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(F) ULTRA VIRES RECEIPT

(i) The Background

Restitutionary claims against public authorities have succeeded in other cases where none of the established grounds of restitution appear to have been applicable. The success of the restitutionary claim in these cases can only be justified by virtue of an independent ground of restitution which is peculiar to restitutionary claims against public authorities.[1] Other cases have rejected a general right of restitution founded on the receipt of an ultra vires payment, primarily because of the fear that allowing restitution for this reason would unsettle public finances.[2] [3] Most importantly, such a general ground of restitution was rejected by the Supreme Court of Canada in Air Canada v British Columbia,60 where a majority of the court rejected the taxpayer’s claim to recover ultra vires payments for three main reasons:

  • (1) if the restitutionary claim was allowed to succeed the State would need to recover the money from a new generation of taxpayers who had not benefited from the provision of State services funded by the tax;
  • (2) arranging for the repayment to the original taxpayers and issuing new tax demands would be economically inefficient; and
  • (3) repaying tax to the original taxpayers would disrupt public finances.

Whilst all of these factors are possible dangers arising from restitutionary claims being brought against public authorities, they should not prevent the acceptance of a general right of recovery and should be dealt with by developing specific defences for the protection of public authorities where the greater public good requires such protection. This was the approach which was advocated by Wilson J in a powerful dissenting judgment, where she argued that there should be a general right of recovery where money is paid to public authorities which is not lawfully due.[4] [5]

  • [1] See, for example, Steele v Williams (1853) 8 Exch 625, 155 ER 1502; South of Scotland Electricity Board vBritish Oxygen Co Ltd [1959] 1 WLR 587.
  • [2] See, for example, National Pari-Mutuel Association Ltd v R (1930) 47 TLR 110.
  • [3] (1989) 58 DLR 161.
  • [4] See also WR Cornish, ‘Colour of Office: Restitutionary Redress against Public Authority’ [1987] JMCL41and PBH Birks, ‘Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights’ in P Finn (ed),Essays on Restitution (Sydney: The Law Book Co, 1990), ch 6.
  • [5] [1993] AC 70. For commentary see E McKendrick, ‘Restitution of Unlawfully Demanded Taxes’ [1993]LMCLQ 88; J Beatson, ‘Restitution of Taxes, Levies and Other Imposts: Defining the Extent of the WoolwichPrinciple’ (1993) 109 LQR 401; GJ Virgo, ‘The Law of Taxation is Not an Island—Overpaid Taxes and the Lawof Restitution’ [1993] BTR442.
 
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