In Redland City Council v Kozik [2024] HCA 7 Gageler CJ and Jagot J. state
1 In the Preface to the second edition of Mason and Carter's Restitution Law in Australia, the authors referred metaphorically to the "restitution common of the law" being "tended by judges". They encouraged preparedness on the part of judges to "tear out weeds, however ancient". In the factual circumstances giving rise to the present case, Redland City Council ("the Council") tore out actual weeds from part of the actual common – in the form of waterways – within its local government area. The Council also dredged and removed silt, rubbish, and debris from the waterways, repaired revetment walls protecting the banks of the waterways from erosion and preventing subsidence, and improved the quality of the water in the waterways ("the works").
2 The Council was required to undertake the works in the discharge of its statutory functions as a local government authority under the Local Government Act 2009 (Qld) ("the Local Government Act") and the Coastal Protection and Management Act 1995 (Qld) ("the Coastal Protection and Management Act"). The Council also had a statutory entitlement to fund the works by levying "special charges" under the Local Government Act on land in its local government area which specially benefited from the works.
3 The Council in fact funded part of the overall cost of the works by purporting to levy special charges on land which adjoined the land on and waters in which the works were carried out. The Council funded the balance of the costs of the works from its general revenue.
4 After the Council had completed the works, it discovered that it had failed to comply with a condition of the prescribed process for the levying of special charges under the Local Government Act, as a consequence of which its levying of the special charges was invalid. The Council refunded to landowners so much of the total amount invalidly levied on and paid by them as remained unspent, but it refused to refund so much as it had spent on the works.
5 Representatives of a group of landowners who had paid the invalidly levied special charges ("the Landowners") brought a proceeding in the Supreme Court of Queensland against the Council for recovery of the unrefunded portion of the amount of the special charges each had paid. Their claim was put on alternative bases. First, it was put as a claim to a statutory debt due by way of refund under regulations made under the Local Government Act providing for the return of "special rates or charges incorrectly levied". Second, it was put as a common law claim in restitution for moneys paid under a mistake of law.
6 By way of defence (and counterclaim for a negative declaration), the Council pleaded that the claim was defeated by each Landowner having received a "direct and comparable benefit" from the Council in connection with the payment of the special charges because of the Council undertaking the works.
7 The parties agreed on stating common questions for determination in the proceeding. The primary judge (Bradley J) made orders which answered each of those questions. The effect of the primary judge's answers was that the Landowners succeeded in their claim to a statutory debt but failed in their claim in restitution at common law.
8 On appeal and cross appeal, the Court of Appeal of the Supreme Court of Queensland (McMurdo JA and Bodice J, Callaghan J dissenting in part) substituted different answers. The effect of the answers as substituted was that the Landowners failed in their claim to a statutory debt but succeeded in their claim in restitution at common law.
9 In answering the common questions, the primary judge made three important findings. These findings were not disturbed on appeal to the Court of Appeal and were not sought to be disturbed in this Court. The first finding was that each Landowner paid the special charges in the mistaken belief that the Landowner had a legal obligation to do so. The second finding was that the land of each Landowner specially benefited from the undertaking of the works. One benefit was both quantifiable and quantified: an increase in the value of the land (or a prevented diminution of value) of at least one to two per cent, an amount which greatly exceeded the amount mistakenly paid by the Landowner as special charges. Another benefit was unquantified even if quantifiable: an increase in visual amenity. The third important finding was that the special benefit to each Landowner resulting from the works was sufficient to render each Landowner's land "susceptible" to the levy of special charges under the Local Government Act.
10 The Council appeals by special leave from so much of the orders of the Court of Appeal as substituted answers to the effect that the Landowners succeeded in their claim in restitution at common law. For their part, the Landowners seek special leave to cross appeal from so much of those orders as substituted answers to the effect that the Landowners failed in their claim to a statutory debt.
11 The proposed cross appeal depends on discrete issues of statutory construction which would render the appeal moot if resolved in the Landowners' favour. For that reason, it is appropriate for special leave to cross appeal to be granted and for the cross appeal to be considered in advance of the appeal. Adopting that course, we would dismiss the Landowners' cross appeal and allow the Council's appeal.
12 We consider that the answers substituted by the Court of Appeal to the effect that the Landowners failed in their claim to a statutory debt were right. On the proper construction of the regulations made under the Local Government Act, providing for the return of special charges incorrectly levied, the Landowners are not entitled to a refund.
13 We consider that the answers substituted by the Court of Appeal to the effect that the Landowners succeeded in their claim in restitution at common law were wrong. The Council had a statutory entitlement to fund the works by the levy of special charges payable by the Landowners. The Landowners cannot recover from the Council so much of the moneys as they paid and as the Council spent undertaking the works because, to that extent, the Council was not unjustly enriched at the expense of the Landowners.
14 The Council's statutory entitlement to fund the works by the levy of special charges payable by the Landowners, and its levy and expenditure in good faith of the special charges on undertaking the works (that is, the Council honestly believing that it had complied with the statutory requirements enabling it to levy and spend the special charges on those works), is an answer to the Landowners' prima facie entitlement to recover moneys paid by them under an operative mistake of law. These circumstances would also answer any prima facie entitlement of the Landowners to recover under the principle formulated in Woolwich Equitable Building Society v Inland Revenue Commissioners – that "money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by the citizen as of right" – if that principle were to be imported into the common law of Australia. Whether the Woolwich principle should be imported into the common law of Australia is raised by the Landowners' notice of contention and was the subject of submissions by the Attorney General of the Commonwealth and the Attorney General of Queensland but, given that the circumstances described would answer any such prima facie entitlement to restitution, that question need not be determined.
