a debt that is payable under or as a result of this Act; or (ii) to recover debts under or as a result of this Act included in a class of debts specified by the Minister by notice in writing published in the Gazette ; or (c) allow an amount that is payable by a person to the Commonwealth under or as a result of this Act to be paid in instalments." The comparable "old" provisions are s .146(1)(b) ( i ) and (ii)-and s.146(1)(c). By virtue of s.50(10)) of the Social Security Amendment Act 1987 and s.10(5) of the Social Security (Review of Decisions) Act 1988 references to s. 146(1)(b)(ii) are to be construed as references to the renumbered provision of the current version .of the Social Security Act 1947 : see note in Reprint No. 6 of that Act (as at 1 January 1989), at 320. The renumbered provision is s .251(1) (b) ( ii ). The same note, at ■i . 319-320, sets out the text of a Gazette notice under the hand of the Minister of State for Social Security limiting to "less than $50" a debt as to which the Secretary has under that subparagraph power to waive the right of recovery of the Commonwealth . -- 19 of 39 -- 16 The result is, as I see it, that on 26 June 1987, which is when Mr Wheeler was found to have made to the magistrates court at Mount Isa the representation that "restitution of the said unemployment benefits by repayment was not sought by the plaintiff", the monetary limit imposed by s.251(1) (b) ( ii ) of the Act on the power of the Secretary to waive the right of the Commonwealth to recover debts under the Act was "less than $50" in amount. There have since been some further amendments which added to s.251 a series of additional restrictions in the form of subsections numbered (1 A ), (IB) and (1C); but none of them is relevant to determination of the present question. If the power of the Secretary of the Department under s.251 (1)(b) to waive the right of the Commonwealth to a debt due by the defendant arising under or as a result of the Act was at the relevant time in June 1987 limited to an amount of less than $50, then it would be astonishing if the authority of Mr Wheeler, as a member of the prosecuting staff of the Commonwealth Director of Public Prosecutions, extended to waiving an amount of over $14,000. The same observation applies with equal force to the provisions of s.70C(c) of the Audit Act 1901 (Cth) authorising the relevant Minister (presumably the Treasurer or Minister of Finance) to "write off" irrecoverable debts and overpayments; in any event, the impression conveyed by the use of the expression "write off" in s.70C is that it refers to the duty of public accounting imposed on the Executive, and is not in law intended to enable the relevant Minister to forego a debt due to the Commonwealth from a person who owes it. -- 20 of 39 -- 17 In my opinion, and contrary to the submission of the respondent on appeal, the effect of the particular provisions of s .251 (1) (b)( ii ) of the Social Security Act is to restrict the power of waiving the right of the Commonwealth to recover a debt such as this to an amount of less than $50, and in any event to confine its exercise to the Secretary of the Department. The Secretary may by s . 14 (1 ) delegate his powers under the Act to an "officer" as defined in s.3; but, even if a prosecutor could somehow be brought within the terms of that definition, a delegation under s.14(1) is required to be in writing; and by s.15(1) the decision of an officer under the Act is also required to be in writing. Everything urged by the defendant in support of its defence in this case is opposed to a proposition that the representation alleged to have been made by Mr Wheeler was a decision in writing, or the result of such a decision. The answer of the jury to question 3 that was put to them assumes that the representation in question was made by the plaintiff "by its agent Wheeler"; but, although he no doubt possessed ample authority in his character of counsel to prosecute for the plaintiff, the finding that he was its agent to make a representation that bound the Commonwealth to forego forever its statutory right to a debt of over $14,000 due to it by the defendant is; as a matter of law, quite contrary to the provisions of s.251(1)(b) of the Act. That may of itself be sufficient to dispose of the defence of estoppel raised to the plaintiff's claim in the action. If it is necessary to go further, it may be added that the express provisions with respect to waiver found in s.251 (1) seem to me -- 21 of 39 -- 18 to be irreconcilable with the scheme of those and other % provisions of the Social Security Act directed to the recovery of debts like this due to the Commonwealth. The distinction, if any, between waiver and estoppel is acknowledged in high places not to be readily identifiable : see Commonwealth v. Verwaven (1990) 64 A.L.J.R. 540, 543, 551-553, 563-564, 571, 576, 581-585. In the context of its presence in s.251 (1), the expression "waive" seems clearly to mean a permanent and binding election to abandon the debt due to the Commonwealth under the Act. If, as I suspect in a case like this, the estoppel set up by the defendant comprises no more than a representation of intention to abandon the claim that was acted on by the defendant, the effect of s.251 (1)(b) is to deny binding effect to any such representation beyond the limits deliberately imposed by the provisions of that paragraph. In other words, Wheeler's capacity in law to raise an estoppel binding on the Commonwealth to forego its right to the debt cannot have been more extensive than his power to make an effective waiver of the debt. On the view I have formed of s.251 (1) of the Act, he possessed no such power at all. The matter* * is in any event covered by authority. In Maritime Electric Co. Ltd, v. General Dairies Ltd. [1937] A.C. 610, it was held that a statutory authority was not estopped by y ; representations it had made from claiming charges which it had a statutory authority to collect and which the defendant had a statutory duty to pay. In giving the advice of the Privy Council their Lordships had this to say ([1937] A.C. 610, 621) about the defence of estoppel rejected in that case: -- 22 of 39 -- 19 "It may be asked with force why, if a voluntary release will not put an end to the obligation of the respondents, an inadvertent mistake by the appellants acted upon by the respondents can have the result of absolving the appellants from their duty of collecting and receiving payment in accordance with the law." The decision, so far as it concerns the aspect of estoppel, was applied in both Commonwealth v. Burns [1971] V.R. 825, 830, and Attorney-General v . Gray [1977] 1 N.S.W.L.R. 406, 410, 412-413. See also Chamberlain v. Deputy Commissioner of Taxation (1988) 164 C.L.R. 502, 510; Hogg : Liability of the Crown. 2nd ed., 190-191. Those two decisions were, of course, directed to payments made in excess of Parliamentary authority; but once it is accepted, as it must be here, that the power to waive is excluded or restricted by statute to the limits prescribed by s.251 (1)(b), it is in my opinion not possible to achieve the same result by relying on an estoppel founded on a representation which, if viewed as a waiver, could not be given effect in law. Whilst acknowledging the extensive impact on this branch of the law of the decision in Walton's Stores (Interstate) Ltd, v. Maker (1988) 164 C.L.R. 387, the question here is not whether the particular representation alleged could found an estoppel; but whether, assuming^ that it could, the representation giving rise /i V . to it was capable in law of being ascribed to the Commonwealth as plaintiff. Because it went beyond the statutory limits allowed by s y . 251 (1 ) (b) , it is my view not possible so to ascribe it. On behalf of the respondent, Mr Douglas of counsel not unjustifiably complained that the point now relied upon was not raised in the court below. The plaintiff's reply simply denied that the plaintiff was estopped. But the matter of Mr Wheeler's -- 23 of 39 -- 20 authority depends on the terms of a statute, which means that it is a question of law. It is not one that could have been solved or disposed of in favour of the defendant by any evidence capable of being led at the trial . In these circumstances this Court is bound on appeal to give effect to it : cf. Suttor v. Gundowda Ptv . Ltd . (1950) 80 C.L.R. 418, 438, where the relevant authorities are referred to. The decision in Deputy Commissioner of Taxation v. Moorebank Proprietary Limited (1988) 165 C.L.R. 55 is itself an instance of a case in which the High Court gave effect to a proposition of law that was never raised or advanced in the court below. It remains to say that it is a little difficult to understand how the assumption that, for the purpose of making the representation found by the jury in their answer to question 3, Wheeler could be regarded as the agent of the Commonwealth. The defence pleaded no more than that the plaintiff "by the said Wheeler" made the oral representation relied upon. His Honour's summing up assumed that, in his character of legal representative for the plaintiff, Wheeler was authorised to make a representation on the matter of repayment that was binding on the Commonwealth. As these reasons show, that direction to the jury was not correct in law. But in this respect no objection was taken to the • form of question, nor to that direction in the .y . summing up. The matter is one that ought in my view to be taken into account, together with the respondent's complaints about the form of the plaintiff's pleading, in determining the disposition of the costs of the trial following upon this appeal. -- 24 of 39 -- 21 I would allow the appeal with costs; set aside the judgment in the court below; and order that judgment be given in favour of the plaintiff against the defendant for $14,176.20 together with interest at 1 2% from the date of service of the plaint until the date on which payment is made. I would order that the defendant pay the plaintiff's costs of and incidental to the action, other than the costs of the trial itself, as to which there should be no order in favour of either party. In respect of the costs of appeal, the defendant should have an indemnity certificate under the Appeal Costs Fund Act 1973. -- 25 of 39 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 124 of 1990 Before the Full Court Mr. Justice McPherson A.C.J. Mr. Justice Shepherdson Mr. Justice Williams BETWEEN : COMMONWEALTH OF AUSTRALIA (Plaintiff) Appellant AND: ALAN RODNEY HAMILTON (Defendant) Respondent JUDGMENT - G.N. WILLIAMS J. Delivered the 28th day of August, 1991. CATCHWORDS: Social Services - recovery of unemployment benefits paid in consequence of false representation - defence of estoppel not available - action to recover debt due to Commonwealth - ss. 107(1 ), 140(1 ), 146 of Social Security Act as at 15th January, 19$6 considered. / * Counsel: Mr. Gaffy Q.C. and R. Trotter for Appellant. Mr. R.J. Douglas for Respondent. Solicitors: Australian Government Solicitor for Appellant. V.R. Moffatt & Associates for Respondent. Hearing date: 18th and 19th July, 1991 -- 26 of 39 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 124 of 1990 BETWEEN : COMMONWEALTH OF AUSTRALIA (Plaintiff) Appellant AND: ALAN RODNEY HAMILTON (Defendant) Respondent JUDGMENT - G. N . WILLIAMS J. Delivered the 28th day of August, 1991. The facts relevant for the determination of this appeal are fully set out in the reasons for judgment of McPherson A.C.J., which I have had the advantage of reading, and I will not unnecessarily restate those facts here. The unemployment benefits in question were paid by the appellant to the respondent during the period 20th April, 1983 to 13th January, 1985. It was on the 26th June, 1987 that the respondent pleaded guilty in the Mt. Isa Magistrates Court to 32l' i counts of making false declarations in respect of payment of unemployment benefits. On that date that the conduct of the appellant said to constitute an estoppel in favour of the respondent occurred. Given those dates counsel informed the court that the applicable statute was the Social Security Act 1947 reprinted as at 15th January, 1986. Copies of that reprint are not readily available and the most readily accessible text of the statute is that reprinted as at 1st January, 1989. Though -- 27 of 39 -- 2 the substance of the relevant sections has not in most instances been altered as between those two reprints, unfortunately the numbering of the sections has been radically changed. In consequence I will in these reasons refer to the section by the number in the reprint as at 15th January, 1986 and put in brackets thereafter the number of the equivalent section in the reprint as at 1st January, 1989. On the plea of guilty in the Magistrates Court the Commonwealth was represented by one H.J. Wheeler, from the Director of Prosecutions office in Townsville. Whilst there is some conflict in the evidence as to the time in the course of the proceeding at which the statement was made, there was no real dispute as to the critical words used by Wheeler, said to give rise to the estoppel. In chief Wheeler's evidence was: "I said to the Magistrate that at this stage restitution was not sought but it may be sought by other means." Under cross-examination he conceded that he could not say they were "the exact words" used, but he reiterated that he "indicated to the court that restitution was not sought at this stage; recovery would be sought by other means." According to Hamilton, Wheeler said "there was no restitution sought at this time." That was the only evidence which could support the affirmative answer of the jury to question 3 which was couched in these terms: "Did the plaintiff on 26th June, 1987, by its agent Wheeler, in all the circumstances represent that it would not seek repayment of overpayments made by the plaintiff to the defendant". As McPherson A.C.J. has pointed out, in order to constitute an estoppel such as would prevent the Commonwealth from suing to -- 28 of 39 -- 3 recover the amount paid by a proceeding commenced in February 1989, it would be necessary for the respondent to establish a representation that the Commonwealth "would not at any time seek repayment of the overpayments made by the plaintiff to the defendant" . But the Commonwealth has not sought to overturn, or have set aside, the findings of the jury. I therefore approach the resolution of this appeal on the basis of the jury's affirmative finding to question 3, but in so doing I ought not be taken as recognising that there was evidence at the trial capable of supporting a finding in those terms. It should also be noted that by its affirmative answer to question 3 the jury made a finding that at the material time Wheeler was the agent of the Commonwealth. He clearly represented the Commonwealth for the purposes of prosecuting the offence, and clearly had at least ostensible authority to make statements relevant to that legal proceeding which were binding on the Commonwealth . But as will become clearer later it would appear he had no authority (at least so far as is revealed by the evidence) to bind the Commonwealth with respect to the recovery in civil proceedings of amounts improperly paid to the 1 i respondent. It is, to say the least, unfortunate that such problems were not recognised in the course of the trial, particularly >*hen the questions for the jury were being framed. The proceedings in the District Court were commenced in reliance on s. 140(1) [s. 246(1)] of the Social Security Act 1947; relevantly it provides that where "in consequence of a false statement or representation ... an amount has been paid by way of pension ... or benefit under this Act which would not -- 29 of 39 -- 4 have : been paid but for the false statement or representation . . . the amount so paid is a debt due to the commonwealth." The commonwealth claimed an amount (finally agreed to be $14,676.20) as "the balance of the amount overpaid to the defendant by the plaintiff as unemployment benefits". In the facts relied on to prove claim it was alleged that . the amount was paid in consequence of representations which were false, and that the sum sued for was "a debt due to the plaintiff". The only substantial defence raised was that of estoppel. The matters pleaded in support of that defence were essentially the following: (i) the respondent pleaded guilty to the complaints and through his solicitor made some representation to the court that he was willing to pay back the amount in monthly instalments; (ii) the plaintiff, through its representative Wheeler, orally represented to the court, in the presence of the defendant, that restitution of the said unemployment benefits by repayment was not sought by the plaintiff; (iii) the Commonwealth knew or ought to have known that t&e defendant would act to his detriment in reliance on those representations and in fact he J did act to his detriment "in arranging his financial affairs according." After the jury findings were returned there were competing motions for judgment. At that stage counsel for the Commonwealth clearly contended that the jury findings did not give rise to a defence of estoppel which would prevent it from recovering the -- 30 of 39 -- 5 amount of the debt. In essence he contended that a judgment in favour of the defendant could not be sustained at law. Counsel for the respondent on the hearing of the appeal complained that a number of submissions made on behalf of the appellant went beyond what was submitted in the District Court when judgment was being sought. It is undoubtedly correct that the argument for the appellant in this Court was more refined and more carefully researched but it does not seem to me to have departed materially from what was being put to the District Court Judge. In any event only matters of law are involved, and it is for this Court to determine whether or not the judgment of the District Court is capable of being sustained at law. Central to the argument for the Commonwealth, both before the District Court Judge and in this Court, is the proposition that the defence of estoppel is not and was not available to the respondent. One question that has caused me grave concern is whether an estoppel can prevent a public instrumentality from recovering from a wrongdoer the profits of criminal activity, particularly where those profits are derived from defrauding the public purse. / t The courts are not disposed to assist a person, guilty of criminal conduct, to retain the benefits received from that conduct; indeed the courts as a matter of policy will not assist a person to enforce rights arising from or associated with criminal activity (cf. Gala v. Preston (1991 ) 65 A.L.J.R. 366). I have been unable to find any direct, precise authority to the effect that an estoppel will not be . enforced in such -- 31 of 39 -- 6 circumstances, but it seems to me to be consistent with the general approach adopted by the court in a number of cases. In Commonwealth of Australia v. Burns (1971) V.R. 825 Newton J. was concerned with an action in which the Commonwealth was seeking to recover amounts paid to Burns purportedly by way of repatriation pension, but in circumstances where she had no entitlement thereto. When the payments had first been made Burns had queried her entitlement with an official, and had been assured that the payments were being lawfully and properly made. She relied on that as one of her defences to the claim. At 830 the learned trial Judge said that the answer to her argument on that ground was "to be found in the well established rule that a party cannot be assumed by the doctrine of estoppel to have lawfully done that which the law says he shall not do". Gibbs J. quoted that observation in Maguire v. Simpson (1977) 139 C.L.R. 362 at 387 and in turn observed at 388 that that "statement would appear to be unexceptionable". To similar effect, in my view, is the decision of the Privy Council in Maritime Electric Co. v. General Dairies Limited (1937) A.C. 610. In that case the appellant was a public utility which was under a statutory duty to furnish adequate electricity facilities to customers and could charge in accordance with the statutory rate for the provision of such services. Through a mistake inaccurate accounts were furnished to the respondent who promptly paid the amount so demanded. On becoming aware of the mistake the appellant sued for the balance and it was held that it was not estopped from recovering. Lord Maughm in delivering the judgment said at 620: "The sections of the Public Utilities Act which are here in question are sections enacted for the benefit -- 32 of 39 -- 7 of a section of the public, that is, on grounds of public policy in a general sense. In such a case . . . where, as here, the statute imposes a duty of a positive kind, not avoidable by the performance of any formality, for the doing of the very act which the plaintiff seeks to do, it is not open to the defendant to set up an estoppel to prevent it." The Court of Appeal in Attorney-General v . Gray (1977) 1 N.S.W.L.R. 406 also concluded that estoppel could not operate in the circumstances of that case, because the effect of the estoppel contended for would be to prevent the Attorney-General from asserting the statutory illegality of excess payments sought to be recovered. It must not be forgotten that estoppel (and at least in some circumstances, waiver) is concerned with preventing a party from obtaining an unconscionable advantage over another, and in consequence in this area of the law the court is frequently called upon to adjudicate as between competing rights; the various judgments in Commonwealth v. Verwaven (1990) 170 C.L.R. 394 sufficiently illustrate that point. Thus one finds, for example, Deane J. observing in that case at 441: "There could be circumstances in which the potential damage to an allegedly estopped party was disproportionately greater than any detriment which would be sustained by the other party to an \ • i extent that good conscience could not reasonably be seen as precluding a departure from the assumed state of affairs if adequate compensation were made or offered by the allegedly estopped party for any detriment sustained by the other party." And in the same case McHugh J. said at 497: "In my opinion, the true basis of the decisions in these cases is that, where the existence of a statutory right depends upon the fulfilment of a condition precedent, a person entitled to insist on the -- 33 of 39 -- 8 fulfilment of that condition may dispense with its compliance unless it is enacted for the benefit of the public, and that person will be held to have waived compliance with the condition if he or she knowingly takes or acquiesces in the taking of a subsequent step in the course of procedure laid down by the statute after the time for the other person to fulfil the condition has passed." Whilst none of those judicial observations is conclusive, each nevertheless seems to me to be suggesting that the public instrumentality, particularly where it is pursuing a statutory right to recover moneys wrongfully taken from the public purse could not, in consequence of conduct (particularly by some minor official), be estopped from pursuing the recovery. Whilst my mind is fairly clear that such is in fact the position at law, it is not in the end result necessary for me to determine the appeal on that ground. The argument by counsel for the appellant centred upon the decision of the Privy Council in Auckland Harbour Board v. The King (1924) A.C. 318. That decision clearly establishes that no money can be taken out of consolidated revenue except under and pursuant to a distinct authorisation from Parliament itself. Further, any payment out of consolidated revenue made without parliamentary^ authority is illegal and ultra vires and it may be recovered. The decision has been applied on a number of occasions recently in Australia; reference need only be made to Commonwealth v . Burns . Attorney-General v. Gray , and Sandvik Australia Ptv Ltd v. The Commonwealth (1989) 89 A.L.R. 213. By s. 136 [s. 238] of the Social Security Act unemployment benefits -- 34 of 39 -- 9 are payable out of the Consolidated Revenue Fund. Such payments may be made to a person if, inter alia, he satisfies the Secretary that throughout the relevant period he was unemployed, capable of undertaking paid work, and had taken reasonable steps to obtain such work (s. 107(1) (c) ) [s. 116(1)(c)]. Here the respondent did so satisfy the Secretary, though of course he did so by making fraudulent misrepresentations. Thus this is not a case of money being paid out of consolidated revenue without the authorisation of Parliament, but rather a case where a person has brought himself within the parliamentary authorisation by making fraudulently misleading statements. I agree with McPherson A.C.J. in concluding that such circumstance distinguishes the present case from that before the courts in Auckland Harbour Board, Commonwealth v. Burns, and Attorney-General v. Gray. Thus the Commonwealth can gain no specific comfort from observations in those decisions to the effect that a claim based on the Auckland Harbour Board principle could not be defeated by estoppel. The final, and critical, question is whether or not the estoppel on which the respondent relies can be supported in law given the terms 6f the statute, and in particular s. 146 [s. 251 3 thereof. There are some important differences which should be noted between those two versions of the section. Section 146(1 ) (b) spoke of "waive or defer the right of the Commonwealth" whereas s. 251(1) (b) merely refers to "waive the right of the Commonwealth". Next, sub-s. (1A), (1B), and (1C) to be found in s. 251 were inserted at a point of time making them irrelevant for present purposes. Finally, it should be noted that s. 146(5) -- 35 of 39 -- 10 which does not appear in the reprint as at 15th January, 1986 is relevant for present purposes because it was inserted by the Amending Act No. 33 of 1986 and came into force in early July 1986. Relevantly then s. 146 provided: "(1) The Secretary may, on behalf of the Commonwealth by determination in writing - (b) waive or defer the right of the Commonwealth - (i) to recover from a person the whole or a part of a debt that is payable by the person under or as a result of this Act ; or (ii) to recover debts under or as a result of this Act included in a class of debts specified by the Minister by notice in writing published in the Gazette; or (c) allow an amount that is payable by a person to the Commonwealth under or as a result of this Act to be paid in instalments. (2) Subject to sub-s. (3), proceedings for the recovery from a person of any amount that is payable by the person to the Commonwealth under or as a result of this Act shall not be commenced after the end of the period of six years commencing on the day on which that amount became payable. (3) Where an amount becomes payable by a person to the Commonwealth under or as a result of this Act because"of - (a) a false statement or representation made by any person; or proceedings for the recovery of that amount may be commenced at a time within the period of six years commencing on the day on which an officer becomes aware that the statement or representation was false. . . . -- 36 of 39 -- 11 (5) A determination made under sub-s. (1) takes effect - (a) on the day specified in the determination, being the day on which the determination was made or any other day before or after that day ; or (b) if no day is so specified, on the day on which the determination was made ." There has been a notice published in the Gazette pursuant to s. 1 46(1) (b) (ii) - particulars are referred to in the judgment of McPherson A.C.J. - which limits a debt as to which the Secretary has power to waive recovery to a debt of "less than $50.00". But I must confess that I cannot understand the significance of s. 146(1) (b) ( ii ). I cannot see how a debt caught by that provision would not also be a debt for purposes of para. (i). If the Secretary has the power to waive the whole of a debt under (i) regardless of its amount, what is the point of conferring on him by (ii) a power to waive a debt of less than $50.00. To my mind suing to recover an amount as a debt pursuant to s . 141(1) [s. 246(1)] is an action "to recover ... a debt that is payable . . . under or as a result of this Act" - para. (1); and it would also be an action "to recover debts under or as a result of? this Act" - para. (ii). Fortunately I do not find it necessary to resolve the conundrum What is. .clear is that the legislation provides a formal procedure by which the Commonwealth may waive its right to recover a debt of the type under consideration here. It is a formal determination because it must be by the Secretary, must be in writing, and takes effect in accordance with sub-s. (5). It is difficult to think of a more formalised procedure for waiving a right. In the circumstances I have come to the -- 37 of 39 -- 12 conclusion that the Commonwealth can only waive its right to recover a debt of the type under consideration here by complying with the formal requirements of s. 146 [s. 251]. An estoppel of the type in issue here must involve, at least as an element, a waiver by the Commonwealth of its right to recover. Such an estoppel is really another way of saying that by the conduct in question the Commonwealth has waived the right to recover the debt and the court will enforce that waiver by applying the doctrine of estoppel. There is no suggestion on the evidence that the formalities of s. 146 [s. 251] were complied with in this case and in those circumstances there is in my view no legal basis for the defence of estoppel which succeeded before the learned trial Judge. The High Court in Deputy Commissioner of Taxation v. Moorebank Ptv . Ltd. (1988) 165 C.L.R. 55 was concerned with the question whether the general scheme providing for collection and recovery of tax set forth in the Income Tax Assessment Act 1936 permitted State limitation statutes to apply by virtue of s. 64 of the Judiciary Act 1903. The court held the State statutes did not apply because the Commonwealth legislative scheme was a v> complete one lehving no room for operation of some other limitation provision. The reasoning is not of direct relevance to this case which is concerned with the availability of a common law defence and therefore the constitutional aspects of Moorebank are not present. But the decision is somewhat helpful because it does show that the courts will be reluctant to permit a matter to be raised as a defence which is inconsistent with the legislative scheme. -- 38 of 39 -- 13 I have already noted that the argument for the appellant before this Court was more refined than were the submissions addressed to the learned District Court Judge on behalf of counsel for the Commonwealth. But, as I have already noted, the critical question of law was raised, but it was rejected by the trial Judge. In those circumstances I am of the opinion that the appellant should have the costs of the trial in the District Court . I would allow the appeal with costs, set aside the judgment in the court below, and order that judgment be given in favour of the plaintiff against the defendant for $14,176.20 together with interest at 12 per cent from the date of service of the plaint until the date on which payment is made. I would order that the defendant pay the plaintiff's costs of and incidental to the action. In respect of the costs of the appeal, the defendant should have an indemnity certificate under the Appeal Costs Fund Act 1973. -- 39 of 39 --