Hookway v Racing Victoria Ltd
[2005] VSCA 310(Judgment by: Harper AJA)
Hookway
vRacing Victoria Ltd
Judges:
Warren CJ
Ormiston JA
Harper AJA
Subject References:
Mistake of law
Prize money paid by racing clubs in mistaken belief that there was no further right of appeal against stewards' findings
Placings later reversed by Racing Appeals Board
Right to recover payment
Whether payment 'voluntary'
Whether defence of 'honest receipt'
Whether 'misprediction'
RACING
Effect of Rules of Racing
Right under AR 173 to seek return of moneys paid by racing clubs
Legislative References:
Income Tax Assessment Act 1936 - s 261
Limitation of Actions Act 1958 - The Act
Judgment date: 20 December 2005
Judgment by:
Harper AJA
[88] I have had the very great benefit of reading, in draft, the reasons for judgment of Ormiston JA I wish only to touch upon his conclusion that, if the matter be properly analysed, there seems ultimately little complexity in the case. I am in what follows indebted to him for that analysis.
[89] Some truths, as Jane Austen observed in the words with which she opened her novel "Pride and Prejudice", are universally acknowledged. One of them is that (very sensibly) racing clubs do not, following a race, willingly present the first prize to the connections of the horse that not only ran second past the post, but whose position in second place will forever be confirmed in the records of racing.
[90] Such a presentation was made in this case. The facts are fully set out in the judgment of Ormiston JA. For ease of reference only, I record some of them here.
[91] On 13 October 2001, the second respondent (the Victoria Amateur Turf Club) conducted a race meeting at the Caulfield Racecourse. One of the races on the program was the Schillaci Stakes. First past the post, and the ultimate winner, was a horse called Mistegic. The appellant's horse, Windigo, came second. Later that day, a sample was taken of the winner's urine. It appeared to show a positive result. Stewards acting for the second respondent instituted an inquiry. The end of the year came, however, before the result of that inquiry was announced.
[92] By this time, the period normally taken for the distribution of prize-money had long since expired. Because the result of the stewards' inquiry was not known, the first respondent -- upon whom fell the responsibility of effecting payment of the prize-money -- withheld the final distribution. A provisional distribution was, however, made in the meantime. The appellant was accordingly paid the amount which represented the second prize.
[93] As a result of the stewards' inquiry, Mistegic was on 4 January 2002 disqualified. The placings for the race were revised. Windigo was proclaimed the winner. It turned out to be a Pyrrhic victory -- or, more accurately, an ephemeral one.
[94] On 7 January, in reliance upon the findings of the stewards, the Stakes Payment Officer of the first respondent (Mr Victor Chung) distributed the balance of the prize money in accordance with the revised placings as determined by the stewards. The distribution included an additional payment to the appellant of $76,500.
[95] There followed a step which, as the learned County Court judge who presided at the trial of these proceedings concluded, took the first respondent, or at least Mr Chung, by surprise. On 11 January 2002, the connections of Mistegic appealed from the stewards to the Racing Appeals Board. As the judge found, Mr Chung -- who died before the trial -- was ignorant of the (newly created) right of appeal.
[96] In the event, the appeal was successful. On 21 March 2002, the Board determined that Mistegic was the winner of the Schillaci Stakes, with Windigo being relegated accordingly to its original position as runner-up. In these circumstances, the respondents on 15 April paid an amount representing the first prize of $110,390 to the connections of Mistegic. There was, before us, no suggestion that that payment is open to impeachment. The respondents however now submit that they are, or one or other of them is, entitled to a refund from the appellant of the sum of $76,500. The appellant submits that he is entitled to keep it.
[97] The trial of the proceeding came on before His Honour Judge Fagan in the County Court at Melbourne on 17 February 2004. On 27 February that year the judge found against the appellant and in favour of the first respondent. Judgment was entered for the full amount of the claim, together with interest. In his carefully prepared reasons, his Honour held -- and there has been no challenge on this point -- that neither Mr Chung nor any member of his staff was aware of a right of appeal from the stewards to the Board. This mistake led to the belief that there could be no appeal against the stewards' finding, and thus to Mr Chung's decision to proceed with the distribution of the balance of the prize money.
[98] In these circumstances there can be no doubt that the sum which the respondents now seek to recover was indeed paid to the appellant by mistake; and I respectfully agree with Ormiston JA that there was therefore a relevant mistake of law involved in the payment such that it could not properly be characterised as voluntary in the sense understood in the law relating to claims in restitution. It would not have been made at all had the first respondent known, at the time of payment, that Windigo had after all been irrevocably relegated to second place. Likewise, the appellant could not then have compelled the respondents to pay to him the sum in fact received. Having received it, however, he submits that he should not be required to make restitution.
[99] In David Securities Pty Ltd v Commonwealth Bank of Australia [135] the majority of the members of the High Court who heard the case (Mason CJ and Deane, Toohey, Gaudron and McHugh JJ) accepted the principle that payments made under a mistake, whether of law or fact, should be prima facie recoverable. It follows that, once the payer has proved mistake, the recipient bears the onus of showing why an order for restitution should not be made. This involves "proving why an order for restitution would be unjust". [136] The majority accordingly rejected the proposition that a payer "should be required to prove that the retention of the moneys by the recipient would be unjust in all the circumstances before recovery should be granted". [137]
[100] Once the learned trial judge had found that the first respondent paid out $76,500 in ignorance of the right of appeal from the stewards, it fell to the appellant to satisfy the court, if he could, that repayment should not be required because to do so would be unjust. In undertaking this task, he is "entitled to raise by way of answer any matter or circumstance which shows that his ... receipt (or retention) of the payment is not unjust." [138]
[101] The appellant relies on the defence of honest receipt. The principle was formulated by Brennan J in David Securities in the following words [139] :
It is a defence to a claim for restitution of money paid or property transferred under a mistake of law that the defendant honestly believed, when he learnt of the payment or transfer, that he was entitled to receive and retain the money or property.
[102] This was not a principle adopted by the majority. They did not need to, because, at least as they saw it, honest belief was not among the defences taken in that case. The two defences upon which the respondent in that case relied were described in the majority judgment [140] as, first, that the payments in question were made for good consideration and, secondly, that in reliance upon receipt of those payments the respondent, in good faith, changed its position to its detriment. The majority was not concerned to ask whether mere honest receipt, or even honest receipt coupled with a change of position, was a good defence, since no evidence, at least none on the latter point, was adduced in the courts below. The majority nevertheless noted that in no jurisdiction can a defendant resort to the defence of change of position where he or she has simply spent the money received on ordinary living expenses. [141]
[103] In my opinion, neither principle nor authority point to honest receipt as being a defence open to the appellant in this case. Even accepting that his receipt was honest, this Court is, as I understand the position, bound to proceed on the basis that it is for him to show why an order for restitution should not be made. He has failed to discharge that onus. I respectfully agree with Ormiston JA that the additional payment was a windfall to which the appellant had no entitlement.
[104] I also agree with Ormiston JA, for the reasons he gives, that properly construed, the Rules of Racing afford the appellant no defence to the claim. I agree that the appeal should be dismissed.