Cominelli & Bonazzi v Lake View & Star Ltd [1934] HCA 36; (1934) 51 CLR 553 (12 September 1934)

HIGH COURT OF AUSTRALIA

Cominelli and Bonazzi Plaintiffs, Appellants; and The Lake View and Star Limited Defendant, Respondent.

H C of A

On appeal from the Supreme Court of Western Australia.

12 September 1934

Rich, Dixon and McTiernan JJ.

Villeneuve Smith K.C. (with him Keall), for the appellants.

Jackson K.C. (with him Leake), for the respondent.

Keall, in reply.

The Court delivered the following written judgment:—

Sept. 12

Rich, Dixon and McTiernan JJ.

In the Warden's Court at Kalgoorlie upon the complaint of the appellants, a tributer and the administratrix of his deceased partner, an order was made that an account be taken of all ores purchased by the respondent company from the appellant and his partner. The period of the account is from 15th May 1930, the date of the commencement of two tribute agreements between them and the respondent company, until 20th April 1932. The order required the respondent company to pay the amount found to be due on taking such account with interest. The account was ordered because the Warden was of opinion that, notwithstanding an agreement set up by the respondent company as a discharge of the claims of the tributers, they were entitled under sec. 152 (b) of the Mining Act 1904-1923 W.A. to all premiums received by the respondent company on the sale of gold obtained from the ore delivered by the tributers and treated by the respondent company. The Warden appears to have considered that sums received by the respondent company for which it had not accounted answered the description "premium."

Upon appeal to the Supreme Court this order was set aside by Northmore C.J. upon the ground that the claim of the tributers had been discharged as a result of their acceptance of sums of money paid under the agreement relied upon by the respondent company. That agreement was dated 18th March 1932, and separately made between each of them and the respondent company. From the decision of Northmore C.J. an appeal is now brought to this Court. We are told that the question whether his decision is right concerns others besides the parties to the appeal, because a number of tributers entered into the form of agreement and signed the form of acknowledgment upon which the judgment of Northmore C.J. proceeds.

The provision upon which the tributers base their claims to a half share of the premiums upon the sale of the gold recovered by the respondent company from the ore, viz., sec. 152 of the Mining Act, was enacted in 1921, when a greater amount of Australian currency was obtainable upon the disposal of bullion than its equivalent in sovereigns. In 1915, the export of gold from Australia was prohibited except with the consent of the Treasurer. It became possible to obtain upon the sale of gold abroad a price which when converted into Australian currency exceeded the amount of £3 17s. 10½d. per ounce of standard gold, or the equivalent of £4 4s. 11.45d. per ounce of fine gold, which represents the relation of sovereigns to bullion fixed by the gold content. At the beginning of 1919, a Gold Producers' Association was formed and registered as a limited company, and this body was permitted by the Treasurer to export gold for the purpose of obtaining the increased return in Australian currency for its members, who constituted over 90 per cent of the gold producers of the Commonwealth. The course adopted in the disposal of gold at that time is stated in Mount Morgan Gold Mining Co. v. Commissioner of Income Tax (Q.)[1] and Dickson v. Commissioner of Taxation (N.S.W.)[2]. It appears from the documents quoted in the judgment of Rich J. in the first of these cases[3] that the excess sum obtained by the association on the sale of the gold was described as a premium, that for one period it amounted to 15s. 7d. per standard ounce sold, and that of the total sum the greater part accrued to the producers of gold in Western Australia.

In 1920, some tributers at Kalgoorlie who, according to the terms of their tributing contract as registered by the Warden, were entitled to the net proceeds of the gold after the deduction of royalty and other moneys payable by them to the mine owner treating the ore, failed to obtain the advantage of the excess amount of Australian currency obtainable for gold, because of their tacit acceptance of a further term upon which they delivered ore, viz., that the mine owner treating it should account for the gold on the basis of £4 per ounce on 90 per cent of the gold content as determined by agreed assay. A decision to this effect by Northmore J. was upheld in this Court in September 1920 by Knox C.J. and Gavan Duffy J., Isaacs and Rich JJ. dissenting (Smith v. The Great Boulder Perseverance Gold Mining Co.[4]). In December of the same year the Mining Act Amendment Act 1920 W.A. was passed, containing provisions giving a greater control over the terms of tributing agreements. Sec. 27 (d) required that, before registering such an agreement, the Warden should satisfy himself that it contained, among other things, a provision to the effect that the proceeds of the gold should be accounted for at the prices actually received on the sale of such gold. In the following year, by the Mining Act Amendment Act 1921, this provision was repealed, and that which became sec. 152 in the Mining Act 1904-1923 was enacted. Sec. 152 is as follows:—"In all contracts between a tributer and the owner of a treatment plant (whether the lessee of the mine under tribute or not) relating to the treatment of gold ore, the following provisions shall apply:—(a) It shall be obligatory on the part of the owner of such plant, when the ore is purchased on assay value, to account for all ores received by him from the tributer for treatment on the basis of not less than ninety per centum extraction of the assayed value of the ore; unless on an application to the warden it shall be otherwise determined, on proof to his satisfaction, that the ore is of so refractory a nature that ninety per centum of the assayed value cannot be extracted; and (b) The owner of the treatment plant shall also account for and pay to the tributer not less than fifty per centum of any premium received by such owner on the sale of the gold obtained from the ore treated."

It is evident, upon an inspection of the two paragraphs of this provision, that the "assay value" of the gold content of the ore is considered as having a definite money equivalent for which the owner of the treatment plant will account, and that it is expected that an amount of currency may be obtained per ounce on the sale of the gold recovered which will leave a surplus over this money equivalent and so constitute a "premium." But it does not appear from the terms of the section whether the money equivalent is regarded as established by the agreement of the parties, by the relation of gold currency to fine gold, or by a tradition or convention resulting from the long existence of that relation notwithstanding the suspension in economic fact during and after the war of a fixed relationship between currency and gold. It seems undeniable, however, that the provision was intended as a substitute for the requirement that the proceeds of the gold would be accounted for at the prices actually received. Its purpose appears to be to enable the owner of the treatment plant to retain half the amount described as a premium. It seems unlikely that it would be left to the agreement of the parties to fix the sum which should constitute the price of the gold that would be the base for the calculation of the excess called the premium.

As time went on questions relating to premiums from the sale of gold ceased to be important, and, probably, from the return of Great Britain to the gold standard in 1925 until the rise in Australia of the rate of exchange upon London, little or no premium was obtainable. But, as a result of the fall in value of Commonwealth notes in terms of sterling, a greater return in Australian currency was obtained upon the disposal of gold. Claims were then made by tributers upon the proprietors of treatment plants to share under sec. 152 (b) in the increased amount upon the footing that the increase constituted a premium within the meaning of that provision. These claims were resisted, and, in November 1930, an action was brought in the interest of the tributers in the name of one Scriven against the Great Boulder Proprietary Gold Mines Ltd. This action was heard by Northmore A.C.J., as he then was, and, on 3rd August 1931, he decided the question in favour of the tributers. His Honor said:—"There is no doubt that the excess that was paid by the mint was due to the exchange rate between Australia and London, but none the less the result was that any person who had gold for sale was in a position to demand and obtain for it a sum in excess of the value of the standard gold and that seems to me another way of saying that anyone who had gold to sell could obtain a premium on its sale."

On 20th October 1931, the defendant in that action obtained leave to appeal from this decision to His Majesty in Council. The appeal was not decided by the Judicial Committee until 22nd November 1932. The appeal was dismissed. In their Lordships' judgment (Great Boulder Pty. Gold Mines Ltd. v. Scriven[5]), which was delivered by Lord Macmillan, reliance was placed upon the practice of the mint in distinguishing between the value of gold upon "a standard gold content at £3 17s. 10½d. per ounce" and the premium on gold offered "owing to the exchange position" by banks in Western Australia. After referring to it, the judgment proceeds:—

It should be explained that standard gold used for minting sovereigns is an alloy of pure or fine gold, and that the value of £3 17s. 10½d. per ounce for standard gold corresponds to £4 4s. 11½d. per ounce for fine gold. During the whole of the period in question English currency was on the gold standard.

The appellants submitted that, notwithstanding the reiterated designation of the sums in question as "premiums" in the relative official documents of the mint, these sums, though paid to and received by them under that designation, were not "premiums" within the meaning of the statute. The argument, as their Lordships understand it, is that gold cannot be accurately described as being at a premium unless its price or value in the world market, i.e., the London price in sterling, is in excess of £4 4s. 11½d. for fine gold or £3 17s. 10½d. for standard gold, and that as the appellants have not received in Australian currency for the gold in question more than the equivalent at the prevalent exchange rate of £3 17s. 10½d. sterling per ounce of standard gold, they have not in fact received any premium at all. A premium, they say, denotes a payment in excess of par, and the payment received by them has not been in excess of the only par applicable, namely, the London sterling price.

Their Lordships recognize the cogency of the appellants' contention as applied to the world market for gold, but what has to be sought in the present instance is the meaning to be attached to the term "premium" as used in a particular statute of the legislature of Western Australia. When in official documents of Western Australia dealing with transactions in the sale of gold their Lordships find the term "premium" used to describe certain payments it becomes exceedingly difficult to hold that the same term has a different meaning in a statute of the same State dealing with the same transactions. The whole business out of which this controversy has arisen has been conducted in Australian currency; the £4 paid by the appellants to the respondent on the purchase of the ore was payable in Australian currency, the legal tender of the country; the costs of mining, treatment and realization, the wages of the tributers fixed at £3 10s. per week, the royalties payable to the appellants, and the mint charges are all reckoned in terms of Australian currency. If in Western Australia gold is paid for at more than £3 17s. 10½d. per standard ounce in Australian currency, it is appropriately described in the vernacular of commerce as being at a premium in the Australian market, although the increased payment is due to the depreciation of the Australian currency rather than to the appreciation of gold in the world market. Section 152 of the Mines Act is designed for the protection of persons in the position of the respondent in their contracts with persons in the position of the appellants, and when it requires the owner of a treatment plant to account for and pay to the tributer not less than 50 per cent of any premium received by such owner on the sale of gold obtained from the ore treated, their Lordships are satisfied that it is the conditions of the local market that are in contemplation. Accordingly, as the value of gold, measured by the standard of the legal tender currency of Western Australia was during the material period at a premium and was so described in the official language of those concerned there with this class of business, their Lordships reach the conclusion that the sums of money in question were premiums within the intendment of the statute[6].

It is to be noticed that their Lordships particularly refer to the fact that during the whole of the period in question English currency was on the gold standard. This fact was important to the understanding of the argument which the appellant submitted to the Board and their Lordships proceed to restate. It is suggested, however, that the existence in England of a gold standard forms the basis of the judgment. But we do not find it easy to see what materiality it can have to the view adopted by their Lordships as the alternative to that argument which their Lordships stated only to reject. They interpreted sec. 152 (b) as referring to the excess in Australian currency over the sum of £3 17s. 10½d. per ounce of standard gold obtained upon the sale of gold. It is not apparent how the fact that English currency did or did not remain on the gold standard could affect the application of the Western Australian statute so construed to the amount by which the Australian currency obtainable for gold exceeded the amount of currency in the form of sovereigns equivalent to the standard gold contents of the metal sold.

Before the decision of the Privy Council in Scriven's Case[7] was given, the respondent in the present appeal took measures to dispose of the claims of tributers winning ore from its mine and delivering it for treatment in its plant. It prepared a form of agreement which recited that the value of gold had lately increased owing to the operation of various causes, that the company had received or would, or might receive, the benefit of the increased value and a bounty under the Commonwealth Gold Bounty Act 1930-1931, that the tributer claimed 50 per cent of the premium on all such gold sold by the respondent company as well as the bounty on a proportion thereof, that the company exported the gold for sale in England, that the company was paid exchange by its bankers, and that disputes and differences had arisen between the company and the tributers as to the meaning of "premium," and concerning the amount which the tributer was entitled to receive from the company in respect of premium and bounty on the gold. It then recited that litigation was pending or threatened by the tributer against the company, and that the company and the tributer had mutually agreed to compromise and settle their differences. The operative part of the agreement expressed an agreement on the part of the tributer to accept from the company in full satisfaction of any claims which he might or should have or might have had against it to premiums and bounty (a) 50 per cent of the bounty, (b) 20 per cent of the amount received by the company in Australia on the value computed at £4 4s. 11½d. per ounce of fine gold, and (c) 50 per cent of the difference between the value of the gold computed at that price per fine ounce in Australian money and the value of the gold computed at the price actually received in England as though such price were Australian money. The agreement contained a covenant on the part of the company to pay these amounts in respect of each parcel of gold sold or to be sold by it, and on the part of the tributer, not to prosecute any claim which had arisen or might arise in respect of these matters. It ended with a release by the tributer of such claims. It may be remarked that from 6th August 1931 under the law of the Commonwealth the owner of the treatment plant was required to account for and pay to the tributer 50 per cent of any bounty received by such owner on account of the gold obtained from the ore treated (sec. 6, Act No. 15 of 1931).

A meeting of the tributers of the respondent company was called by it and they were individually requested to enter into the agreement proposed by the company. The tributers Cominelli and Bonazzi, with whom this appeal is concerned, ultimately consented to do so. Notice of termination was given by the respondent company under the tributing agreements of those tributers who refused to enter into such a contract.

Upon the assumption that the construction given to sec. 152 by the Privy Council applies after 21st September 1931, when Great Britain went off the gold standard, 50 per cent of the excess over £3 17s. 10½d. per standard ounce received by the company would be payable to the tributers, whether ascribed to exchange or simply to the appreciation of gold in terms of Commonwealth notes. The agreement, therefore, purports on this assumption to deprive the tributers of a considerable part of what would be payable to them under the statute. It also purports to govern the relations of the tributers and the respondent company prospectively. In fact the tributers, Cominelli and Bonazzi, who had been delivering ore since 15th May 1930, continued to deliver ore for treatment until 20th April 1932. Northmore C.J. was of opinion that the agreement lawfully operated as a discharge of the claims of the tributers which had accrued prior to its date. He decided, however, that it could not overcome the force of the section in respect of the subsequent relations of the parties. In this his Honor was clearly right. The terms of the section are imperative and its provisions must govern the relations of the parties notwithstanding any executory agreement to the contrary. So far as the agreement operated in respect of future deliveries of ore, it amounted to no more than an executory contract imposing conditions inconsistent with those imputed by the statute. But in respect of the ore delivered after the agreement, the respondent company actually paid the tributers according to its provisions and they signed acknowledgments of the receipt of the amounts so paid "in full settlement of our claims as set out in agreement with" the respondent company. His Honor considered that these payments so acknowledged operated to discharge the claims accruing after the agreement. It is open to doubt whether any intention on the part of the tributers to agree to the discharge of claims since accrued actually existed or was expressed. The acknowledgment seems to refer rather to payments pursuant to the agreement of 18th March 1932, than to a settlement of claims existing notwithstanding that agreement. This ground alone would be enough to displace the inference that the claims arising after the agreements were discharged by accord and satisfaction. But we think that the whole agreement is contrary to sec. 152 (b), and cannot be supported whether in respect of the antecedent or subsequent claims. The provision forms part of a carefully framed enactment for the protection of tributers. That enactment controls their freedom of contract in their interest. It places their contracts under the supervision of the Warden, and requires that they be approved by him and registered. The enactment originally included an express requirement that the proceeds of the gold should be accounted for at the prices actually received on its sale. In substitution for this provision, sec. 152 was passed. In terms, par. (b) directs that the owner of a treatment plant shall account for and pay 50 per cent of the premium. The agreement of the 18th March 1932, under colour of settling differences, attempts to substitute an entirely different method of remunerating the tributer for his gold. It altogether deserts the basis adopted by the section. The rule of the statute, to adopt the language of Lord Watson, in Anctil v. Manufacturers Life Insurance[8], "is one which rests upon general principles of public policy or expediency, and which cannot be defeated by the parties." The argument that, although the statute may be paramount in annexing its terms to the agreement of the parties, yet it does not exclude a compromise of disputed claims arising under the statute, neglects the character of the duty which the statute imposes. That duty is to account for and pay to the tributer an ascertainable sum. To pay another sum because the person upon whom the duty lies disputes the true interpretation of the statute governing the ascertainment of the amount is to violate the duty, not to pursue it sub modo.

For these reasons the judgment of the Supreme Court ought to be reversed and the order of the Warden restored. That order does not declare that the amounts obtained by the respondent company in respect of the gold in excess of £3 17s. 10½d. per ounce of standard gold are premiums. Although we do not doubt that that was the Warden's opinion, yet we agree with the contention of the respondent that, under the order made, it remains open to the respondent company to contend on the taking of accounts that some or all of this excess does not constitute a premium, notwithstanding the decision of the Privy Council in Scriven's Case[9]. We do not desire to encourage this contention, but as counsel for the respondent company submitted that the question did not arise upon this appeal, which concerned only the order made by the Warden, and that we ought not to decide the question so as to conclude the parties, and, as he did not argue it fully before us, we refrain from expressing any final opinion upon it. For the future the question has been set at rest by the Mining Act Amendment Act 1932 W.A..

The appeal should be allowed with costs.

The order of the Supreme Court should be set aside. In lieu thereof it should be ordered that the appeal from the Warden be dismissed with costs, and the order of the Warden restored.

Appeal allowed with costs. Order of the Supreme Court set aside. In lieu thereof order that the appeal from the Warden to the Supreme Court be dismissed with costs and the order of the Warden restored.

Solicitors for the appellants, Villeneuve Smith & Keall.

Solicitors for the respondent, Jackson, Leake, Stawell & Co.

[1] [1923] HCA 37; (1923) 33 C.L.R. 76, at pp. 82-85 and 98-104.

[2] [1925] HCA 29; (1925) 36 C.L.R. 489, at pp. 491, 492.

[3] (1923) 33 C.L.R., at p. 103.

[4] [1920] HCA 58; (1920) 28 C.L.R. 359.

[5] (1932) 36 W.A.L.R. 101.

[6] (1932) 36 W.A.L.R., at pp. 105, 106.

[7] (1932) 36 W.A.L.R., at pp. 105, 106.

[8] (1899) A.C. 604, at p. 609.

[9] (1932) 36 W.A.L.R. 101.