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Is anybody in a position to advance the debate whether the principle in Auckland Harbour Board v The King can be defeated by a change of position argument beyond this statement in The Laws of Australia?

"[105] It is uncertain whether general restitutionary defences such as provision of consideration (see [204-210]) and change of position (see [196-201]) are available to the Crown against a claim for recovery of an unlawful exaction. The principle in Auckland Harbour Board v The King [1924] AC 318, can lead to harsh results, leading to calls for allowing defendants to raise general restitutionary defences against the Crown.1 It is arguable that the absolute right of recovery conferred by this principle is particularly harsh and unfair given the lack of a reciprocal right by the citizen to recover ultra vires exactions from the Crown: see [90-94]. There is conflicting authority about whether the defence of the provision of good consideration is available as a defence in a claim by the Crown.2 There is no authority on whether the defence of change of position should be recognised in this context. It is at least arguable that the pro tanto nature of the defence 3 strikes a fair balance between the need on the one hand to protect parliamentary control over funds, and the desirability on the other hand of mitigating the harsh operation of this principle on recipients of government money.4

1 Law Reform Commission of British Columbia, Report on the Recovery of Unauthorised Disbursements of Public Funds, LRC 48, 1980; Burrows A, The Law of Restitution (London: Butt, 1993), 332.

2 In Commonwealth v Burns [1971] VR 825, Newton J at 827 suggested that payments made with consideration might fall outside of the Auckland Harbour Board principle. On the other hand, in A-G v Gray [1977] 1 NSWLR 406 (CA), Glass JA (Samuels JA agreeing) at 414 appeared to reject the argument that the provision of good consideration could render unauthorised payments irrecoverable.

3 The defence of change of position operates only to the extent that the money has been specifically paid out on an item of extraordinary expenditure: see [196-201].

4 Contrast Mason K and Carter JW, Restitution Law in Australia (Sydney: Butt, 1995), 787, where it is argued that the requirement of detrimental reliance can never be met in this context, as reliance can not properly be based on an illegal payment."

The English Law Commission in its Report on Restitution (Law.Com.No.227) para. 17.20 in the absence of authority on the point believed that the standard restitutionary defences of change of position and submission or compromise would and should apply. Mason and Carter in their work at p. 787 para. 2107 take the view that a change of position defence is precluded for similar reasons as preclude a defence of estoppel. They find it difficult to see how reliance could properly be placed upon the faith of a payment prohibited by law.

It's an interesting debate arising, in the context that concerns me, in circumstances where a beneficiary of a State superannuation scheme has been overpaid by accident and the bulk of the overpayment came from consolidated revenue.

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Thanks in anticipation,

James Douglas QC

Level 18 Inns of Court
107 North Quay
Brisbane QLD 4000
Australia
Tel: +617 3236 2723
Fax: +617 3236 2730