Restitution of Unlawfully Levied Taxes: Survey and Comparative Analysis of Developments in Canada, Australia, and England

Abstract

The common law traditionally has not been sympathetic to taxpayers wishing to recover unlawfully levied taxes from public authorities. Because a mistake of law did not, as a general rule and in itself, give rise to a right to restitution, and because courts refused to find that the mere fact that monies had been demanded by public authorities amounted to compulsion, taxpayers were often left without a remedy. Fortunately, important judicial developments have occurred in Canada, Australia, and England in the past decade. The demise of the infamous mistake of law rule and the recognition in England of the Woolwich principle have facilitated the recovery of unlawfully levied taxes. Yet, these developments have revealed profound differences as to which defences should be made available to public authorities. The "fiscal chaos" and "passing on" defences proposed by three Justices of the Supreme Court of Canada in the Air Canada case have not been well received in Australia and England. This article traces the evolution of the traditional common law approach to the problem of unlawfully levied taxes, offers a survey of the judicial developments in this area since the past decade and proposes a comparative analysis of the approaches adopted in each jurisdiction.