Restitution from Government Officials
Ronald D. Collins*
This paper considers the legal position of the
private citizen who pays to a government of-
ficial a sum which subsequently turns out to
have been invalidly demanded. The author
examines the existing common law authori-
ties and finds three conflicting and confusing
theories used to deny or justify recovery. As
neither provides a clear, rational and just ba-
sis upon which to allow restitution, the au-
thor propounds a new theory. A special
standard, the author argues, should apply to
statutory authorities as the duties owed by
government officials are public in character
and derive from basic principles of public
law. The special standard theory thus places
the onus on the public official to demonstrate
the invalid payment was made voluntarily.
This would facilitate the plaintiff’s claim for
recovery and, in the author’s opinion, pro-
vides a more just solution to the problem of
when recovery should be allowed.
Cet article traite de la situation juridique du
citoyen qui fait un paiement A un officier pu-
blic en vertu d’une demande qui s’avre par
la suite 8tre sans fondement legal. Un examen
de la jurisprudence en common law pousse
l’auteur A conclure qu’il existe trois theories
vague et contradictoire portant sur le droit
du citoyen de rrclamer l’indfi. Considrrant
qu’aucune des theories d6jA formulres ne fait
justice au citoyen dans son effort de recouvrer
de I’Etat, l’auteur en propose une nouvelle.
Les officiers publics se doivent de suivre cer-
taines normes de conduites particulires
puisque leurs fonctions tirent leur origine du
droit public. 11 faudrait selon l’auteur admi-
nistrer une pr6somption de recouvrement en
plagant sur l’officier public le fardeau de prouver
que le paiement fut volontaire.
*B.A. (Toronto); LL.B. (Queen’s); B.C.L. (Oxon.); member of the Bar of Ontario.
McGill Law Journal 1984
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Synopsis
Introduction
I. Existing Theories: Contradiction and Uncertainty
A. The Ultra Vires Theory
B. Mistake
C. Duress on a Private Law Standard
II. A Better Theory: A Special Standard for Government Officials
Conclusion
Introduction
If you asked the man on the street whether he ought to be able to
recover money which he paid to the government pursuant to a statute or
demand which turned out to be unauthorized or illegal, his answer would
be prompt and confident: of course he should recover. Unfortunately the
law of restitution has not yet developed a coherent set of principles for this
situation. Our man on the street would be surprised to learn that the law
is complicated and confused in this area and that his chances of recovery
are poor. It is the purpose of this paper to suggest a way in which the law
can be brought into step with the common perception of the just solution
to this problem.
Let us first define the problem as the situation where a government
official receives money from an individual pursuant to a statute or demand
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
409
which turns out to be unauthorized. Let us call this problem the colore officii
situation, a term which translates simply enough as “by colour of office”.
Although this Latin label is potentially misleading,’ and is objected to by
some meticulous theorists, 2 it is a convenient shorthand for the purpose of
analysis.
One finds in the cases and doctrinal commentary several different the-
ories purporting to explain restitution from public authorities. The more
traditional theories are three in number, and suggest that recovery is based
on either: the ultra vires nature of the official’s demand; the mistake in the
citizen’s mind when he paid; or duress, on a private law standard, being
exerted by the official on the citizen.
Despite several recent Supreme Court of Canada decisions in the area,
there is as yet no clear authority as to which theory of recovery is correct.
Frequently, the fact situation before the court will confuse the issue. For
instance, the plaintiff might have made the payment under a mistake of
fact, in urgent circumstances, and in response to an official demand. In such
a situation he could be entitled to restitution on two or three independent
grounds. The facts may be unclear as to whether any of these independent
grounds are established, and the lawyer argues in the alternative. Unfor-
tunately, the judgments in such cases often do not make it clear which
ground is relied upon, nor do they sufficiently distinguish between the ele-
ments of the different grounds. 3 The resulting confusion in the case law has
made it difficult to predict when recovery will be allowed. The costs of this
uncertainty are high: decisions are inconsistent; plaintiffs’ rights are seldom
known clearly; and judgments can often be criticized as unjust.
In an effort to resolve these problems, this paper presents a new theory
which may be used as a simple, rational basis for recovery from public
officials. The theory is based on the special public character of statutory
‘It could be misleading because lawyers are often confused or side-tracked by the use of
Latin. The phrase has venerable history as describing extortion by public officials (see infra,
notes 97-8 and accompanying text), but it was also sometimes used as a name for a technical
defence. In Irving v. Wilson (1791) 4 T.R. 485, (1791) 100 E.R. 1132 (K.B.), colore officii was
pleaded as a defence by a public official who argued that he should not be liable because he
had acted in execution of a public office.
2Birks, Restitution from Public Authorities [1980] C.L.P. 191, 199.
3Restitutionary theory is still in a formative stage. The law has developed piecemeal in
specific areas where plaintiffs have managed to convince the courts that injustice would result
if recovery were not allowed. Only relatively recently have legal thinkers sought to combine
these areas. Grounds for recovery which developed independently have been recognized as
differing aspects of the subject of restitution, united by the principle of unjust enrichment.
Nevertheless, the elements which must be established in order to permit recovery vary in
different categories of restitution, and it is important to keep these distinctions in mind in any
restitutionary analysis.
McGILL LAW JOURNAL
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authorities and the unique nature of their relationship with the citizens they
represent. In essence this theory is that wherever a colore officii situation
arises the legal burden of proof is placed upon the public official, so that
there is a presumption of recovery; the presumption is rebutted if the de-
fendant government can establish in the particular instance that the citizen’s
payment was voluntary. This “special standard” theory can be analysed as
either a special sub-category of the duress branch of restitution, or as a
unique category unto itself
In one sense the confusion in the case law on restitution from govern-
ment officials could be regarded as fortunate in that it requires us to review
the rationale behind recovery, and this allows us to choose a theory which
best fits our conception of justice. The choice will depend to some extent
on our policy positions regarding when we would like to see restitution in
colore officii situations. We must consider the basic principles of unjust
enrichment and the rule of law, and balance the roles of state and citizen
in the twentieth-century world.
I. Existing Theories: Contradiction and Uncertainty
A. The Ultra Vires Theory
The view that restitution in colore officii situations is based on the ultra
vires nature of the public official’s demand is propounded by Birks in his
excellent article, Restitution From Public Authorities.4 Birks uses as a cor-
nerstone for his argument the Bill of Rights, 1688,5 which enshrines the
principle that there shall be no taxation without the consent of Parliament.
This constitutional principle 6 allows one to distinguish the unauthorized
demands of private individuals from those of public officials. A payment
in response to a private demand must be made under mistake or duress in
order to be recoverable, but a payment in response to a public official’s
demand should always be recoverable where the demand was ultra vires
and the payment unconstitutional. 7 Birks is thus suggesting that all payments
4Supra, note 2.
$I Wm. 3 & M. Sess. 2, c. 2. See supra, note 2, 203-4.
6Note that the principle of no taxation without the consent of Parliament is part of the
Canadian Constitution as well-it is an English constitutional principle formed prior to 1867
and so included in the preamble to the B.N.A. Act, 1867 (now the Constitution Act, 1867, 30
& 31 Vict., c. 3. (U.K.). It is possible that the Charter of Rights in our new Constitution
reinforces this position. Under section 7 everyone has the right not to be deprived of security
of the person except in accordance with the principles of fundamental justice, and section 15
provides that everyone has the right to equal protection of the law. Arguably an unauthorized
tax violates both of these rights.
7Supra, note 2, 203.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
411
made in response to unauthorized demands by public officials be recover-
able, whether or not there is any mistake or threat backing up the demand,
simply because the demand was ultra vires. He admits that the cases have
not yet gone this far, but argues that they should. 8 Birks would limit this
general rule only by making it inapplicable to government bodies acting in
a private capacity and by preventing recovery where the official was led into
error by the individual who later complained. 9
The ultra vires theory finds strong support in the case law in the converse
situation where a government official makes a payment which was unau-
thorized and therefore ultra vires. In such a situation the government can
recover any ultra vires payment that can be traced.’0
This right, which has never been questioned in any common law jurisdiction,
is so extensive that the recipient cannot plead that he changed his position in
reliance on any representation that he was entitled to the money. For a “party
cannot be assumed by the doctrine ofestoppel to have lawfully done that which
the law says he shall not do.””I
Since a government which makes an ultra vires payment can always recover,
it would seem logical and just that the reverse also be true, that when the
government makes an ultra vires demand it should always repay.
Despite the attractiveness of the ultra vires theory, it has received on
the whole relatively little support in the case law, and has never been the
express basis on which recovery was allowed. A number of cases, mostly
from the last century, concerned themselves almost exclusively with the
validity of the tax in question, and awarded recovery immediately upon the
conclusion that the tax was invalid.1 2 Such cases suggest that all improper
taxes must be repaid, and therefore support the ultra vires theory.’ 3 Further
8Ibid., 205-6.
9Ibid., 205.
‘OR. v. Toronto Terminals Railway Co. [1948] Ex. C.R. 563.
“See R. Goff & G. Jones, The Law of Restitution, 2nd ed. (1978) 103, where the authors
quote Newton J. in The Commonwealth ofAustralia v. Burns [1971] V.R. 825, 830 (S.C.). In
this case the defendant raised an estoppel defence which would have been successful against
a private plaintiff but was rejected by Newton J. as inapplicable to an ultra vires payment by
the government.
‘2See, for example, Neivdigatev. Davy(1693) 1 Ld. Raym. 742, 91 E.R. 1397 (K.B.); Campbell
v. Hall (1774) 1 Cowp. 204, 98 E.R. 1045 (K.B.); Hooper v. Exeter Corp. (1887) 56 L.J.Q.B.
457; Queens of the River Steamship Co. Ltd v. The Conservators of the River Thames (1899)
15 T.L.R. 474 (Q.B.); South of Scotland Electricity Board v. British Oxygen [1959] 1 W.L.R.
587, [1959] 2 All E.R. 225 (H.L.).
131t should be noted that these cases provide as much implied support for the ultra vires
theory as they do for the special standard theory, which is presented more fully infra, Part II.
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support can be found in two English cases which strongly repeat the prin-
ciples contained in the 1688 Bill ofRights, but their statements on the subject
of recovery are obiter.14
A number of other cases, while finding the particular tax or payment
to the government to be unauthorized, nevertheless refused recovery.’ 5 The
leading decision is that of the Supreme Court of Canada in Nepean Hydro
v. Ontario Hydro.16 In this case the defendant had a complicated system
for computing the cost of hydro to municipalities. The system resulted in
newer municipalities like the plaintiff paying a higher rate than that paid
by older municipalities. The plaintiff sued for a declaration that the sur-
charge was invalid and for restitution of the surcharges paid in the past,
some $921,463. The Supreme Court of Canada ruled that the surcharge was
invalid but refused restitution. Nepean Hydro was not on its facts a colore
officii case, because the plaintiff was another branch of government, not a
private individual. However, if the ultra vires nature of an unauthorized
government demand had been the true basis for recovery in colore officii
cases, then restitution should have been allowed in this case, since here too
the demand was ultra vires. The Supreme Court of Canada in Nepean Hydro
refused restitution of an ultra vires payment. Thus, although the case did
not deal with a colore officii situation between an individual and govern-
ment, its result is still inconsistent with the ultra vires theory. In practical
terms, then, Nepean Hydro casts great doubt upon ultra vires as a tenable
theory for explaining restitution in colore officii situations in Canada.
In addition to this lack of support in the case law, there is a conceptual
problem with the ultra vires theory. The ultra vires theory would make
restitution in a colore officii situation turn entirely on the nature of the
defendant’s demand, without regard to the voluntariness of the plaintiff’s
payment. The problem with this approach is that it would allow recovery
of a payment which had been made as a voluntary settlement. The general
restitutionary rule is that where the plaintiff voluntarily submits to the de-
fendant’s honest claim, with the intention of waiving any further rights, he
14A.G. v. Wilts United Dairies, Ltd (1921) 37 T.L.R. 884 (C.A.); Brocklebank, Ltd v. The
King [1925] 1 KB. 52, (1925) 132 L.T. 166 (C.A.). Again, these cases support the special standard
theory as well as the ultra vires theory.
15See, for example, Slater v. Burnley Corp. (1888) 59 L.T 636, (1888) 36 W.R. 831 (Q.B.);
William Whitely Ltd v. The King (1909) 101 L.T. 741, [1908-10] All E.R. Rep. 639 (K.B.);
Tivyford v. Manchester Corp. [1946] 1 Ch. 236, [1946] 1 All E.R. 621. These cases are all
discussed by Birks, and can be rejected as poor and inconsistent decisions. See infra, note 58,
and text following. However, Hydro Electric Commission ofthe Township ofNepean v. Ontario
Hydro [1982] 1 S.C.R. 347, (1982) 132 D.L.R. (3d) 193 [hereinafter cited to S.C.R. as Nepean
Hydro] cannot be rejected in this manner.
161bid.
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RESTITUTION FROM GOVERNMENT OFFICIALS
413
cannot later come back and recover his payment. 17 This rule is based upon
the general policy that voluntary compromises should not be reopened. The
ultra vires theory, in ignoring the plaintiff’s voluntariness, would violate
this rule in colore officii situations. Thus the plaintiff who knew the gov-
ernment was making an invalid demand and was under no practical pressure
but who perhaps thought the payment was “for a good cause” could later
change his mind and obtain restitution.18 Such a result, while in strict com-
pliance with the 1688 Bill of Rights, is contrary to the general policies and
rules of restitution.
B. Mistake
The second theoretical explanation offered for allowing restitution in
a colore officii situation is that the plaintiff acted involuntarily since he was
mistaken as to the validity of the official’s demand. Crawford, in his article
Restitution: Mistake of Law and Practical Compulsion,’9 takes the position
that the element of mistake is the primary reason for allowing restitution
in these cases. 20 The theory here is that the citizen’s mistake as to some
fact relating to his obligation to pay is what entitles him to recovery, with
the normal rules for restitution for mistake applying.
The first difficulty with this theory is that, at least as the law now
stands, 21 there can be no restitution for a mistake of law.22 In most colore
officii situations, if the citizen believes the official to be making a valid
demand, he does so because of a mistaken view of the law (which is probably
shared by the official) and not because of a mistake of fact. An example of
the problems mistake analysis leads to is found in George (Porky) Jacobs
Enterprises Ltd v. The City of Regina.23 In that case the plaintiff had paid
17See generally Goff & Jones, supra, note 11, 30 et seq.
‘sFor an example of how this could arise, see the passage from Steele v. Williams (1853) 8
Ex. 625, (1853) 155 E.R. 1502, quoted in the text below at note 81.
19(1967) 17 U.T.L.J. 344.
20See ibid., 352, where Crawford says that “[lI]ogically, although these cases contain elements
of both compulsion and mistake, it is really only the mistake which is material”.
The reader is also referred to an excellent article by McCamus, Restitutionary Recovery of
Moneys Paid to a Public Authority Under a Mistake of Law: Ignorantia Juris in the Supreme
Court of Canada (1983) 17 U.B.C. L. Rev. 233. McCamus’ article is principally concerned
with advocating the abolition of the rule preventing recovery of moneys paid under a mistake
of law, and is essentially a critique of Nepean Hydro. Hence, Dean McCamus discusses colore
officii restitution in the framework of mistake. However, he is more concerned with overruling
Bilbie v. Lumley (1802) 2 East 469, (1802) 102 E.R. 448 (K.B.) than with developing a general
colore officii doctrine.
21Although this law might change after Nepean Hydro, supra, note 15.
22Bilbie v. Lumley, supra, note 20.
23[1964] S.C.R. 326, (1964) 47 W.W.R. 305, (1964) 44 D.L.R. (2d) 179 [hereinafter cited to
S.C.R. as George (Porky) Jacobs].
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under a mistaken belief that the provisions of an amending by-law required
per diem fees as had the previous by-law. In essence, the plaintiff paid in
ignorance of the content of the current law, which seems to be a bald mistake
of law. However, the Supreme Court of Canada, per Hall J., was reduced
to describing this as a mistake of fact in order to allow recovery:
The mutual mistake of fact here was as to the existence of one or more by-
laws calling for a licence fee on a per day basis. Both the licence inspector and
Jacobs believed that such by-laws existed in fact but they did not actually exist
at all so the mistake is one as to the fact of the existence of the by-laws and
not one of interpretation of by-laws that in any way purported to stipulate for
a per day fee.24
It would be preferable to base the law on a theory which did not require
such tortured logic.
In Eadie v. Township of Brantford,25 the Supreme Court of Canada
attempted to avoid such difficulties by treating colore officii situations as
an exception to the general rule that there can be no restitution for a mistake
of law. The decision in Eadie is worth reviewing in detail because it has
done so much to confuse the law in this area. The plaintiff owned land in
the defendant Township which he wanted to subdivide. Upon applying for
severance he was informed that he would have to pay a large fee and to
convey a “road-widening” strip to the Township. He refused and his ap-
plication was rejected. Over a year later, the plaintiff became ill and was
hospitalized for a considerable period of time. Concerned for his wife, he
concluded that he must sell his property, and after some negotiations be-
tween his solicitor and the Township he agreed to their severance fee in
order to be able to close the sale. An independent case later proved the by-
law under which the Township demanded the severance fee to be invalid,
and so the plaintiff brought this action to recover his money. By a three-
to-two margin the Supreme Court of Canada allowed restitution. Spence J.
for the majority accepted the municipality’s position that the case must be
analysed as “an action for the repayment of moneys paid under a mistake
of law”. 26 By adopting this as his starting point, Spence J. was forced to
consider all the possible grounds of recovery as if they were exceptions to
24Ibid., 329-30.
25[1967] S.C.R. 573, (1967) 63 D.L.R. (2d) 561 [hereinafter cited to S.C.R. as Eadie].
26Ibid., 580.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
415
the general rule that money paid under a mistake of law cannot be re-
covered. 27 After erroneously treating the law of duress as if it were an ex-
ception to the mistake of law rule,28 Spence J. went on to create a new
exception to the rule for colore officii situations, based on a famous passage
from a judgment of Lord Denning in Kiriri Cotton Co. Ltd v. Dewani.29
Unfortunately, Kiriri had nothing to do with colore officii, and the use of
this passage out of context created a great deal of confusion.
Kiriri dealt with the recovery of money paid under an illegal contract
between two private individuals. The ordinary rules of illegal contracts are
that a court will not enforce payments yet to be made under them, nor will
it allow recovery of payments that have already been made under them. A
party to an illegal transaction cannot rely on the illegality of his own bargain
in order to obtain recovery. This is sometimes stated as a Latin maxim in
pari delicto potior est conditio defendentis, which translates roughly as “where
two parties are equally involved in an illegality, the position of the defendant
is stronger”. However, there is an exception to this general rule where the
parties are for some reason not equally involved in the illegality, or “not
in pari delicto”. It was this exception that was at issue in Kiriri. In that case
the statute which made the contract illegal was one designed to protect
tenants from excessive rents. The plaintiff tenant had paid rent under a lease
which called for an amount of rent illegal under the statute, and sued to
recover it. The Privy Council held that the parties were “not in pari delicto”
and allowed recovery. The statute was to protect people like the plaintiff
from people like the defendant, and so the “primary responsibility” for the
illegality lay on the defendant landlord. 30
The defendant in Kiriri had argued that the rent was paid under a
mutual mistake of law and so there could be no recovery. Lord Denning’s
famous passage was a response to this argument. It is a very broad statement
of the principle that the rule preventing recovery for a payment under a
he sought to have the general rule applied.
27The municipality’s counsel was no doubt highly persuasive in promoting this analysis as
28Spence J. based his judgment in Eadie on the “exception” to the mistake of law rule found
in Maskell v. Homer [1915] 3 K.B. 106, (1915) 84 L.J.K.B. 1752 (C.A.) [hereinafter cited to
K.B. as Maskell], citing the famous “urgent and pressing necessity” passage. See Eadie, supra,
note 26, 581. It is difficult to understand how such a learned judge could have taken this step.
Immediately before the passage cited, Lord Reading C.J. had expressly found “that the plaintiff
did not pay under a mistake” (118). Lord Reading made it clear that duress was an alternate
ground for recovery that had nothing to do with mistake. This independence of the rules for
restitution in duress situations is emphasized by the fact that a plaintiff will often recover when
he knew a demand was invalid, protested, but paid under duress. Nevertheless, Spence J.’s
erroneous analysis has been incautiously followed many times since. Even McCamus, supra,
note 20, 255, refers to duress as an exception to the mistake of law rule.
29[1960] A.C. 192, [1960] 1 All E.R. 177 (P.C.).
30See generally Goff & Jones, supra, note 11, 329 et seq.
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mistake of law applies only where the mistake of law is all that the plaintiff
relies upon. If there is “something more” to the plaintiff’s case, then the
rule does not prevent recovery. In other words, if the plaintiff has paid
under mistake of fact or duress he is entitled to recover regardless of whether
or not he was also operating under a mistake of law. In Kiriri the Court
allowed recovery because the payment was illegal under a statute designed
to protect the plaintiff. The parties were “not in pari delicto”. In the passage
quoted, Lord Denning was simply pointing out that in this situation the
plaintiff’s mistake of law did not prevent recovery. He was not formulating
an exception to the mistake of law rule. He was stating that it did not apply
because the plaintiff’s case was based on other grounds, that is, on “some-
thing more”.
This passage in Kiriri was used entirely out of context in Eadie. Spence
J. quoted Lord Denning as if he was stating an exception to the mistake of
law rule, and then applied the passage as if this exception was the guiding
principle in colore officii cases. 31 He stated that the duty of a public clerk
toward taxpayers makes the clerk “not in pari delicto” to the taxpayer when
he demands money under an illegal by-law. 32 This use of the phrase “not
in pari delicto” is completely inappropriate. It is true that in a colore officii
situation the parties are not equally involved in the illegality of the demand
based on the invalid law. However, as the phrase in pari delicto carries
doctrinal significance in a different area of restitution, use of it in colore
officii situations is certain to create confusion.
After Eadie, there were a number of trial and appeal level decisions in
which great difficulty was experienced in applying this “not in pari delicto”
exception to the mistake of law rule in colore officii situations. 33 A typical
31The principle stated in this passage does have some relevance to colore officii cases. If the
plaintiff paid under a mistake of law, the rule in Bilbie v. Lumley, supra, note 20, does not
prevent recovery. Indeed, as was said before, he can recover whether or not he believes the
demand legal. The plaintiff recovers because of “something more”. However, such relevance
does not make this passage a guiding principle.
32Eadie, supra, note 25, 583.
33See, for example, G. Gordon Foster Developments Ltd v. Corporation of the Township of
Langley (1977) 5 B.C.L.R. 42, (1977) 810 D.L.R. (3d) 216 (S.C.), (1979) 14 B.C.L.R. 29, (1979)
102 D.L.R. (3d) 730 (C.A.) (restitution of invalid subdivision approval fees denied); A.J. Sev.
ersen Inc. v. Corporation of Qualicum Beach [1980] 3 W.W.R. 375 (B.C.S.C.), (1982) 135 D.L.R.
(3d) 122 (B.C.C.A.) (restitution of invalid water improvement fees refused); Greenwin Devel-
opments v. Corporation ofthe City of Toronto (1980) 10 M.EL.R. 174 (Ont. Div. Ct) (restitution
of an invalid sewer charge refused); Ronell Developments Ltd v. Duncan (1981) 25 B,C.L.R.
123 (Cty Ct) (restitution of invalid subdivision charge refused); Conin Construction Co. Ltd
v. Borough of Scarborough (1981) 32 O.R. (2d) 500, (1981) 122 D.L.R. (3d) 291(H.C.) (resti-
tution of an invalid sewer charge allowed); Re Hay and City of Burlington (1981) 38 O.R. (2d)
476 (1981) 131 D.L.R. (3d) 600 (C.A.) (restitution of an invalid re-zoning charge allowed);
JR.S. Holdings Ltd v. Corporation ofthe District of Maple Ridge (1981) 27 B.C.L.R. 36, (198 1)
122 D.L.R. (3d) 398 (S.C.) (some invalid subdivision charges repaid).
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
417
example is Wilson v. District of Surrey.34 In this case, the defendant mu-
nicipality had exacted “service costs” from the plaintiff developer as a pre-
requisite to approval of a subdivision plan. Hinds J. held that the defendant
did not have legal authority to require most of these charges. After rejecting
a compulsion argument, Hinds J. went on to discuss the “not in pari delicto”
exception. He stated that the plaintiff paid under a genuine mistake of law
and that “of the two parties here, the defendant must bear the primary
responsibility for the occurrence of the mistake of law”. 35 The defendant
municipal officials ought to have known that the demand for these payments
was not supported by legislative authority. Hinds J. got his “primary re-
sponsibility” language directly from Lord Denning’s passage in Kiriri (which
he cited), and used these as the key words for invoking this new “not in
pari delicto” doctrine based on Eadie. He continued by giving effect to
another disturbing twist of the law which has developed since Eadie, citing
the Ontario Court of Appeal in Nepean Hydro. Once the determination is
made that the defendant received an unauthorized fee paid under a mistake
of law for which the defendant was “primarily responsible” so that the
parties are “not in pari delicto”, restitution does not automatically follow.
The court must proceed to “balance the equities” between the parties:
It is therefore necesary to consider the surrounding circumstances in order to
determine whether the defendant is obliged by the ties of natural justice and
equity to refund the moneys of [the plaintiff]) 6
Hinds J. proceeded to perform just such a balancing. He considered how
the “service costs” exacted by the defendant municipality were to be applied,
and decided whether “in equity” the plaintiff developer ought to contribute
toward these municipal services. He ended up allowing recovery of some
of the charges, but not of others. Such an approach can at best be described
as “palm tree justice”. It is certainly a far cry from a predictable rule of
law.37
34[1981] 3 W.W.R. 266 (B.C.S.C.).
35Ibid., 281.
36Ibid.
37Many of the cases cited above, supra, note 33, take a similar approach. Most of these deal
with developers paying subdivision charges which the local municipality did not have the
authority to demand. In J.R.S. Holdings, for example, after balancing the equities and “finding
that the parties were ‘not in pari delicto”‘, Berger J. ordered, at page 49, some of the invalid
subdivision charges to be repaid and others not, depending on whether he thought it “fair”
that the plaintiff contribute to them. This recurrent fact situation has contributed in an un-
fortunate way to the development of the law. The courts are reluctant to allow recovery of
moneys which they feel ought to be paid. It is generally considered that the developer who
profits from a subdivision ought to contribute toward the extra burden for services which it
places on the municipality. However, it is submitted that it is a serious error to achieve this
result by the “balancing of equities” approach which has emerged since Eadie, supra, note 25.
It is not consistent with the rule of law that a government body should obtain money illegally
and then be able to retain the money because the court in hindsight determines it fair that the
McGILL LAW JOURNAL
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The Supreme Court of Canada decision in Nepean Hydro has done
much to rectify the confusion created by Eadie. Estey J. for the majority
made a careful and excellent analysis of the Kiriri decision and what it really
stands for. He made it clear that Kiriri is a case dealing with the recovery
of moneys paid under an illegal contract, and that it could not be applied
to the facts of Nepean Hydro:
The in pari delicto test and its terminology seem most inappropriate and utterly
unconnected to the realities of the transaction. 38
He dismissed the entire mistake analysis of Eadie by saying:
In my view, the presence of mistake of law in the parties to the transaction
was superfluous as the entitlement to recovery arose on the finding of payment
under practical compulsion. 39
This clear rejection by Estey J. and the numerous conceptual difficulties
described above combine to make untenable the theory that restitution in
colore officii situations is based on a mistake of law, that is, as an exception
to the general mistake of law rule.
It has been suggested that the solution to this problem is to overrule
Bilbie v. Lumley and allow restitution for a mistake of law.40 The rule
preventing recovery of moneys paid under a mistake of law has been sub-
jected to intense judicial and academic criticism, and is long overdue for
abolition. While I support such a reform, it is my submission that changing
the law in this way will not provide an adequate theory for restitution in
colore officii cases. It is true that once the law is changed, mistake of law
will be an alternative ground for relief in many colore officii fact situations.
However, this new doctrine would be incapable of explaining why there had
been recovery in colore officii situations prior to the change. Most colore
payment be made. Applying a “change of position”, estoppel, or other equitable defence is
entirely appropriate, for restitution is a claim in equity. But to deny recovery because the judge
feels it fair – usually for unexpressed reasons –
that the plaintiff make certain contributions,
is to make the judge’s sense of commercial fairness the retroactive validator of an illegal act.
It would be better to allow restitution where the grounds can be established and then to provide
for future payments by appropriate changes in the authorizing laws.
3’Nepean Hydro, supra, note 15, 394. See also 392-3, 399 and 407.
391bid., 409-10. It would seem that the Kiriri argument has been successfully buried. In
Seversen, supra, note 33, 125, the only decision since Nepean Hydro, supra, note 15, to raise
the point, Hutcheon J.A., for the B.C. Court of Appeal, said: “It follows from Nepean that the
principle in the Kiriri case relied upon so heavily by the respondent has no application.”
40Supra, note 20. See also the persuasive dissenting opinion of Dickson J. in Nepean Hydro,
supra, note 15.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
419
officii cases do not even mention mistake.4′ If mistake of law was the pri-
mary rationale for restitution in such cases, the careful written reasons of
many earlier judgments would have to be ignored. The answer to the prob-
lem is that there is a different, more rational basis for restitution in these
cases.
There remains one final difficulty with explaining restitution in colore
officii situations in terms of mistake. In some of the leading cases42 the
plaintiff was convinced the official’s demand was invalid, protested, but
paid anyway to avoid possible harmful consequences. The plaintiff was not
operating under any mistake, legal or factual, when he made the payment.
Yet he recovers. The fact that a plaintiff can recover in cases like this reveals
that the existence of a mistake is irrelevant to the reason for restitution. It
is submitted then that mistake analysis cannot provide an adequate theory
of colore officii restitution.
C. Duress on a Private Law Standard
A third theory for recovery in colore officii situations is based on duress
on a private law standard being exerted by the defendant on the plaintiff.
Under this theory there are no special colore officii rules; the problem is
treated simply as another example of duress. If a public official uses wrongful
pressure on a citizen to extract an unauthorized payment, then restitution
will be allowed. The Court will look to the wrongfulness of the pressure and
to the level of compulsion in determining recovery, and will do so according
to the same standards as in a case between two citizens. By this theory no
distinction is made between a duress case like Maskell v. Homer43 and a
colore officii case like Steele v. Williams.44
The first problem with this theory is that it is very difficult to apply
the private law standard of compulsion in cases where the demand is made
by a government official. To begin with, there is no single private law stan-
dard. The law has recognized a number of different types of wrongful pres-
sure which will entitle a party to restitution. These include physical threats
recent line of Canadian cases based on George (Porky) Jacobs, supra, note 23, and
-1The
Eadie, supra, note 25, are unique. Few of the old cases, English or Australian, make any mention
of mistake as a possible ground for recovery.
42See Mason v. New South Wales (1958) 102 C.L.R. 108 (Aust. H.C.). This is the leading
Australian authority on colore ofiicii and probably the best modern judicial analysis of the
subject. See also St. John v. Fraser-Brace Overseas Corp. [1958] S.C.R. 263, (1958) 13 D.L.R.
(2d) 177. Estey J. in Nepean Hydro, supra, note 15, 409, points out that “no element of mistake
was present” in that case –
but restitution was still allowed.
43Supra, note 28. The defendant in this case was acting as a private citizen when he exacted
market tolls from the plaintiff.
44Supra, note 18.
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to the person,45 threats to bring a criminal action,46 wrongful seizure of
goods, 47 various types of economic duress 48 and undue influence.49 The level
of compulsion required to justify restitution differs between these various
sub-categories of duress. For example, in cases of physical threats restitution
will be allowed whenever the threat was part of the inducement which caused
the plaintiff to benefit the defendant. The plaintiff “is entitled to relief even
though he might well have entered into the contract if [the defendant] had
uttered no threats to induce him to do so”. 5 However in cases of economic
duress the compulsion must essentially leave the plaintiff with no other
alternative; it must be sufficiently severe to amount to “a coercion of [the
plaintiff’s] will so as to vitiate his consent”. 51
Which standard should we apply to colore officii cases? The differences
in the required levels of compulsion stem from different policy considera-
tions in the various sub-categories of duress. We are more concerned to see
a man recover and more certain that he has acted involuntarily when his
life has been threatened than when his property has been threatened. Thus
we must weigh our policy considerations when determining the appropriate
level of compulsion for recovery in a colore officii situation.
The theory which we are presently considering takes the position that
there are no special policy considerations when wrongful pressure is applied
by a government official as opposed to when it is applied by a private citizen.
To take this stance it is necessary to say that there is no difference between
coercion applied by the government or by an individual, that we are not
more concerned to see recovery where a citizen has been wrongfully pres-
sured by his government than when pressured by another individual, and
that we are not more certain that the individual paid involuntarily in re-
sponse to a demand from the government than in response to any other
demand. If one accepts these propositions then it would seem appropriate
that colore officii cases be judged on a private law standard. Recovery would
depend on the seriousness of the compulsion exerted by the official; there
would be no separate colore officii sub-category of duress.
However, many would not accept the above propositions. When a gov-
ernment official demands a payment from a private individual, the demand
45Barton v. Armstrong [1976] A.C. 104, [1975] 2 All E.R. 465 (RC.).
46Kaufinan v. Gerson [1904] 1 K.B. 591, [1904-07] All E.R. Rep. 896.
4 7Astley v. Reynolds (1731) 2 Str. 915, (1731) 93 E.R. 939 (K.B.).
4 8Nixon v. Furphy (1915) 25 N.S.W.S.R. 151; The “Siboen ” [1976] 1 Lloyd’s Rep. 293; Pao
On v. Lau Yiu Long [1979] 3 W.L.R. 435, [1979] 3 All E.R. 65 (P.C.).
49Mutual Finance, Ltdv. John Weltan & Sons, Ltd [1937] 2 K.B. 389, [1937] 2 All E.R. 657.
50Supra, note 45, 119.
5’Pao On v. Lau Yiu Long, supra, note 48, 450.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
421
is qualitatively different from one made by an individual in a private ca-
pacity.52 This inherent difference in the nature of a governmental demand
suggests that the coercive effect of that demand, and therefore the possibility
of recovering moneys illegally demanded, should be tested by a different
legal standard.
A second problem is that the private law duress theory discriminates
against the impoverished or law-abiding citizen. The factors which distin-
guish a governmental demand from a private demand suggest that once it
has been established that a government official has illegally demanded and
received a payment, the citizen should recover his payment without further
enquiry into whether he paid wholly involuntarily or only partially so. If
we required further proof that the plaintiff did not want to pay the tax, such
as evidence of a protest or initial refusal to pay until sanctions were threat-
ened, then we would be left with the situation that the more law-abiding
the citizen, the less his chances of recovery. Further, given the complexity
of modem laws, only individuals with access to expensive legal advice can
determine that a given statutory demand is invalid. If an official protest or
litigation at the earliest possible opportunity was a requirement of recovery,
citizens without access to such advice would be precluded from obtaining
restitution. Such a rule offends both common sense and public policy. 53
A third conceptual problem with the private law duress theory is that
it completely ignores the ultra vires nature of the official’s demand and the
constitutional prohibition of taxation without the consent of Parliament.
Surely these factors should have some influence on a plaintiff’s right to
restitution, even if we do not accept Birks’ entire ultra vires theory. Yet the
private law duress theory rejects these factors by making recovery turn
exclusively on the presence or absence of compulsion on the same basis as
if the demand had been made by a private individual.
A fourth problem with the private law duress theory is most visible in
the formulation provided by Goff and Jones, who express the test as follows:
Where money has been paid to a public officer to obtain performance by him
of a duty which he is bound to carry out for nothing or for less than the sum
paid, such money or, where some money is due, the excess is recoverable as
money had and received.5 4
This could be called the “entitlement” theory of colore officii. By this theory
wherever a public official refuses a plaintiff something to which he is legally
entitled without the payment of an invalid fee, a sufficient level of com-
pulsion would be deemed to be established and restitution allowed. The
52See infra, notes 93-4, and accompanying text.
53See McCamus, supra, note 20, 247, for a similar criticism.
54See Goff & Jones, supra, note 11, 171.
McGILL LAW JOURNAL
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problem with this theory is pointed out by Birks. 55 Consider a statute setting
out a licensing scheme and requiring a licence fee. The citizen will be refused
a licence unless he pays the fee, and so he pays. If it later turns out that the
fee requirement in this statute was invalid, the citizen would recover his
payment under the entitlement theory because he had been refused some-
thing to which he was entitled. However, if it turns out that the entire
licensing statute was invalid, the citizen would not recover his fee under
the entitlement theory because he had never been entitled to a licence in
the first place. The result would be that the plaintiff’s “hope of restitution
diminishes as the illegality established against the agency becomes more
radical”. 56
Despite these conceptual problems, a number of cases have explicitly
applied the private law duress theory. While the private law test for duress
varies according to the type of compulsion applied, most colore officii sit-
uations involve an economic threat against the plaintiff: he will have to pay
an additional penalty, he will be deprived of a vital service, he will be
prevented from doing business, or his goods will be seized or detained if
he does not pay the unauthorized fee. The classic statement of the private
law standard for recovery in these situations is found in the following passage
from Lord Reading C.J. in Maskell v. Horner:.
If a person pays money which he is not bound to pay, under the compulsion
of urgent and pressing necessity, or of seizure, actual or threatened, of his
goods, he can recover it as money had and received. The money is paid, not
under duress in the strict sense of the term, as that implies duress of person,
but under the pressure of seizure or detention of goods, which is analogous to
that of duress. Payment under such pressure establishes that the payment is
. The payment is made for
not made voluntarily to close the transaction…
the purpose of averting a threatened evil, and is made, not with the intention
of giving up a right, but under immediate necessity and with the intention of
preserving the right to dispute the legality of the demand…. 57
To recover under the private law test the plaintiff must have had virtually
no alternative but to pay; he must have been “under the compulsion of
urgent and pressing necessity”. The possibility of litigating before paying is
generally considered to remove the situation from one of sufficient compulsion.
The first English case specifically to apply the private law test for duress
in a colore officii sitution was Slater v. Burnley. 58 The plaintiff sought to
recover a water rate payment which had turned out to be invalid. Cave and
Wills J.J. in brief judgments ignored the leading case of Steele v. Williams,
5 5Supra, note 2, 196-7.
56 Ibid., 197.
57Supra, note 28, 1755.
58SIater v. Burnley Corp., supra, note 15.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
423
which had been cited in argument and which refused to apply the private
law test.59 They stated simply that the plaintiff had paid “voluntarily” and
so could not recover; in short, they applied the private law standard of
duress without further discussion of their reasons. 60
In William Whitely Ltd v. The King6 1 the plaintiffs were seeking res-
titution of duties paid to Inland Revenue for certain servants. For five years
the plaintiffs had paid these duties under protest, fearing the consequences
of nonpayment. They then refused to pay and when they were prosecuted
for penalties it was established that the duties had never been payable. The
fact that it had always been open to the plaintiffs to refuse and litigate
induced Walton J. to consider the payments to have been “voluntary” and
so he denied recovery. He referred to the colore officii cases only by citing
a summary of them in Leake on Contracts.62 Relying only on texts and
without any examination of the cases, Walton J.’s position is untenable in
view of the authorities at the time. The leading case was still Steele v.
Williams, where a higher court had expressly rejected the position which
he took.63 Walton J.’s notion that the possibility of litigation made the
plaintiff’s payment “voluntary” is also questionable. One should note that
the litigation that proved the tax invalid was a penal action seeking the
payment of fines. If criminal prosecution is treated as an option, then no
government demand backed by threats of fine or imprisonment could con-
stitute compulsion.
Twyford v. Manchester Corp.64 was a case involving the demand by the
defendant municipality for fees for permission to cut inscriptions in a cem-
etery. The plaintiff stonemason paid these fees under protest and then sued
to have them declared invalid and to obtain restitution. Romer J. held that
the fees were invalid, but denied recovery. The case appears to have been
poorly argued on behalf of the plaintiff, as no colore officii cases were cited;
the only authority relied upon was a case of private duress. The defendant
brought forward Slater v. Burnley and William Whitely Ltd, and Romer J.
followed these two cases without further investigation into the law. He
applied the private law of duress and found as a fact that the plaintiff was
never threatened with exclusion from the cemetery. The case cannot be
59There is no explanation given for ignoring Steele v. Williams, supra, note 18.
60This was the first English colore officii case where restitution was denied for this reason,
and is, I would argue, wrongly decided, especially in view of the state of the law at the time.
61Supra, note 15.
62S. Leake, Principles of the Law of Contracts, 5th ed. (A. Randall, ed., 1906) 58-62. The
Court also referred to the third edition (1878) by Bullen and Leake.
63See the quotation from Martin B., cited below at note 81.
64[1946] 1 Ch. 236, [1946] 1 All E.R. 621.
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considered a very strong authority in view of its failure to consider most
of the relevant law.65
The first significant 66 Canadian colore officii case was Cushen v. The
City ofHamilton.67 The plaintiffbutcher paid a licensing fee to the defendant
municipality for two years and then refused to pay the third year and was
prosecuted. He was convicted but on certiorari the conviction was set aside
and the by-law creating the licence fee was declared illegal. He then sued
to recover his payments. The payments were made with “some unwilling-
ness and hesitation” but there was no evidence of a protest. Osler J.A. cited
Morgan v. Palmer,68 Dew v. Parsons69 and Steele v. Williams 70 and stated
that “the case at bar bears no analogy to any case of the classes I have
mentioned.”‘ 7′ Having thus without explanation rejected the leading au-
thorities, he went on to cite at length American cases and texts to a contrary
effect. Restitution was denied. The Court stressed that, although the by-law
made it necessary for the plaintiff to obtain a licence in order to earn his
livelihood, he could have refused to pay the first year in the same way that
he had the third. They thus held that he had not been compelled to make
the payments, clearly setting compulsion in this colore officii situation at a
65See the case comment by Marsh at (1946) 62 L.Q.R. 333, which suggests that Twjlford is
wrongly decided and that the Court should have followed the Steele v. Williams colore offweii
principles.
Other cases sometimes cited on this point include Sebel Products Ltd v. Commissioners of
Customs andExcise [1949] Ch. 409, [1949] 1 All E.R. 729, where although recovery was allowed,
it was suggested that William Whitely was correctly decided. However, Vaisey J. expressed a
strong public policy that government should always return taxes that turn out to have been
illegally imposed. Again, none of the other colore officii cases were cited. See also Eric Gnapp
v. Petroleum Board [1949] 1 All E.R. 980 (C.A.). The case does not really deal with colore
officii, but with a contract between the plaintiff and the Board. To the extent that it does deal
with recovery from a government agency it is explicable in terms of the wartime situation and
shortage of petrol. In National Pari-Mutuel v. The King (1930) 47 T.L.R. 110 (C.A.) a book-
making company had paid duty on a betting machine. The duty was held in another case to
be illegal, and so the plaintiff company sued to recover its payments. No cases were cited, and
Scrutton L.J. began his judgment with a snide remark about the plaintiff’s business. He then
dismissed the claim very briefly with no mention of colore officii principles. The case cannot
be regarded as a very strong authority.
66In Grantham v. City of Toronto (1847) 3 U.C.Q.B. 212, 215, a previous Ontario case,
restitution was refused because the official had been led into error by the individual who later
complained. Trusts Corp. v. City of Toronto (1899) 30 O.R. 209 is another case which is
sometimes cited as a colore officii case. However, it is not such a case on its facts. While the
plaintiffhad paid under mistake, the defendant municipality was lawfully entitled to the money.
67[1902] 4 O.L.R. 265 (Ont. C.A.).
68(1824) 2 B. & C. 729, (1824) 107 E.R. 554 (K.B.).
69(1819) 2 B. & Aid. 562, (1819) 106 E.R. 471 (K.B.).
70Supra, note 18.
71Supra, note 67, 267. The basis of his distinction is impossible to fathom.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
425
private law standard.72 It should be noted that Cushen was implicitly over-
ruled by the Supreme Court of Canada in George (Porky) Jacobs,73 a decision
which will be discussed below. 74
While there are many cases which decide colore officii situations in
terms of duress, the cases referred to above are the only ones which clearly
do so on a private law standard of duress. When listed sequentially they
constitute a formidable line of authority, but seen individually each of these
decisions is questionable. A number of other cases are ambiguous on this
issue, because the plaintiff was subjected to such severe compulsion that
recovery would be allowed on any standard. There remains a third group
of cases which decide colore officii situations on the basis of duress, but
allow recovery on facts which do not come within the private law test. These
latter cases cast doubt on the private law duress theory as a solution for
colore officii situations, since they seem to apply a different standard for
recovery.
An early example of recovery being allowed in a colore officii case which
would not have met the private law test for compulsion is Dew v. Parsons.75
In this case the plaintiff was a Sheriff suing an attorney to recover fees for
issuing certain warrants. The defendant claimed as a set-off certain fees
which his clerk had previously paid to the plaintiff and which were in excess
of the legal charge. Abbot C.J., Holroyd and Best J.J. held that the defendant
was entitled to the set-off- “If the defendant has paid more money than the
Sheriff is allowed by law to demand as his fee, the Sheriff cannot retain that
surplus…. .” The clerk paid out of ignorance, made no protest, and there
is no suggestion that the Sheriff refused to issue the warrant unless he was
paid. The very fact that the Sheriff was suing to be paid other fees creates
a strong likelihood that he performed his services before requesting payment.
There is thus nothing in the facts equivalent to the private law standard of
duress and no indication in the judgments that such a finding of duress was
necessary.
The decision in Morgan v. Palmer76 is to a similar effect. The plaintiff
publican paid an annual licence fee for his pub, a portion of which went to
72Cushen was treated as conclusive authority in O’Grady v. City of Toronto (1916) 37 O.L.R.
139, (1916) 31 D.L.R. 633 (H.C.). It was also treated as good law, although distinguished, in
Pople v. Dauphin (1921) 31 Man. R. 125, (1921) 60 D.L.R. 30 (C.A.).
73Supra, note 23.
74See infra, text following note 86. In both Cushen and Jacobs a licence fee was paid for
some period of time without protest. In both cases the licence was necessary to the plain-
tiff’s means of earning his livelihood, the fee turned out to be invalid, and it would have been
possible to litigate the validity of the fee at an earlier point in time. Thus, the decision in
Cushen must be taken to be overruled by Jacobs.
7sSupra, note 69.
76Supra, note 68.
McGILL LAW JOURNAL
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the defendant mayor. The plaintiff paid the fee for some sixty-five years
before objecting and suing for recovery. The judges allowed restitution,
ruling that the mayor’s fee was illegal and “that the payment was by no
means voluntary”. Clearly the facts here would not have been sufficient to
allow recovery under the private law test for duress. The plaintiff had been
paying for a long period of time and there was no suggestion of a threat to
withhold his licence. Abbot C.J. in ordering recovery was concerned with
the inequality between the official and the citizen, and Bayley J. referred to
the public policy of the situation. 77
The leading early case on colore officii is Steele v. Williams.78 The
plaintiff was a solicitor who had had his clerk perform certain searches of
a parish registry. After the searches were made, the defendant, who was the
parish clerk, charged the plaintiff’s clerk an excessive fee for the searches.
There was no protest at the time of payment. 79 The plaintiff then sued to
recover the excess, and obtained a rule nisi. The case was heard by Parke,
Martin and Platt B.B. and it is significant that the judges did not even call
on the plaintiff for his argument. They ruled that the fee was illegal and
that the plaintiff was entitled to restitution. “The defendant took it at his
peril; he was a public officer, and ought to have been careful that the sum
demanded did not exceed the legal fee.” 80 In his submissions the defendant
argued that “the money was paid voluntarily, and with a full knowledge of
the law and facts, and therefore cannot be recovered back”. Martin B. replied
during argument that “the case of Morgan v. Palmer shows that if a person
illegally claims a fee colore officii, the payment is not voluntary so as to
preclude the party from recovering it back”. Then in his judgment he wrote:
It is the duty of a person to whom an Act of Parliament gives fees, to receive
what is allowed, and nothing more. This is more like the case of money paid
without consideration –
to call it a voluntary payment is an abuse of language.
If a person who was occupied a considerable time in a search gave an additional
fee to the parish clerk, saying, “I wish to make you some compensation for
your time”, that would be a voluntary payment. But where a party says, “I
charge you such a sum by virtue of an Act of Parliament”, it matters not
whether the money is paid before or after the service rendered; if he is not
entitled to claim it, the money may be recovered back.8′
The Supreme Court of Canada first confronted a colore officii situation
in 1958 in the case of Municipality of St. John v. Fraser-Brace Overseas
77Note that this case is consistent with either the ultra vires theory or the special standard
theory, but the words of the judges strongly favour the special standard theory.
7sSupra, note 18.
79See the summary of the defendant’s argument, supra, note 18, 1503.
8OPer Platt B., supra, note 18, 1505.
8’Per Martin B., supra, note 18, 1505.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
427
Corp..82 The plaintiff Fraser-Brace was a construction company which was
building a radar base in the City of St. John. Title to the land was vested
in the United States Government and the plaintiff held the land on a lease.
The defendant imposed certain taxes on the plaintiff in respect of its lease-
hold interest and personal property on the land. The plaintiff from the
beginning took the stance that such taxes were not valid, but paid on de-
mand, sometimes under protest, sometimes not.83 After several years Fraser-
Brace brought this action to recover the payments. Most of the judgments
in the case discussed the international law relevant to the taxation of a
foreign sovereign and concluded that these taxes were invalid. Having come
to this conclusion the Court was unanimous that restitution should be al-
lowed, with only Rand J. addressing the issue of the basis for recovery. Even
the reasons of Rand J. are remarkably sparse. He makes it clear that recovery
is based on the compulsion inherent in a municipality’s demand, and that
the contractors were not required “to take proceedings that might later be
obviated”. 84 They could have brought their action earlier, but the desire to
avoid “rancorous controversy” was sufficient justification for not doing so. 85
The case was decided on the basis of compulsion, but does not come within
the private law test of duress, for surely a construction company’s desire to
avoid controversy does not amount to a situation of urgent and pressing
necessity.
In George (Porky) Jacobs86 the plaintiffwrestling promoter was required
by officials of the defendant municipality to pay a per diem licence fee for
wrestling exhibitions. In fact, but unknown to either party, the relevant by-
law only called for annual fees, and so the demands were illegal. When the
plaintiff discovered this he sued for restitution. The Supreme Court of Canada
allowed recovery on the basis of mistake of fact, as is discussed above. Hall
J. for the unanimous Court also recognized duress as an alternative ground
for judgment. In summarizing the law of duress he cited the famous passage
from Lord Reading C.J. in Maskell v. Homer.87 Immediately after citing
this passage he stated that the “question was reviewed by this Court in
Municipality of St. John v. Fraser-Brace” and went on to quote from Rand
J.’s judgment in that case. Fraser-Brace was a colore officii case, and allowed
82[1958] S.C.R. 263, (1958) 13 D.L.R. (2d) 177.
831bid., 263, per Locke J.
84Ibid., 272.
85See ibid., 272, where Rand J. states: “pressure was present here inducing payment as a
temporary means of avoiding rancorous controversy, as well as interference with the prose-
cution of the work”. There was no evidence that the municipality made any threats of seizure;
it is unclear what the “interference” refers to, unless it is the general aggravation of “fighting
City Hall”.
86Supra, note 23.
87See supra, notes 28 and 57, and accompanying text.
REVUE DE DROIT DE McGILL
[Vol. 29
recovery in a situation which did not come within the Maskell test of “urgent
and pressing necessity”. Yet by putting the two cases together without further
comment, Hall J. seems to be suggesting that the Maskell test should apply
to colore officii cases. Hall J.’s judgment then went on to hold that on the
facts Jacobs met the test for compulsion because he “had no actual alter-
native but to pay the fee being demanded”. 88 Note that there was no evi-
dence of any threat to close down the wrestling shows or other sanctions;
Jacobs simply paid in response to the demands without protest. It is sig-
nificant that he paid each fee after the show to which it applied, so there
was no question of preventing him from operating. 89 Thus the finding of
duress on the facts of Jacobs is actually an application of a different test
than the more stringent one enunciated in Maskell.
The Supreme Court of Canada in Eadie again left it unclear as to
whether it was applying the private law test for duress in allowing recovery.
The Maskell test of urgent and pressing necessity was relied upon by the
municipality, which took the position that in order to recover “the plaintiff
must have been faced with a situation where there was no other alternative
available to him”. 90 Spence J. rejected this and stated that “practical com-
pulsion is alone necessary”. Alternative courses which were “time consum-
ing and impractical” should not prevent a plaintiff from recovering. 91 He
went on to find that Eadie’s hospitalization and desire to provide for his
wife met this test and so compulsion was established. This is significantly
lower than the required standard of duress in private cases of economic
compulsion, at least prior to this case.92
In the result, the private law duress theory for restitution in colore officii
situations receives at best ambivalent support from the case law. Most colore
officii cases are decided on the basis of some form of duress. However, those
which expressly apply the private law test are of questionable authority, and
many allow recovery in situations which do not meet the test applied in a
case between two private individuals. When we combine these difficulties
88Supra, note 23, 331.
89See the statement of facts in the decision of the Saskatchewan Court of Appeal, (1963) 37
D.L.R. (2d) 757, (1963) 47 W.W.R. 233 [hereinafter cited to D.L.R.].
90Eadie, supra, note 25, 571.
91Ibid.
921t is unclear whether in taking this step Spence J. was intending the lower standard to apply
to all compulsion cases between private individuals, or whether this was a special colore oficii
standard to be applied where the compulsion was the result of an act by a government official.
The Supreme Court of Canada decision in Nepean makes it clear that compulsion was the
only reason for recovery in Eadie, but does not address the question of whether the new Eadie
“practical compulsion” test applies to all cases, or only to colore officii
cases. It is possible that
Spence J. intended it only as a colore officii standard, because later in his judgment he em-
phasized the duty of the municipality toward the taxpayers.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
429
in the case law with the numerous conceptual problems discussed above,
we must conclude that duress on a private law basis is not an adequate
foundation on which to build a theory of restitution in colore officii situations.
II. A Better Theory: A Special Standard for Government Officials
Statutory authorities occupy a unique position. As the wielders of state
power, their demands are backed by a vast array of possible sanctions. Yet
this vast power they wield is subject to the rule of law and constitutional
restraints. As government officials, they owe a high level of duty to the
citizens whom they serve and represent. Whether elected, or appointed by
elected representatives, their role is to apply the law. Great coercive power
is given to them to ensure compliance with the law, and it is their duty to
use this power only in accordance with the law.93 When a government official
illegally demands money from a citizen, the demand is both a breach of
duty toward that citizen and a coercion of that citizen’s will.
There are inherent elements of compulsion in every government de-
mand for money.94 When such a demand turns out to be unauthorized, and
therefore ultra vires, it becomes wrongful compulsion. There is an essential
difference between an invalid demand from the government and an invalid
demand from an individual. This difference is to be found in the duty of
the government towards the citizen, in the gross inequality between the
government and the individual, in the multitude of serious sanctions avail-
able to the government to back up its demands, and in the ultra vires theory
and the constitutional principle that there can be no taxation without the
consent of Parliament. When a government official has received money from
an individual pursuant to a statute or demand which turns out to be un-
authorized or illegal, this essential difference between governmental and
private demands should be recognized. In other words, in colore officii sit-
uations the law of restitution should recognize these special factors and apply
a special standard in determining recovery.
This conclusion is strengthened by the criticisms which were directed
at the private law duress theory above. The law-abiding citizen or the person
93We touch here upon matters of political and legal theory beyond the scope of this paper.
The special standard theory is based on the starting point that in a democratic society the
coercive nature of state power gives rise to a corresponding duty on the part of the state to
exercise that power fairly. While the exact nature of this duty is a question which has been
debated by philosophers for centuries, the general duty is now firmly rooted in principles of
public and administrative law. Of course, it must be conceded that if the very existence of
such a duty is denied, the special standard theory would have no basis.
94As MacPherson J. said in the trial judgment of George (Porky) Jacobs, quoted in the appeal
judgement, supra, note 89, 760: “No normal person pays a tax or a licence fee that he is not
compelled to pay”.
McGILL LAW JOURNAL
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without access to legal advice should not have a lesser right of recovery
when the government has illegally taken his money. To prevent such a result,
the right to recovery must rest upon the illegality of the governmental de-
mand being made and should not depend upon subsequent protests by the
plaintiff.
Given the inherent coercive nature of a public official’s demand, a
special standard should be applied in colore officii situations in determining
whether or not the individual’s payment was voluntary and therefore whether
or not he should recover. This special standard could be described as a
presumption, once a colore officii situation is established, that the payment
was involuntary, unless the contrary can be proved. It seems reasonable to
make the presumption that the citizen did not pay an illegal tax or licence
fee voluntarily, and so the special standard theory does not require any
further evidence of compulsion in order to establish the plaintiff’s case.
However, it should remain possible for the defendant government to defeat
the plaintiff’s claim with evidence that this was one of the rare situations
where the citizen wanted to give money to his government, whether he owed
it or not.95 The special standard theory would thus essentially shift the legal
burden of proof in colore officii situations. Note however that the pre-
sumption of involuntariness should be strong enough that the government
defendant could not rebut it simply by proving certain negative elements
like the absence of protest or the possibility of earlier litigation. To prevent
recovery the government should have to prove a positive intention on the
part of the plaintiff to make the payment whether or not the demand was
valid.
The special standard theory is similar to the ultra vires theory in that
it would allow restitution in a majority of colore officii situations. However,
it avoids the conceptual problem of the ultra vires theory, in that it continues
to focus on the plaintiff’s voluntariness. Therefore it does not violate the
general principle that there should be no restitution where the parties have
made a voluntary compromise intending to waive any further rights. Al-
though the legal burden of proof is reversed, the special standard theory
still looks to the voluntariness of the plaintiff’s payment as well as to the
wrongfulness of the defendant’s pressure, and so there would be no recovery
if there had been a genuine voluntary compromise. As we will see below,
the special standard theory has implicitly received considerably more sup-
port in the case law than the ultra vires theory.
The special standard theory could be viewed as a sub-category of duress,
allowing restitution on a public law rather than a private law standard. All
95See supra, note 81, and accompanying text for a passage from Steele v. Williams which is
an example of this.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
431
of the objections to the private law duress theory are met by the special
standard theory.96 Alternatively, the special standard theory could be con-
sidered a unique restitutionary category. The choice between these two view-
points is largely academic. The combination of breached duty and inherent
coercion render the payment involuntary and provide the basis for restitution.
There is really nothing novel about the theory that a special standard
should apply to government officials when they unlawfully demand money.
This has been a common law principle since at least the year 1275. 97 The
Latin phrase we have been using was originally colore officii sui false, cor-
rupte et extorsive and formed the indictment for the common law misde-
meanor of extortion by a public official. 98 Recovery of government extortion
developed with the common law action of indebitatus assumpsit for money
had and received. 99 The leading cases from the nineteenth century, discussed
standard theory.
96See supra, pages 419 to 422. None of these conceptual problems arises under the special
97Statute of Westminster, 3 Ed I, c. 26 (1275). See also Statute 9 Hen. VI, c. 7 (1430). The
early history of colore officii cases is superbly set out by Windeyer J. in Mason v. New South
Wales, supra, note 42, 139-42.
98Coke, Co. Lit. 368b, defined this offence as “the taking of money by any officer, by colour
of his office, either where none at all is due, or not so much is due, or where it is not yet due”.
See also Beawfage’s Case (1603) 10 Co. Rep. 99b, 102a, (1603) 77 E.R. 1076 (K.B.). Early
colore officii cases dealt with the criminal liability of the official for his extortion, and made
little mention of the possibility of the victim of the extortion being able to recover his money.
See, for example, R. v. Roberts (1692) Carth. 226, (1692) 90 E.R. 735 (K.B.) or R. v. Burdett
(1696) 1 Ld. Raym. 148, (1696) 91 E.R. 996 (KtB.). In another early case, Empson v. Bathurst
(1619) Hutt. 52, (1619) 123 E.R. 1095 (C.P.), a sheriff had used his office to obtain an agreement
for the payment of an excessive fee. The sheriff then sued on the agreement and was held
unable to recover “for his obligation is extortion, and colore officii, and void by the common
law”.
99There is an early dictum in an anonymous case per Holt C.J. that indebitatus assumpsit
would lie “where money was paid for fees which were not justly due”: (1697) Comb. 447,
(1697) 90 E.R. 583 (K.B.). The point was then made explicit by Lord Mansfield in Moses v.
Macferlan (1760) 2 Burr. 1005, (1760) 97 E.R. 676, 681 (K.B.).
In Irving v. Wilson (1791) 4 T.R. 485, (1791) 100 E.R. 1132 (K-B.), recovery of an invalid
fee paid to a revenue official after seizure of the plaintiff’s goods on the highway was permitted.
In Jons v. Perchard (1796) 2 Esp. 507, (1796) 170 E.R. 436 (N.P.), recovery of an excessive
bail bond was permitted from a sheriff whose bailiff had demanded it; similarly in Lovell v.
Simpson (1800) 3 Esp. 153, (1800) 170 E.R. 570 (N.P.). In Parsons v. Blandy (1810) Wight.
22, (1810) 145 E.R. 1160, recovery ofan excessive toll charged by a public official was permitted,
with no discussion of reasons. In Waterhouse v. Keen (1825) 4 B. & C. 200, (1825) 107 E.R.
1033 (KB.), the plaintiff’s claim for an invalid toll was defeated due to a defective notice of
action, but the implication was that otherwise he would have won. It is clear on the facts of
this case that the defendant tollkeeper was not extorting the excess for his own benefit, but
was simply misinterpreting his authorizing statute. An extravagant charge for the use of court
roles and deeds was recovered in Pigott’s Case which is cited by Lord Kenyon C.J. in Cartiwright
v. Rowley (1799) 2 Esp. 723, (1799) 170 E.R. 509, 510 (N.P.). In Longdill v. Jones (1816) 1
Stark. 345, (1816) 171 E.R. 492 (N.P.), the defendant sheriff executed a writ offi. fa. for the
plaintiff but only turned over part of the sum executed, retaining the rest as his fee. Lord
REVUE DE DROIT DE McGILL
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above, were Dew v. Parsons,l00 Morgan v. Palmer’0′ and Steele v. Wil-
liams.0 2 In each of these cases recovery was allowed on the basis that the
payment was not voluntary, and yet the facts did not come within the private
law test for duress. The reasons of the judges in allowing recovery empha-
sized factors such as the inequality between the official and the citizen,’ 0 3
the public policy of the situation, 10 4 and the duty of a public officer. 0 5 It is
submitted that the judges were applying a special public law standard in
awarding restitution in these cases.
The force of these cases can be seen from the way the law developed
in reliance on them in Australia. In Sargood Brothers v. The Common-
wealth, 0 6 the plaintiff had paid a customs tariff which was not authorized
by the law, and sued for recovery. Most of the judgments concerned whether
or not the tariff was valid, and the Court concluded that it was not. On the
question of recovering the illegal charges, O’Connor J. cited Morgan v.
Palmer, Steele v. Williams and Hooper v. Exeter Corp.’0 7 and said:
The principle of law applicable in such cases is well recognized. Where an
officer of Government in the exercise of his office obtains payment of moneys
as and for a charge which the law enables him to demand and enforce, such
moneys may be recovered back from him if it should afterwards turn out that
they were not legally payable even though no protest was made or question
1llenborough C.J., with no explanation, held the plaintiff entitled to recover the excess of the
legal fee. In Umphelbyv. M’Lean (1817) 1 B. & Aid. 42, (1817) 106 E.R. 16 (K.B.), the defendant
collectors of taxes had made an excessive charge for expenses upon a distress upon the
plaintiff’s property, and, wihout reasons Lord Ellenborough held the plaintiffentitled to recover
the excess. In Traherne v. Gardner (1856) 5 El. & BI. 913, (1856) 119 E.R. 721 (K.B.), the
defendant charged the plaintiff an excessive fee for registering his title to four pieces of land
“in copyhold”. The judges allowed the plaintiff to recover the excess, saying basically that the
payment was not “voluntary”.
Most of these cases involved the defendant public official charging an excessive rate for the
performance of his duty and the plaintiff was held entitled to recover the excess. Note however
that the defendant’s motive was irrelevant, and there is usually no mention of whether the
plaintiff was mistaken as to the legality of the fees at the time he paid them. Although sometimes
the plaintiff was clearly compelled within the private law standard of duress, other cases make
no reference to the plaintiff having been in urgent circumstances when he paid.
‘0Supra, note 69.
1’Supra, note 68.
’02Supra, note 18.
103Per Abbot C.J. in Morgan v. Palmer, supra, note 68.
t’4Per Bayley J. in Morgan v. Palmer, supra, note 68.
05Per Platt B., in Steele v. Williams, supra, note 18, 1505.
106(1910) 11 C.L.R. 258 (Aust. H.C.).
0 7Supra, note 12.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
433
raised at the time of payment. Payments thus demanded colore officii are
regarded by the law as being made under duress. 0 8
This clear enunciation of the special standard theory remains the law in
Australia.10 9
Despite a remarkable failure to cite any of the leading nineteenth-century
cases, 10 Canadian case law is for the most part consistent with, if it does
not explicitly support, the special standard theory. We have seen that the
Supreme Court of Canada in Fraser-Brace allowed recovery in a colore officii
situation on a compulsion basis, even though the private law test for duress
had not been met. The same happened in George (Porky) Jacobs. The Court
never stated that it was applying a special standard because the defendant
was a government official, and yet the result is not consistent with the private
law theory of duress.
In R. v. Beaver Lamb and Shearling Co.,”
restitution of an invalid
tax was refused by the Supreme Court of Canada. The majority of the Court
refused to consider whether this tax could have been recovered on the basis
of duress, because it had not been pleaded.”12 However, Ritchie J. expressly
considered the duress argument and rejected it. He applied the private law
standard of duress, and cited two duress cases between individuals. Without
addressing the matter fully or citing any of the old English authorities, he
108Ibid., 276. It is interesting to note that this clear and powerful statement of what we have
called the special standard theory of colore officii was challenged by Issacs J. in dissent at page
309: “[s]uch a doctrine, it is evident, would throw the finances of the country into utter con-
fusion.” See text accompanying notes 118 et seq., infra, for a response to this criticism.
’09The leading Australian case is Mason v. New South Wales, supra, note 42. The plaintiff
was a carrier and paid licensing fees for interstate transport. Another carrier challenged the
validity of these fees and had them declared illegal under the Australian Constitution. The
plaintiff, who had always paid under protest, then brought this action to recover the fees. The
High Court allowed restitution, with differing reasons being given. Dixon C.J. cited William
Whitely (supra, note 15), National Pari-Mutuel (supra, note 65), and Sebel Products (supra,
note 65) and recognized that those English cases seemed to be saying that an illegal tax cannot
be recovered from the Crown “unless the circumstances were such that they would be re-
coverable as between subject and subject”. He expressed disagreement with this position but
did not resolve his conflict with the earlier cases, saying “it is enough if there be just and
reasonable grounds for apprehending that unless payment be made an unlawful and injurious
course will be taken by the defendant in violation of the plaintiffs’ actual rights”: supra, note
42, 117. Menzies and Windeyer J.J., however, both cite and approve O’Connor J.’s passage
above from Sargood Bros.: supra, note 42.
” t0Only one case (Cushen, supra, note 67) cites the leading colore officii authorities, and it
rejects them without discussion in favour of American authorities.
“‘ [1960] S.C.R. 505, (1960) 23 D.L.R. (2d) 513.
“12See Kerwin C.J.C., Fauteux J. concurring, ibid., 507, where he stated “no such claim was
ever alleged”. See also Locke J., ibid., 522: “this is not pleaded and the matter was not in issue
at the trial and need not be considered”.
McGILL LAW JOURNAL
[Vol. 29
rejected the idea that there should be a special standard in colore officii
cases. He quoted McDonald J.A. from the British Columbia Court of Appeal:
Every Act for taxation or other purposes, whether valid in fact, or for the time
being thought to be valid, compels compliance with its terms under suitable
penalties. The payee has no choice and the authorities imposing it are in a
superior position. It does not follow, however, that all who comply do so under
compulsion, except in the sense that every Act imposes obligations, or that
the respective parties in the truest sense are not on “equal terms.” It should
be assumed that all citizens voluntarily discharge obligations involving pay-
ments of money or other duties imposed by statute. 113
Ritchie J.’s minority view will have to be rejected if a special standard colore
officii doctrine is to be established in Canada.
The decision of the Supreme Court of Canada in Eadie offers consid-
erable support to the special standard theory. The County Court Judge had
allowed restitution because the municipal clerk was a public officer in a
position analogous to that of an officer of a court “and it was highly ine-
quitable if not dishonest”” 14 for the Municipality to insist on retaining the
money illegally demanded by such an officer. In the Supreme Court Spence
J. commented that “there is much to be said in support of such a view”,
but left it without further discussion. This passage constitutes an open in-
vitation to judges in future colore officii cases to apply the special standard
theory.
We have already discussed the references to Kiriri which created so
much confusion in Eadie. Immediately after invoking Kiriri, Spence J. em-
phasized the duty of the municipal clerk toward the taxpayers, 115 and used
this as a basis for his finding of “not in pari delicto”.” 6 Nepean has made
it clear that Eadie was decided on the basis of compulsion. Although Spence
J. uses the Latin phrase in pari delicto, the argument can be made that his
analysis imperfectly expresses a special standard theory. The phrase indeed
speaks to the inequality between official and citizen, and the duty of the
“31bid., 524. The quotation is from Vancouver Growers Ltd v. Snow Ltd (1937) 52 B.C.L.R.
32, 37-8, [1937] 4 D.L.R. 128. The logic of this passage is highly questionable. It agrees that
in practice compliance with a statute is compelled, but then asserts that for the purposes of
the law we must assume compliance voluntary. That amounts to a legal obligation to “pay
voluntarily, whether you want to or not”.
‘ 4Eadie, supra, note 25, 570.
1 5 lbid., 572.
116Spence J.’s “duty analysis” was followed by McKenna in Mistake ofLaw Bet ween Stat utorI
Bodies and Private Citizens (1979) 37 U.T. Fac. L. Rev. 223. McKenna points out the impor-
tance to Spence J.’s judgment of the recognition of a duty owed by the public official to the
taxpayer. Unfortunately his analysis is flawed by an unnecessary reliance on Kiriri and the out-
of-context passage cited by Spence J.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
435
official was raised as relevant. Restitution therefore was allowed on a stan-
dard different from that in Maskell v. Horner.’ 17
Although not referred to as such, the special standard theory thus re-
ceives considerable support in the case law. It also avoids the conceptual
problems of the existing theories. However, we must still confront a major
policy objection which can be raised” 18 against any colore officii theory which
allows recovery in a majority of cases. This objection is that such a wide
right to restitution would create uncertainty and danger for the public trea-
sury. Suppose for instance that a government agency like the Hydro Com-
mission imposed an invalid surcharge of $1.00 on its monthly bill to all
customers. Some ten years later an individual realizes the illegality of this
surcharge and sues to recover as much as the six year limitation period will
allow. The plaintiff would be suing for seventy-two dollars. However, if he
brought his suit as a class action on behalf of all Hydro customers, the
government would stand to lose hundreds of millions of dollars. Fear of
this possibility has made the courts slow to develop the law in the colore
officii area.
One partial solution is to shorten the limitation period for restitution
cases.” 9 This would reduce the total of any given claim. It would also
prevent late-coming plaintiffs, in situations where class actions were not
used, from seeking to cash in on a government mistake after someone else
had taken all the risks and expense of proving a tax invalid. A vigorous
application of the doctrine of laches could achieve the same result.
A second solution would be to recognize a “change of position” def-
ence.’ 20 The Supreme Court of Canada has already done so in mistake cases
such as Rural Municipality of Storthoaks v. Mobil Oil of Canada Ltd.12 1
This defence would be a difficult one to establish in colore officii situations
117Supra, note 28.
“SSee McCamus, supra, note 20, 256.
“9This paper is not the appropriate place to develop this position, but a two year limitation
period, not only in colore officii cases, but on all restitutionary claims, would be reasonable.
Such a limitation period would, in effect, operate as an assumption of “change in position”
after a reasonable time.
’20See Goff& Jones, supra, note 11, 545 et seq. for a good analysis of this restitution defence.
121 [1976] 2 S.C.R. 147, [1975] 4 W.W.R. 591, (1975) 55 D.L.R. (3d) 1. It is not yet decided
whether this defence would apply to duress situations. It usually would not, as one of the
elements of the defence is that the defendant must not have “knowledge of the facts entitling
the other to restitution” (Restatement of Restitution, 142), and in most duress situations the
defendant does have such knowledge. However, colore officii cases are unique in that the official
is usually ignorant of the illegality of his demand at the time he makes it. In the recent Canadian
cases concerning invalid development taxes it would have been infinitely preferable if the
courts had seen fit to apply the change of position doctrine rather than the vague “balancing
of equities” to which they resorted.
REVUE DE DROIT DE McGILL
[Vol. 29
because it would be hard to prove that the government had changed its
position in response to any one addition to the public treasury. However,
in our Hydro example it may be that they had used the revenue from the
surcharge specifically for a new generating station which would not otherwise
have been built. It would be appropriate to deny restitution in those situ-
ations where the government could establish a detrimental change of po-
sition directly related to the invalid tax.
A third possibility is that the limitations suggested by Birks in devel-
oping his ultra vires theory could also apply to the special standard theory.
Colore officii rules would be inapplicable to government bodies acting in a
private capacity, and recovery would be refused where the official was led
into error by the individual who later complained.
The final answer to the concern over the potential magnitude of gov-
ernment liability to colore officii claims is that this problem should not be
solved by limiting the citizen’s right to restitution. The solution should be
found in seeking to eliminate illegal demands by the government, not in
preventing recovery once they have taken place. Such a righteous answer
might seem excessively idealistic and impossible to achieve. There will al-
ways be public officials who make honest mistakes and impose unauthorized
charges. It is suggested, however, that the cost of these mistakes is more
appropriately borne by the government, whose position in society gives
official demands so much inherent coercive power, rather than by the law-
abiding citizen who simply obeys.
Unfortunately, government debts are paid by taxpayers. A large colore
officii restitution case might put a sufficient hole in the public treasury that
future taxes would have to be increased to replace the funds which were
intended for public projects. The objection could be made that we would
then be taxing today’s citizens to compensate for payments illegally exacted
from yesterday’s taxpayer. 22 The unauthorized tax may well have funded
services which have benefited the plaintiff. The first response is that, with
a short limitation period, yesterday’s taxpayer is almost certainly still paying
tax today. He will in any case end up paying legally for the service he has
enjoyed. More importantly, the integrity of our system of constitutional law,
which includes the principles of the 1688 Bill of Rights, should not be
compromised simply because the plaintiff probably benefited from the ser-
vices provided by the illegal tax. The overall cost to society of violating
122See McCamus, supra, note 20, 257-9 on this point.
1984]
RESTITUTION FROM GOVERNMENT OFFICIALS
437
these principles would be far greater than the burden of a slight increase in
taxes to rectify an error. 123
Conclusion
Present case law reveals neither a clear nor consistent explanation for
recovery in colore officii situations. The result is that it is difficult to predict
whether restitution will be allowed in any given situation. The early au-
thorities consistently allowed recovery on a duress basis, and the indications
are that a special standard was being applied when the duress was exercised
by a public official. Later English cases are inconsistent, but the higher courts
continue to show support for colore officii restitution on grounds different
from those of private law duress. The Australian High Court has endorsed
a special standard basis for recovery.
Canadian courts to date have revealed a remarkable failure to perceive
the problem. Rarely have they even recognized that they are dealing with
a colore officii situation. 124 The Supreme Court of Canada has been con-
fronted with the problem on four occasions. In Fraser-Brace restitution was
allowed without explanation, although the facts are not consistent with the
private law test for duress. In Beaver Lamb restitution was denied because
duress had not been pleaded, but one judge in a minoh’ty decision rejected
the possibility of a special standard of duress for government demands. In
George (Porky) Jacobs and Eadie recovery was allowed on a compulsion
basis, with implicit support for the special standard theory in the result itself
and in the references to “not in pari delicto” and the attendant duty of
public officials. It is noteworthy that in the only instance where the Supreme
Court of Canada denied restitution it did so because duress had not been
pleaded. 125 Thus it is still possible for a court to adopt the special standard
theory without having to overrule any of the leading cases.
On a theoretical level, the existing theories are plagued with conceptual
problems. The ultra vires theory ignores the plaintiff’s voluntariness. The
mistake theory cannot get around Bilbie v. Lumley, and even if we overrule
‘2 3Another possible policy concern with a rule permitting general recovery in colore officii
situations is raised but adeptly dismissed by McCamus, supra, note 20, 259-60. The concern
is that a general rule permitting recovery might cause public officials to be unduly cautious in
their exercise of their statutory powers. However, as McCamus puts it, 259-60, “[t]here are
other pressures present in the political system which are likely to be more influential than the
law of restitution in determining the degree of caution or abandon exhibited by public officials
in the discharge of their responsibilities”.
124This is despite the remarkable appearance of the quotation from Sargood, supra, note 106,
in Severson v. Corporation of Qualicuin Beach, supra, note 33, 383.
125Remembering always that Nepean Hydro, supra, note 15, was not a colore officii case
between a private citizen and a public official.
McGILL LAW JOURNAL
[Vol. 29
this old obstacle, the theory cannot explain why there has been colore officii
recovery prior to such overruling. Nor can the mistake theory explain why
there has been, and arguably should be, restitution even when the plaintiff
knew the fee was invalid when he paid.
Nepean Hydro has rejected the mistake and ultra vires theories. That
case has also made it clear that restitution is given in colore officii situations
because the citizen’s payment was involuntary due to compulsion. The only
question becomes whether there should be a special standard for the required
level of compulsion exercised by a government official or statute, or whether
all cases should be judged according to the same private law standard. Here
the Canadian law of restitution remains uncertain. For the reasons discussed
above, there is a fundamental difference between an invalid demand made
by a government and one made by private individual. The public official’s
demand inherently contains a strong element of compulsion, and it offends
the rule of law to permit an official to retain an unauthorized payment
without placing some minimum onus of proof on that official. The basic
difference between public and private demands should be reflected in our
law of restitution, and this would be accomplished by adopting a presump-
tion of involuntariness in colore officii cases. The official would have the
burden of proving the citizen’s payment was voluntary. The result would
be that recovery would almost always be allowed in these cases, which is
what the man on the street would have expected in the first place.
