Geddes v Magrath [1933] HCA 57; (1933) 50 CLR 520 (24 November 1933)

These two appeals from the Full Court of the Supreme Court of New South Wales raise the same question of construction. They were heard together and may be conveniently disposed of together.

Sec. 6 of the Industrial Arbitration (Amendment) Act, No. 39 of 1932, provided as follows:—"(1) Upon the commencement of this Act the offices of deputy commissioner and of the chairmen of conciliation committees shall cease to exist. (2) The deputy commissioner and each chairman of conciliation committee shall receive such compensation as he would have been entitled to had his services been dispensed with otherwise than according to law."

At the time of the passing of the Act, the respondent Mr. E. C. Magrath was exercising the powers and functions and performing the duties appertaining to the office of deputy commissioner, and the appellant Mr. W. J. T. Morgan, those appertaining to the office of a chairman of conciliation committees. The powers, functions and duties of the two offices are set out in the Industrial Arbitration (Amendment) Act 1926. By sec. 6 (4) of that Act, the Governor was empowered to appoint a person to be a deputy commissioner of the Industrial Commission of New South Wales for such time as the Governor might fix. There was no express provision fixing, or authorizing the fixation of, the salary payable to the deputy commissioner. Curiously enough, each chairman of conciliation committees occupied what may be called the converse position. By sec. 8 (1) the Minister was empowered to appoint persons to act as chairman, and to fix their remuneration; but there was no special provision fixing their tenure of office.

The actual terms of the Executive-Council minute appointing Mr. Magrath provided for a period of five years from September 24th, 1931, at a salary of £1,000 per annum. The Government informed him that he had been appointed upon such conditions to the office of deputy commissioner. So, also, the actual terms upon which Mr. Morgan was appointed by the Minister provided for a period of five years from January 31st, 1932, with remuneration at the rate of £750 per annum, and he was informed accordingly.

The main argument presented on behalf of the nominal defendant for the Government of New South Wales is that, under the provisions of the 1926 Act, the Governor was not empowered to fix any salary for the deputy commissioner, and the Minister was not empowered to make an appointment for a term in respect of the office of chairman of conciliation committees. In our view, it is not necessary to consider whether there is any substance in these contentions. Sec. 6 (1) of the 1932 Act declared that, from the commencement thereof, the offices both of deputy commissioner and of chairman should cease to exist. And the Legislature immediately provided in sec. 6 (2) that the deputy commissioner and each chairman of conciliation committees should receive compensation as therein provided.

We are of opinion that Parliament, in using the words "the deputy commissioner and each chairman of conciliation committee", intended to refer to the persons in actual occupation of those offices. It is clear that Parliament also intended each occupant to receive "such compensation as he would have been entitled to had his services been dispensed with otherwise than according to law"; in other words, each person described in the sub-section is entitled to recover by way of compensation for the loss he has sustained by the lawful act of the Legislature the same amount of money as he could have recovered if his appointment had been lawful and the termination of his services had been unlawful. This is the view of the matter which was adopted by Street J., and we are in complete agreement with him.

Of course, in assessing the amount of compensation in the case of each occupant of office, consideration would have to be given to the possibility of the plaintiff's obtaining some other appointment during the currency of the agreed period of service. This element, operating in diminution of compensation, was fully considered by Street J., and we think that his method of assessment was right.

Further, we are of opinion that, in calculating the amount of compensation, the learned trial Judge did not proceed erroneously in point of law in working out the compensation upon such a rate of interest as he considered reasonable in all the circumstances. We think that he was not bound to follow the practice of the local Court of Equity and that, in this respect, there is no reason which would justify us in interfering with his assessment of compensation.

The result of this opinion is that, in each case, the order of the Full Court should be discharged, and in lieu thereof an order should be made restoring the order of the trial Judge. In Magrath's case, there should be a dismissal of the Crown's appeal and an allowance of the cross-appeal, which was instituted for the purpose of restoring the order of the trial Judge. In Morgan's case the appeal should be allowed.

Sec. 6 of the Industrial Arbitration (Amendment) Act 1932 is as follows:—"(1) Upon the commencement of this Act the offices of deputy commissioner and of the chairmen of conciliation committees shall cease to exist. (2) The deputy commissioner and each chairman of conciliation committee shall receive such compensation as he would have been entitled to had his services been dispensed with otherwise than according to law."

Magrath, the respondent in the first of these appeals, was the deputy commissioner and Morgan, the appellant in the second of the appeals, was a chairman of conciliation committees under the Act of 1926. The deputy commissioner was appointed under sec. 6 (4) of that Act, which in so many words empowers the Governor to fix a term, and, in my opinion, impliedly authorizes him to define the salary at which an appointment is made to the office. A chairman of conciliation committees is to be appointed by the Minister, who by sec. 8 (1) is expressly empowered to fix remuneration, but is not expressly empowered to appoint for a term. In my opinion sec. 30 of the Interpretation Act 1897 applies to the power conferred by sec. 8, which must be construed as enabling the Minister to remove from, as well as appoint to, the office of chairman of conciliation committees. Both the respondent Magrath and the appellant Morgan received appointments for five years certain. The Full Court construed sec. 6 (2) of the Act of 1932 as meaning that for loss of office the officers should receive such compensation as the law would give them if they had been ousted or removed otherwise than under the statute of 1932. Accordingly, in its opinion the appellant Morgan was entitled to no compensation because, notwithstanding his appointment for five years certain, the Minister had lawful authority to remove him without cause. I am unable to adopt this construction of sec. 6 (2) of the Act of 1932. In my opinion it means no more and no less than it says: the words "had his services been dispensed with otherwise than according to law" mean "if he had lost his office contrary to law." It does not mean to set the Court upon inquiry whether this could have happened; it simply directs that it shall be supposed it has happened, and that upon that supposition compensation shall be assessed. Accordingly, I think the judgment of the Full Court was wrong in the case of the appellant Morgan, and he is entitled to compensation.

In Magrath's case the Full Court agreed with the trial Judge that he was entitled to compensation on the ground that he could not be removed during his term of office by the Crown, because of the statutory authority to fix the term. It of course follows from the view I have taken that the conclusion of the Full Court in Magrath's case is right, although I do not agree with the distinction drawn by the Full Court between the two cases.

In assessing compensation in Morgan's case, Street J. proceeded upon the assumption that he was not removable from office during his term. I do not think sec. 6 (2) of the Act of 1932 requires such an assumption, but nevertheless I consider that the assessment by Street J. should not be disturbed. My reason is that I do not think the mere existence of a power in the Minister to interrupt the assigned term and remove the officer should make any difference in the amount estimated as representing the loss he would have suffered if he had been removed contrary to law. He was appointed for a fixed term. There was nothing unlawful in nominating a term for which he should hold office. It gave him an assurance that he might retain office for that term unless it was sooner determined by the active intervention of the Minister for some unexpected cause, and it informed him that at the end of the term he would be required to vacate office unless reappointed. The presumption that unless he misconducted himself the statutory power of removal would not be exercised is very strong, and is reinforced by the fact that, although it was decided to abolish his office by statute, the Executive Government did not terminate his appointment but left it to the Legislature, which abolished the office only subject to payment of compensation. The existence of the power of removal is therefore, in my opinion, a matter which does not make it right to reduce the sum assessed for compensation.

In ascertaining the amount of compensation, Street J. proceeded in each case by reducing the future anticipated payments of salary to their present value as at the date of the abolition of office. For this purpose he took a rate of two and one-half per cent. The Full Court considered that this rate was too low and raised it to three and one-half per cent. Without disagreeing with the proposition of the Full Court that three and one-half per cent would be an appropriate rate for the purpose, I do not think that they should have substituted their opinion on this matter for that of the trial Judge. It was, after all, only a figure which he adopted for his own assistance in going through the process of estimating a lump sum for damages. The method he adopted of arriving at the lump sum was not opposed to law and no information was before him which would establish that the rate of two and one-half per cent would produce a greater amount of compensation than the loss suffered by deprivation of salary. Accordingly I think that in each case the assessment of compensation by Street J. should stand.

This means that the Crown's appeal in Magrath's case should be dismissed, that Magrath's cross-appeal should be allowed and the judgment of Street J. restored, and that Morgan's appeal against the judgment of the Full Court should be allowed and the judgment of Street J. restored.

Morgan v. Geddes.—Sec. 8 (1) of the Industrial Arbitration (Amendment) Act 1926 made the following provision:—"The Minister may, in the manner prescribed, establish conciliation committees for any industry or calling for which a board is constituted, or for any industry or calling for which for the purpose of establishing a committee the commissioner may recommend that a board be constituted. The Minister may appoint such number of persons as may be prescribed to act as chairmen of conciliation committees and may fix their remuneration."

On 9th June 1926, the appellant was appointed by the Minister to act as chairman of conciliation committees for a period of five years, and, after various extensions of this appointment, on 28th January 1932, the Minister appointed him to be a chairman for a further period of five years until 31st January 1937 with remuneration at the rate of £750 per annum. On 6th December 1932, Act No. 39 of 1932 commenced, sec. 6 of which is as follows:—"(1) Upon the commencement of this Act the offices of deputy commissioner and of the chairmen of conciliation committees shall cease to exist. (2) The deputy commissioner and each chairman of conciliation committee shall receive such compensation as he would have been entitled to had his services been dispensed with otherwise than according to law." The appellant brought proceedings to recover compensation from the Crown pursuant to sub-sec. 2 of sec. 6. The proceedings came before Street J., who assessed compensation at the sum of £2,550 by determining as at 6th December 1932 the present value of the appellant's salary for the unexpired balance of the term of five years and making a deduction on account of the probability of his obtaining employment during that period. On appeal to the Full Court this decision was reversed and a verdict entered for the Crown. The ground upon which the Full Court held that the appellant was not entitled to compensation was that, upon the true construction of sec. 6 (2) of Act No. 39 of 1932, it did no more than confer a right to that compensation, if any, which would ensue from deprivation of office if the statute were not a justification, and that under sec. 8 (1) of the Industrial Arbitration (Amendment) Act 1926 there was no abridgement of the Crown's right at any time to remove at pleasure notwithstanding any period mentioned in the appointment of a chairman. We are unable to agree with the construction placed upon sub-sec. 2 of sec. 6 of the Act of 1932. In terms the section provides that each chairman shall receive such compensation as he would have been entitled to had his services been dispensed with otherwise than according to law. This language appears to us to require the assumption, for the purpose of compensating him, that the appellant has suffered an unlawful deprivation of office and to direct that he shall receive that compensation which would be given for such a loss occasioned unlawfully. The expressions "would have been entitled" and "had his services been dispensed with" are adapted to describe an assumption contrary to fact. The words "otherwise than according to law" have the same meaning as "in a manner contrary to law." The construction adopted by the Full Court makes them mean "had his services been dispensed with otherwise than under this section whether according to law or not according to law." Such a meaning, in our opinion, the provision will not bear. A person who holds the office of chairman of conciliation committees and loses it under the Act is given a right to that compensation which he would receive if he had suffered an unlawful deprivation of office. In our opinion, a verdict ought not to have been entered for the Crown.

But a question remains whether the appellant is entitled to compensation assessed upon the footing that he would have retained office for the unexpired residue of the five years expressed in his appointment. Sub-sec. 1 of sec. 8 of the Industrial Arbitration (Amendment) Act 1926 does not fix or expressly empower the Minister to fix a period for which a chairman of conciliation committees should hold office. We agree with the view that sec. 30 of the Interpretation Act 1897 applies to sec. 8 (1), and, accordingly, that the Minister had authority to suspend or remove a chairman from his office notwithstanding that a fixed term had been specified in his appointment. In ascertaining the amount of compensation payable under sec. 6 (2) of the Act of 1932, we think no assumptions are required beyond that which is expressed. The tenure and conditions of office are to be taken to be what in fact and in law they were, but it is to be assumed that the claimant lost the office unlawfully and is to receive compensation for this assumed legal wrong. The question is not one of wrongful dismissal, although analogous to it. The chairmen of conciliation committees had entered into no contract of service with the Crown. They were independent persons occupying a public office to which rights and duties were assigned by law, not by contract. When they are treated for the purposes of compensation as having suffered a wrongful deprivation of office, the inquiry must be directed to ascertaining what were the profits and advantages which they might justly expect to flow from occupying it, and what corresponding burdens or restrictions they were relieved from by losing it. Street J. addressed himself to this question, but he treated the appellant as entitled as of right to hold office for the full residue of five years. In this, we think, he was wrong, because the appellant was subject to the Minister's power of summary removal. But, on consideration, we have come to the conclusion that no diminution should on this ground be made in the amount of compensation awarded. The appellant had a definite appointment of five years duration. This, although it would not prevent the exercise of the Minister's power of removal, amounts to a definite assignment of the term for which the Crown meant the appellant to hold office. It founded a just right to expect that, in the absence of misconduct, incapacity, or the like, on his part, the term would not be abridged by the exercise of the power to intervene and remove from office. The Legislature itself appears to have acted upon this view of the matter in removing the occupants of the offices by legislative means instead of leaving the Executive to resort to its statutory powers. In assessing compensation for loss of office, the practice has been to give an amount which represents the future advantages which the holder has a just right to expect. Under sec. 66 of 5 & 6 Wm. IV. c. 76, an officer of a borough in any office of profit which should be abolished became "entitled to have an adequate compensation, to be assessed by the council, and paid out of the borough fund, for the salary, fees and the emoluments of the office which he shall so cease to hold, regard being had to the manner of his appointment to the said office and his term or interest therein, and all other circumstances of the case." Compensation for loss of office assessed under this provision was calculated in respect of the period during which there was a just expectation that the office would continue (Ex parte Lee[1]; The Queen v. The Mayor, Aldermen and Burgesses of the City and Borough of Norwich[2]).

We think the assessment of Street J. should be restored, subject, however, to one modification. We agree with the Full Court in the adoption of three and one-half per cent instead of two and one-half per cent in computing the present value of future salary.

Geddes v. Magrath.—In the case of Morgan we have stated the construction which we place upon sec. 6 (2) of the Industrial Arbitration (Amendment) Act 1932, and the principles upon which we consider compensation thereunder should be ascertained. That construction and those principles apply a fortiori to the facts of this case, in which the appointment for a fixed term was made under express statutory authority. In the case of a deputy commissioner, sub-sec. 4 of sec. 6 of the Industrial Arbitration (Amendment) Act 1926 expressly authorized the fixing of a term, and it was for this reason that the Supreme Court held that the respondent was entitled to compensation. The Crown's appeal against that judgment must be dismissed. But, in the Full Court, the actual amount assessed by Street J. was reduced, rightly as we think, by the adoption of a higher rate of interest for ascertaining the present value of future salary. The respondent's cross-appeal from this reduction should be dismissed.

Geddes v. Magrath.—Appeal dismissed. Cross appeal allowed. Order of Full Court varied by omitting such part thereof as reduces the verdict for the plaintiff for £2,900. Verdict for the plaintiff for £2,900 restored. Appellant to pay costs of appeal and cross-appeal to this Court.

Morgan v. Geddes.—Appeal allowed. Order of Full Court discharged and verdict for plaintiff for £2,550 restored. Respondent to pay costs of this appeal and of appeal to Full Court.

[1] (1837) 7 Ad. & E. 139, at p. 140; [1837] EngR 792; 112 E.R. 423, at p. 424.

[2] [1838] EngR 756; (1838) 8 Ad. & E. 633; 112 E.R. 978.

High Court of Australia

Geddes v Magrath [1933] HCA 57; (1933) 50 CLR 520 (24 November 1933)

HIGH COURT OF AUSTRALIA