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High Court of Australia |
H C of A
On appeal from Evatt J.
4 April 1934
Evatt J.
Watt K.C. (with him Evatt and Thomas), for the plaintiff.
Flannery K.C. and Jordan K.C. (with them Nicholas), for the defendant.
April 4, 1934
Evatt J
. delivered the following written judgment:—In this action the plaintiff claims that there is owing to him from the State of New South Wales the sum of £1,114 10s. in respect of advertisements inserted by the plaintiff in a newspaper called the Labor Weekly. The newspaper circulated in New South Wales. Its owner, the plaintiff, was at all material times a resident of South Australia.
The case comes before this Court under sec. 75 (IV.) of the Constitution, which vests original jurisdiction in this Court in all "matters between States, or between residents of different States or between a State and a resident of another State." (See also Judiciary Act 1903-1933, secs. 58, 64.)
The actual decision of the Full Court of this Court in The Commonwealth v. New South Wales[1] , is that sec. 75 (III.) of the Constitution enables an action for tort to be brought by the Commonwealth against a State without the consent of that State. But the reasoning of the Court extends equally to sec. 75 (IV.). Thus Knox[2] :—"This power is conferred by the Constitution itself on this Court to take cognizance of this matter. Any legislation by Parliament directed to conferring this power would, therefore, be as superfluous as legislation by Parliament to restrict the limits of the jurisdiction would be ineffective."And Isaacs, Rich and Starke[3] :—"The cause of action, as a tort in its inherent nature, would as between subject and subject be justiciable in a competent Court. It therefore falls within the meaning of the word "matters" in sec. 75 of the Commonwealth Constitution."[4] :—"Obviously the matter was one to be dealt with by the Constitution, which created mutual rights and obligations between Commonwealth and States and foresaw the necessity of some tribunal, not the judicial organ of any one State exclusively, to determine or finally determine possible disputes between Commonwealth and States, and between different States, and between States and residents of other States. As to these the Constitution at once enacted sec. 75 as a self-executing provision in the terms mentioned. The words "in all matters" are the widest that can be used to signify the subject matter of the Court's jurisdiction in the specified cases. "Matters" read with the context and in relation to "judicial power" are limited by the inherent sense of matters which a Court of law can properly determine, that is, by some legal standard."Isaacs, Rich and Starke JJ. also pointed out that the word, i.e., "matters," must"[5] ."
The case therefore establishes that in the present action against the State of New South Wales by the plaintiff, a resident in another State, the question for the Court to determine is whether a breach of contract has been proved. (See Daly v. Victoria[6] ; Judiciary Act, secs. 58 and 64.)
At this stage two points should be mentioned. I assume in favour of the defendant State that it is not, by sec. 75 (IV.), or by secs. 58 and 64 of the Judiciary Act, placed in precisely the same position as a subject who is sued for breach of contract, so that it is entitled to invoke any constitutional immunity from liability other than the general liability for breach of contract implied by the Constitution or imposed by the Judiciary Act. This assumption may find support in sec. 106 of the Constitution and in the opinions expressed in the case of Australian Railways Union v. Victorian Railways Commissioners[7] .
I also assume in favour of the defendant State that the governing law to be applied in ascertaining and measuring the obligation of the contract is that of the State of New South Wales. It may be—I express no opinion on the point—that the express stipulation in the first contract is sufficient to ensure such a reference to the law of South Australia as will exclude the application of that part of the constitutional law of New South Wales which is invoked by the defendant. On the other hand, much is to be said in favour of the view that the constitutional doctrine in question applies whether or not the governing law of the contract is that of South Australia. At any rate, I assume in favour of the defendant that the doctrine is applicable.
The first advertising agreement which the plaintiff made with the defendant is embodied in a document dated 1st April, 1931. It provided for 5,000 inches of advertising space to be inserted in his newspaper between 2nd April, 1931, and April, 1932. The total moneys payable thereunder were to amount to £1,000. But the full 5,000 inches was not used during such period of twelve months, only 3,900 inches of advertisement being inserted. Payments to the plaintiff for the space used were made regularly by the government officers, including those whose duty it was to see that the payments were authorized by Parliament. When the first contract period was about to end the plaintiff interviewed Mr. Harpur, who was Superintendent of Advertising and had the management of all the Crown's advertising. The plaintiff pointed out that 1,100 inches had not been inserted during the year. He suggested an arrangement under which (a) 3,900 inches would be inserted over the next ensuing twelve months, and (b) the 1,100 inches available under the previous contract would be used at the rate of 45 inches per weekly insertion over a period commencing at once and ending about the end of October, 1932.
The plaintiff's proposal was accepted and the arrangement as to the 3,900 inches was embodied in a written document signed by Mr. Harpur as Editor of Publications and Superintendent of Advertising. It requested the Labor Weekly to have advertisements "re Government Tourist Bureau or other matter" inserted in its columns between 1st April, 1932, and 11th April, 1933, the minimum space per week to be 75 inches and the rate being 5s. 6d.
The full arrangement of April, 1932, was put into effect; advertisements were inserted and payment made regularly until 17th May, 1932, when the Under Secretary of the Premier's Department informed the plaintiff that he was directed by the Premier to inform him "that it is not intended to utilize any further space in your paper for Government advertising." Upon inquiry at the Premier's office the plaintiff was informed that this unilateral termination of the running agreements was taken upon the direct responsibility of the new Ministers of the Crown, who replaced the previous administration which had held office under Mr. Lang as Premier. The plaintiff refused to accept the breach. It may here be noted that the bona fides of the agreement with the plaintiff has not been impugned in any way in these proceedings.
Refusing to accept the breach, the plaintiff treated the agreements as still on foot and duly inserted advertisements throughout the agreed period in accordance with the standing copy which had been supplied to him by the Government Tourist Bureau through Mr. Harpur, the instruction having been that the last copy was to stand until the Government desired fresh copy to be inserted. To the manner or form of the advertisements no objection was raised by the Government either whilst they were being inserted or during the present hearing, where the State took its stand upon legal considerations of a technical character. That the Government was quite aware of the form of the advertisements inserted by the plaintiff appears from a letter dated 1st November, 1932, from the Under Secretary of the Premier's Department to a body called the Sane Democracy League, which seems to have complained that Government advertisements were being inserted in a Labour newspaper. The same knowledge on the part of the Government is shown by the letter dated 1st June, 1932.
The first question which arises is whether the plaintiff has shown that the agreement entered into in April, 1932, was authorized by the then Ministers of the Crown, that is, whether Mr. Harpur had sufficient authority on behalf of the Crown to enter into the transaction in question. In my opinion, this question admits of only one answer. The insertion of advertisements for Government trading concerns such as the Tourist Bureau, and also for ordinary administration purposes, was essential to the proper functioning of the Executive Government of the State of New South Wales. This is shown by the long-continued practice of Parliament's voting moneys for advertising services and by the setting up of an officer like Mr. Harpur to act as a permanent official for dealing exclusively with all Government advertising. Not only was the insertion of Tourist Bureau advertisements within the ordinary scope of administration; in the present case it is abundantly clear that the responsible Ministers required that the transactions should be entered into and did so "as a matter of Government policy." The actual directions to Mr. Harpur proceeded from the secretary of the Premier, Mr. Lang, one of whose Cabinet colleagues was Mr. Gosling, the Chief Secretary, to whose responsibility in the first instance the industrial undertaking known as the Tourist Bureau was committed. No objection was raised to the admissibility in evidence of conversations between the permanent Under Secretary, Mr. Hay, and the Premier, the Premier's private secretary and Mr. Harpur; and these conversations prove a direct chain of authority from the first Minister of the Crown as representing the Cabinet to Mr. Harpur, who made the final and formal arrangements with the plaintiff. There was no statutory or other authority which required such transactions to be documented or evidenced by Order in Council or in any other special manner.
The suggested defence that the contract was not authorized by the Government completely fails. It is only right to add that, although raised in the pleadings, this defence was not seriously pressed at the hearing.
The main, indeed the only real defence relied upon by the State of New South Wales, was that Parliament did not make public moneys available for the express purpose of paying the plaintiff for his advertising services. The defence is, of course, quite unmeritorious, and its success might tend to establish a dangerous precedent in the future. But it raises an interesting question of law, the examination of which shows that the repudiation of subsisting agreements by a new administration can seldom be ventured upon with success.
The facts in relation to the relevant grants of public money by Parliament are somewhat complicated. The two financial years to be considered are 1931-1932 and 1932-1933 for, as I have already explained, the agreements sued on by the plaintiff, although made in April, 1932, stipulated for the performance of advertising services not only during the then current financial year, but the succeeding financial year also. I now deal with the financial year 1931-1932. The Supply Act (No. 5) (No. 46 of 1931) was assented to on 6th October, 1931. It recited a resolution of the Assembly to grant to the Crown a sum mentioned in the statute and then proceeded, in the ordinary form, to make good the grant by authorizing the issue and application out of the Consolidated Revenue Fund of the specified sum "to be expended at the rates which are shown on the estimates for the financial year ending thirtieth day of June, One thousand nine hundred and thirty-two, as laid upon the table of the House, to defray the expenses of the various departments and services of the State during the months of October and November or following month of the financial year ending thirtieth day of June, One thousand nine hundred and thirty-two, subject to the rate of any reduction that may hereafter be made in the expenditure of the year 1931-1932."
It will be observed that this temporary Supply Act referred to the estimates as laid upon the table of the House. Those estimates are in evidence. At page 35, one of the enumerated "functions of the Department" of the Premier is No. 7, "Government Advertising and issue of Government Publications," and No. 8, "Publicity for all Departments." At page 41 the annual estimate for "Governmental Advertising" is £6,600.
The next Supply Act was Act No. 58 of 1931. In form it followed the Supply Act already mentioned. It authorized expenditure for December, January and February at the rate shown on the estimates referred to above. This Supply Act was followed by one passed on 7th March, 1932 (Act No. 1 of 1932). By this Act authority was given to issue moneys from the Consolidated Revenue Fund to make good supplies voted for the months of March and April, 1932. Act No. 8 of 1932 followed the same form as the three previous temporary Supply Acts, and authorized expenditure in respect of the month of May, 1932. These four Acts were based upon the current estimates for 1931-1932.
Finally, Act No. 11 of 1932 authorized the application of certain sums out of the Consolidated Revenue Fund to make good grants in respect of the month of June, 1932. In this case, however, the money was authorized to be expended at the rates shown in the estimates for the previous financial year, that is, 1930-1931, which had been embodied in the usual Appropriation Act. The appropriation for the year 1930-1931 for the Government Advertising (Premier's Department service) was £9,900.
The ordinary Appropriation Act was not passed in respect of the year 1931-1932. I do not suggest that either administration was at fault in the matter, but, in any event, responsibility must be borne both by the Lang and Stevens administrations, the former holding office for about ten months of the financial year, and the latter for about two months.
It will be observed that the five Supply Acts for 1931-1932 granted supplies for the Government services for only nine months of the financial year. In respect of the first three months, sec. 33 of the Audit Act provides that if, before the close of any financial year, no Act is passed granting and appropriating moneys out of the Consolidated Revenue Fund to meet the requirements for the next succeeding financial year, the Treasurer may pay moneys in order to meet current and accruing requirements, subject to certain conditions. Under these conditions the authority of the Treasurer ceases upon the passing of the Appropriation Act for the next succeeding financial year, and does not, in any event, extend beyond the first three months of that year. Further, when the Appropriation Act is passed, all payments are to be treated as made out of the supply granted by the Appropriation Act under the respective divisions and heads of services. Further, the authorized rates of payment are to be based upon the Appropriation Act of the immediately preceding financial year "in respect of all salaries ... contracts, supplies, services ... and other recurrent charges."
Sec. 33 (1) (d) also provides that, when the estimates of expenditure for the year are presented to Parliament and the rate of expenditure in such estimates is in any case lower for any service than that authorized by the previous Appropriation Act, the payments under the authority of sec. 33 shall not exceed the lower rates.
It appears that the estimates for the year 1931-1932 were laid before the Assembly on 27th August 1931. The event mentioned in sec. 33 (1) (d) having happened, the result in respect of Government advertising was to limit the authority to make advertising payments to the rate of £6,600 per year, instead of £9,900 per year, which was the appropriation in respect of 1930-1931. It would appear doubtful whether sec. 33 (1) (d) operates in respect of that portion of the months of July, August and September which have elapsed before the estimates are presented to Parliament. I shall assume that there is a retroactive operation so that, in respect of the Government advertising service for the whole financial year 1931-1932, eleven months out of the twelve should be treated upon the basis of an annual vote of £6,600 per annum, in accordance with the current estimates, only the last month, June, 1932, being treated upon the basis of an annual vote of £9,900. The net result is that the total supply which Parliament made available during the year for Government advertising can be reckoned as amounting to eleven-twelfths of £6,600, plus one-twelfth of £9,900, that is, £6,875 in all.
It appears from the statement prepared by Mr. Kelly, Chief Accountant at the Treasury, that if payment had been made to the plaintiff in respect of the advertisements inserted before the end of the financial year, 30th June, 1932, but not paid for, the total expenditure for the service would only have amounted to £4,595 18s., a figure considerably lower than the assumed minimum supply voted by Parliament, that is, £6,875. At the same time it may be noted that upon the hypothesis mentioned, the statement erroneously treats the total supply available in respect of 1931-1932 as £7,700, for such figure does not apply the condition mentioned in sec. 33 (1) (d) of the Audit Act and discussed above.
Before referring to what took place in the financial year 1932-1933, it is convenient to consider the legal position as it existed on and in respect of 30th June, 1932. It was argued for the State that it was a condition of the contracts with the plaintiff that all payments of money thereunder should be authorized by Act of Parliament, and it was said that no person can successfully sue the State of New South Wales in the absence of a precise or specific Parliamentary allocation of public moneys for the purpose of making payments under the contracts. It was further contended that, even in an Appropriation Act, the constitutional condition of such contracts is not fulfilled unless it can be shown that Parliament's intention was directed to the particular payment to the particular contractor.
Certainly, the New South Wales Constitution Act does contemplate that subject to the payments to be made in pursuance of the Constitution Act itself, the Consolidated Revenue Fund should be subject to be appropriated to such "specific purposes" as may be prescribed by any Act in that behalf (sec. 45). But this section is necessarily subject to the terms of any subsequent Act passed by Parliament, this part of the Constitution of New South Wales being of a flexible character. For the principle of McCawley v. The King[8] is that, in dealing with public moneys or indeed any other subject not governed by a special method of law-making, Parliament is not bound to adhere to the letter or spirit of sec. 45, but is, on the contrary, empowered to make any provision it thinks fit, whether consistent or not with sec. 45.
Whilst the validity of the various Supply Acts for 1931-1932 have not, and cannot, be impugned, the question still remains whether their terms are sufficient to enable the plaintiff to satisfy the constitutional doctrine invoked by the defendant to defeat his present claim.
In the well-known case of Churchward v. The Queen[9] , Shee J., in a passage often cited, adopted the principle that, in the case of a contract by a subject with the Crown, there should be implied a condition that the providing of funds by Parliament is a condition precedent to the Crown's liability to pay moneys which would otherwise be payable under the contract. In that case the actual promise was to pay a sum "out of the moneys to be provided by Parliament" (see Churchward v. The Queen[10] ); so that the judgment of Shee J. went beyond the actual point necessary to determine the case. Churchward's Case[11] was decided upon demurrer, the third plea alleging that "no moneys were ever provided by Parliament for the payment to the suppliant for, or out of which the suppliant could be paid for the performance of the said contract, for any part of the said period subsequent to the 20th June, 1863, or for the payment to the suppliant for, and in respect of, or out of which the suppliant could be paid or compensated for, in respect of any damages sustained by the suppliant by reason of any of the breaches of the said contract committed subsequent to the said 20th of June, 1863" [12] . (I italicize certain words.)
Further, the Appropriation Acts referred to in that case expressly provided that Churchward's claim was to be excluded from the large sum of money (£950,000) thereby voted for the general purposes of providing and maintaining the Post Office Packet Service.
The judgment of Shee J. has always been accepted as determining the general constitutional principle. But it should be added that Cockburn[13] :"I agree that, if there had been no question as to the fund being supplied by Parliament, if the condition to pay had been absolute, or if there had been a fund applicable to the purpose, and this difficulty did not stand in the petitioner's way, and he had been throughout ready and willing to perform this contract, and had been prevented and hindered from rendering these services by the default of the Lords of the Admiralty, then he would have been in a position to enforce his right to remuneration."
It appears clear that the first part of this passage has not been acted upon by the Courts in the cases subsequently determined, and that, even where the contract to pay is in terms "absolute" and the contract fails to state that the fund has to be "supplied by Parliament," the Crown is still entitled to rely upon the implied condition mentioned by Shee J.
The second part of Cockburn's C.J. statement, that, if there is a fund "applicable to the purpose" of meeting claims under the contract, the contractor may enforce his right to remuneration, has never, so far as I know, been questioned. Moreover, its correctness was assumed by the terms of the Crown's third plea in Churchward's Case[14] which denies that moneys were ever provided by Parliament "out of which the suppliant could be paid for the performance of the said contract."
Mr. Flannery, for the Crown, relied upon Commonwealth v. Colonial Ammunition Co.[15] [16] Isaacs and Rich JJ. discussed the general object of parliamentary supply and appropriation under the system of responsible government. But it is clear that the discussion was entered upon in order to show that the mere inclusion in an Appropriation Act of a general reference to some Government service cannot be relied upon in order to work a legalization or validation of every contract which related to such service, but which has been rendered invalid by the non-observance of the conditions of a prior statute. In the Colonial Ammunition Case[17] the contract should, in accordance with sec. 63 of the Defence Act[18] . There being no Order in Council, reliance was placed upon certain Appropriation Acts. But Isaacs and Rich[19] :—"The object of Parliament in such a case is financial, not regulative. In doing that, it is not concerned with general legislation, and is acting wholly alio intuitu (see May's Parliamentary Practice, 10th ed., p. 562). It thereby neither betters nor worsens transactions in which the Executive engages within its constitutional domain, except so far as the declared willingness of Parliament that public moneys should be applied and that specified funds should be appropriated for such a purpose is a necessary legal condition of the transaction. It does not annihilate all other legal conditions."
From this it appears that the learned Judges considered that the somewhat general appropriation there relied upon was sufficient to satisfy one "necessary legal condition of the transaction," though not all other legal conditions. The condition which was satisfied is, of course, the condition referred to by Shee J. in Churchward's Case[20] , and here invoked by the defendant.
That this is a correct view of the Colonial Ammunition Case[21] is shown by the judgment of Isaacs J. in The Commonwealth v. Colonial Combing, Spinning and Weaving Co. (Wooltops Case[22] , where it is stated that Parliament may sanction the expenditure of public money payable under contracts with the Crown "either by direct legislation or by appropriation of funds."
I quite agree that ne her the reference in the Colonial Ammunition Case[23] nor the passage mentioned in the Wooltops Case[24] is directed to determining the question, what degree of authorization or reference in an Act is to be deemed sufficient to comply with the constitutional condition mentioned by Shee J. in Churchward's Case[25] . But at the very least the cases do not qualify in any way the observation of Cockburn[26] , to which I have referred.
In Commercial Cable Co. v. Government of Newfoundland[27] Viscount Haldane said:"For all grants of public money, either direct or by way of prospective remission of duties imposed by statute, must be in the discretion of the Legislature, and where the system is that of responsible government, there is no contract unless that discretion can be taken to have been exercised in some sufficient fashion."
This general principle adopts the main principle of Churchward v. The Queen[28] , though expressing it somewhat differently. However, the statement affords no guidance as to what will, under any particular circumstances, constitute a "sufficient" expression of the exercise of the Legislature's discretion to grant or withhold public moneys.
In Auckland Harbour Board v. The King[29] the facts were somewhat analogous to those in the Colonial Ammunition Case[30] . A New Zealand statute had provided that the sum in respect of which the Auckland Harbour Board petitioned against the Government of New Zealand was payable to the Board by the Government, but only subject to a condition described in the statute. This condition was not, in fact, satisfied, and the Board then sought to rely upon a subsequent Appropriation Act, in which Parliament granted public moneys in general terms for railway purposes. This was said to be capable of dispensing with the non-fulfilment of the condition of liability expressly laid down in the prior statute. But it was held by the Privy Council that it had no such operation. Chapman[31] , when the case was before the New Zealand Supreme Court:—"As to the effect of the parliamentary appropriation—a question on which we have not had the advantage of hearing argument—I cannot conceive that this covers or was intended by Parliament to cover the mistake that has been made. There is a general vote for opened lines in the North Island, but that refers to lawful expenditure. A specific mention of this sum would, of course, have ended all controversy, but here there is nothing to show that Parliament expressed its will with reference to what was otherwise an unauthorized payment."
Hosking[32] : "It appears to me to be clear that, although moneys are appropriated by Parliament in anticipation for particular purposes, no part of them can be disbursed by the officers of the Crown until that part has become payable according to the law governing its payment."
These opinions of Chapman and Hosking[33] .
The opinion expressed by Chapman J. was that a specific mention of the sum in dispute "would, of course, have ended all controversy," but, as the grant was general, it could not be regarded as an authorization of expenditure otherwise unlawful because it did not sufficiently appear that the condition of the earlier statute had been waived by Parliament.
It is abundantly clear, I think, that the Auckland Harbour Board Case[34] does not justify the theory that, where there is nothing unlawful in a contract entered into by the Crown, and that contract is authorized by responsible Ministers, and made by them in the ordinary course of administering the affairs of Government, a detailed reference to the particular contract must be found in the statutory grant in order to satisfy the constitutional condition laid down in Churchward's Case[35] .
Incidentally it should be noted that the Auckland Harbour Board Case[36] shows that payments made from the Consolidated Revenue Fund in the absence of a "sufficient" parliamentary authority may be recovered back by the Government if they can be traced. In these circumstances, it would be an extraordinary if not disastrous doctrine if the law is, as the Crown contends, that not a single contract made by the Crown with a subject is enforceable against the Crown, and every payment made thereunder is recoverable back from the subject, unless a clear reference to payments under the particular contract is contained in an Act of Parliament. This doctrine would reduce almost to a nullity the responsibility of Ministers for the ordinary course of governmental administration, and would compel Parliament to devote all its time and attention to administrative, as distinct from legislative, duties. The position may be illustrated.
It has been the practice of the Government to enter into advertising contracts, the performance of which extends or may extend into more than one financial year, apart altogether from the innumerable contracts for single insertion advertisements in newspapers and periodicals. For instance, on 1st June, 1932, the Government entered into a contract with the proprietor of the Sydney Morning Herald, and accepted a heavy liability for advertisements covering the month of June in the financial year 1931-1932, and eleven months during the following financial year. Payments were made to the proprietor from time to time in accordance with the contract. But no reference whatever was made to this particular contract in any Act of Parliament. If the argument for the State is right, this money is recoverable back from the proprietor, although the contract has been fully performed on the part of the newspaper. Contracts of a like character were admitted in evidence in order to show the practice of the Government in relation to the Government advertising business of the State and in order to measure the precise surplus or deficiency in the Parliamentary grants for advertising. But the contracts also show that it has never been the practice for Parliament itself to consider with particularity that large number of contracts payments under all of which are made in reliance upon the general Parliamentary grant for Government advertising.
Further illustrations suggest themselves. During the course of argument I mentioned the expenditure on books in the library attached to the Attorney-General's Department. This expenditure has been covered only by a general vote for the library. It would be preposterous if Parliament should have to address its attention to each contract for the purchase of books for this library and determine, with fitting solemnity, what firm or company should supply each book or each parcel of books.
Again, as was stated in evidence, the Crown enters into many transactions under which it becomes lessee of premises. Rent thus becomes payable by the Crown weekly, monthly or yearly. But it has never been the practice that leases should be submitted to Parliament for approval, or that the individual lessors should be mentioned by name or other description in some portion of the Supply or Appropriation Act.
From convincing illustration, one may turn to the discussion of learned writers. Thus Durell in his work on Parliamentary Grants says:—"It is not its (i.e. Parliament's) duty to decide upon matters of administration itself, but to take care that the persons who have to decide them are the proper persons, and are honestly and intelligently chosen. "Deliberation, and not despatch, is the duty of the House of Commons." Again, "when a popular body knows what it is fit for and what it is unfit for, it will more and more understand that it is not its business to administer, but that it is its business to see that the administration is done by proper persons, and to keep them to their duties." The working of constitutional government necessitates the delegation of certain powers to every department. If such powers are exercised with the knowledge of Parliament and subject to its control, they can be more advantageously discharged by the responsible Minister or his department, which has the special or local knowledge, than by direct parliamentary action (p. 20)."
Durell adds, with reference to the "course of expenditure" : "The control of Parliament over the course of expenditure is limited to its control over the Executive; and so long as the Government possesses the confidence of the House, no active exercise of control would take place except in case of suspected illegality" (p. 21).
Maitland, in his Constitutional History of England (1908), pp. 445, 446, says:—"But statute does not say to the queen, "You shall spend so much on your embassies, so much on your navy." Rather its language is: "Here is money for this purpose and for that; spend it if you please; we trust the discretion of your advisers; the account of the expenditure will be presented to us and votes of censure may follow." This, however, applies only to expenditure within the limits laid down by the Act; here are two and a quarter millions for war-like stores, £100,000 for the royal parks, one hundred guineas for expenses connected with the observation of the transit of Venus; if more is drawn out for any of these purposes, some one will have committed a crime, indeed in all probability several persons will have conspired to commit a crime."
It may be added that one of the grants which Maitland (at p. 385) describes as appropriated "with great minuteness" includes "£2,902,900 for the payment of seamen and marines, £964,400 for their victuals and clothing, £11,477 for the maintenance of the British Museum and the Natural History Museum, £2,100,000 for public education, £1,000 as a gratuity for the widow of a certain distinguished public servant."
Later (at p. 445), he describes an appropriation as "pretty minute" which includes £1,639,300 "for the expense of dockyards and naval yards at home and abroad," and £50,000 "for Her Majesty's foreign and other secret service."
Durell fully discusses the legal position, and concludes:—"If, as is the case, Parliament grants to the Crown a certain sum for a certain service in a given year, without any more definite appropriation in the terms of the grant, it is legally competent to the Executive to expend that sum at discretion in the year upon that service. That is to say, since the parliamentary enactment deals with the vote only, the Government is not legally bound to adhere to the details submitted to Parliament, provided the expenditure is restricted to "the four corners of the vote." Morally, however, the Government must adhere to those details as far as is consistent with the interests of the public service, since its good faith is pledged by the details given to Parliament, and the Comptroller and Auditor-General would correctly bring divergencies to notice. This being so, it follows that if Parliament wishes to definitely prohibit the use of a vote for a service which would be covered by the terms of the resolution granting the vote, even though no mention is made of it in the details of the estimates, the resolution must contain a special proviso to that effect. By this means only can Parliament ensure that a particular service is not carried out, for then there would be no funds which could legally be applied to it. In the absence of such a proviso there would be no technical incorrectness in charging the expenditure against the vote, even though the service were for a purpose for which Parliament had not wished to provide. This point is admitted by the Treasury, which points out that, even if the amount of a vote is reduced in supply, there is no guarantee that expenditure will not take place upon the object in respect of which such reduction is made (pp. 296, 297)."
A case in which the views of Maitland and Durell, though not referred to, seem to be applied to their full extent, is the decision of the Full Court of New South Wales in Commonwealth of Australia v. Kidman[37] . In that case it was held that a contract between the Commonwealth of Australia and the then respondent had been recognized as valid by certain Appropriation Acts of the Commonwealth Parliament. These Acts authorized the payment of moneys in respect to "Commonwealth Shipbuilding" and the "construction of ships." The Court held that as payments under the contract were made, or could be presumed to have been made, under the Appropriation Acts in question, it was impossible for the Court to treat the contract as being invalid.
Without necessarily following Durell to the full extent of his argument, I am satisfied that, in the absence of some controlling statutory provision, contracts are enforceable against the Crown if (a) the contract is entered into in the ordinary or necessary course of Government administration, (b) it is authorized by the responsible Ministers of the Crown, and (c) the payments which the contractor is seeking to recover are covered by or referable to a parliamentary grant for the class of service to which the contract relates. In my opinion, moreover, the failure of the plaintiff to prove (c) does not affect the validity of the contract in the sense that the Crown is regarded as stripped of its authority or capacity to enter into the contract. Under a constitution like that of New South Wales where the legislative and executive authority is not limited by reference to subject matter, the general capacity of the Crown to enter into a contract should be regarded from the same point of view as the capacity of the King would be by the Courts of common law. No doubt the King had special powers, privileges, immunities and prerogatives. But he never seems to have been regarded as being less powerful to enter into contracts than one of his subjects. The enforcement of such contracts is to be distinguished from their inherent validity.
It appears that no Appropriation Act eo nomine was enacted for the year 1931-1932. We have seen that the responsibility for this omission lies upon the two governments which held office during that financial year. It was suggested that the absence of an Appropriation Act is fatal to the plaintiff's claim.
In my opinion, the English practice of Parliament's covering expenditure early in the financial year by passing Consolidated Fund Acts and subsequently appropriating the same amounts retrospectively in the Appropriation Act, has caused some misconception as to the precise legal situation in New South Wales. As to the English practice, Durell says:—"All grants in supply are strictly appropriated to the service of the financial year in which provision is made, and no issues can be made from the consolidated fund on account of unspent grants in one year for use, even temporarily, in the following year. Unless, therefore, the services are to be brought to a standstill, it is absolutely essential that provision for carrying them on should be made before 1st April. The Treasury, moreover, has no power to authorize issues out of the consolidated fund except under statute. It is therefore necessary to pass before 1st April, a Consolidated Fund Bill which empowers the Treasury to issue out of the consolidated fund, for the service of the departments for whose use the grants are voted, such sums as they require, in anticipation of the statutory sanction to be conferred by the Appropriation Act. Similar Bills may also be required between 1st April and the date on which the Appropriation Act is passed, if the supply made available by the first one becomes exhausted (pp. 29, 30)."
And he adds:—"When all the estimates of the year have been voted, the Appropriation Bill is brought in. The passing of this gives final and full legal sanction to the votes on account which have previously been passed, by appropriating them to their respective services. The issues out of the consolidated fund are legalized by the passing of Consolidated Fund Bills, but these bills give no legal effect to the votes as such. If a prorogation or a dissolution takes place before the Appropriation Act is passed, all the grants made are nullified and would require to be re-voted in the next session before a legal appropriation could ensue. It is therefore necessary that before a dissolution takes place, all grants on account should be legalized by an Appropriation Act (p. 35)."
Why should a dissolution or a prorogation nullify a grant on account? Hearn in The Government of England (1886), p. 370, points out that these grants on account are "towards making good the services voted in the present session" And he adds that"the word "vote" is a term of art and implies that the resolution thereby announced ends with the current session. Hence if, as has sometimes happened, the session terminates without an Appropriation Act, there remains nothing upon which the Ways and Means Act can operate. They are not repealed, and payments already made under them are valid, but as they are limited to "services voted in that session," and as these votes no longer exist, the grants become inoperative, and must be re-voted when Parliament has again assembled (p. 370)."
For this proposition of law, Hearn relies in the main upon the case of Alcock v. Fergie[38] [39] :—"But to render any part of the consolidated revenue legally available for and applicable to the payment of the amount of this judgment, Parliament must have voted and actually appropriated the money for the purpose; and this must have been effected either by a general, or a special, Appropriation Act; or the moneys comprised in what is known as a Supply Bill must have been applied to the particular purpose during the operation of the measure. It is admitted that no general Appropriation Act has passed, and that the session terminated before the contract was made. The operation of the Supply Bill therefore lapsed."
Turning to the form of the so-called Supply Bill, No. 322, it provided that "there shall and may be issued out of the consolidated revenue and applied from time to time to such services as shall then have been voted by the Legislative Assembly of Victoria in this present session of Parliament, any sums of money not exceeding £300,000" [40] .
This was a very curious form of wording, and it was quite capable of being regarded as meaning that unless, at the time of payment out of the consolidated revenue, there was existing a resolution of the Assembly covering or referring to the services, no payment should be made. And, as Hearn points out or implies, a mere resolution of one House of Parliament ceases to have any living force or effect after a prorogation or dissolution. In striking contrast to the Victorian Act No. 322, which was dealt with in Alcock v. Fergie[41] , is the Victorian Act No. 327, sec. 2 of that Act providing: "There shall and may be issued out of the consolidated revenue and applied for or towards making good the supply granted to Her Majesty for the service of the year one thousand eight hundred and sixty-eight the sum of one million pounds."
This latter provision is more in keeping with the form of the English Consolidated Fund Acts, for, although it makes a reference to the grant of supply to the Crown, it makes no reference, either expressly or impliedly, to the existence of Assembly resolutions at the time of payment out of revenue for the services of the Crown.
The English practice is referred to by Durell in the passage already cited. The form of the Consolidated Fund Acts is that the Treasurer may issue out of the consolidated fund and apply towards making good the supply granted to the Crown for the services of the year, a certain sum of money. Later when the Appropriation Act is passed (that is in England), it always contains a section appropriating, as from the date of their original passing, the sums granted in the Consolidated Fund Acts towards the services and purposes expressed for the first time in the Schedule to the Appropriation Act.
It is quite clear that Durell's reference at page 35, quoted above, that grants contained in the Consolidated Fund Acts are nullified upon prorogation or dissolution, whilst certainly emphasizing the usual constitutional practice, contains a legal opinion of very doubtful import. The authority quoted by Durell is May, who says (13th ed. (1924), p. 499):—"The grants on account caused by a dissolution should be legalized by an Appropriation Act, passed before Parliament is dissolved, appropriating in detail all the supply voted in the expiring session in the manner used at the close of an ordinary session; and the amount of supply left unvoted is dealt with by the succeeding Parliament. The prorogation or dissolution of Parliament without an Appropriation Act is a constitutional irregularity, as thereby all the grants of the Commons are nullified, and the sums must be voted again in the next session, before a legal appropriation can be effected. This course was followed on the two occasions when Parliament was dissolved, no Appropriation Act having been passed. On the occasion of the dissolution of 1820, the Commons did not pass a Bill to effect the due appropriation of certain temporary supplies; a course which drew from the Lords a remonstrance, which that House recorded on its journal."
It is also true, as May noted, that the Commons in 1784 resolved that persons who acted on supply grants not covered by an Appropriation Act would be guilty of a high crime and misdemeanour, but this resolution of the House of Commons was only intended, as most historians agree, to deter Pitt from securing from George III. a dissolution of Parliament. In spite of the threat, Pitt acted on supply grants, and Parliament was dissolved without an Appropriation Act. The statement in Alcock v. Fergie[42] attributed to counsel, of whom Hearn himself was one, that Pitt, trusting to obtain a majority in the new House of Commons, looked to an indemnity from the future Parliament, and duly obtained it, is quite incorrect. The contrary is not only asserted, but commented upon by the standard authorities. For instance, Tomline says: "Nor was any Bill of indemnity passed, or even called for, by those who had in the old Parliament declared that it would be necessary in case of a dissolution" (Memoirs of the Life of the Rt. Hon. William Pitt (1822), vol. i., p. 507). And Stanhope emphasizes the same fact, and comments:—"Thus worthless was the resolution which the late House of Commons had carried on this subject. So completely had all the threats antecedent to the dissolution fallen to the ground" (Life of the Rt. Hon. William Pitt (1861), vol. i., p. 224).
It may also be noted that the Acts under which Pitt acted were two, one granting to the Crown certain excise duties, and the other a land tax (24 Geo. III., sess. 1, cc. 1 and 4). These Acts bear little resemblance to the modern Consolidated Fund Acts, which are concerned not at all with authorizing the imposition of taxation, but only with the provision of a key to enable the Executive to unlock the Treasury so as to meet the exigencies of the public service. It is, of course, true that by 24 Geo. III., sess. 2, c. 44, the moneys arising from the excise duties and land tax were duly appropriated. But no inference can or should be drawn that any illegality would have been committed merely by reason of the absence of an Appropriation Act. May's note on the subject seems to have been affected, to some extent at least, by the original Whig tradition that the danger to be guarded against was actually misappropriation by the Crown of moneys intended to be allocated to a specific purpose.
In truth, the modern Supply Acts, such as those passed in New South Wales during the financial year 1931-1932, are not merely Supply Acts but also Appropriation Acts so far as they operate and extend. The constitutional practice is that such Acts are subsequently embodied in one Appropriation Act which deals with the whole financial year. In this sense the Appropriation Act replaces them, and they cease to govern the situation. But it must be taken that the New South Wales Parliament deliberately chose to dispense with an Appropriation Act in respect of the year 1931-1932, and to rest content with the Supply Acts which, with the Audit Act, covered the full twelve months' supply. The possibility of variation or replacement by an Appropriation Act never having eventuated, one is necessarily referred back to the Supply Acts and the Audit Act themselves. In such circumstances all that a Court of law can do is to attend to their terms and give them full force and effect. Doing this, the result is a distinct authorization to the Executive to pay moneys from the Consolidated Revenue Fund (the only fund now in question) upon the basis of the estimates referred to in the Acts, the fund being made available in order to defray the expenses of the Crown in the various departments and services during the months specified in the Acts. It is not possible to treat the Supply Act and the Audit Act as ceasing to operate because prorogation or dissolution took place in May, 1932, and no Appropriation Act in the usual form has ever been passed. Of course the authorization to pay extends only to the various months of the year 1931-1932, and ceased to have effect on 30th June, 1932. But this is also the case when the Appropriation Act is passed in the usual way.
The actual point of Alcock v. Fergie[43] concerned the effective recovering of moneys payable originally under a contract entered into after the session had closed, and said to be irrecoverable in any event because, at the time of suit, no moneys were legally available for the purpose of payment. An important part of the reasoning in Alcock v. Fergie[44] was subsequently rejected by Madden C.J., in his illuminating judgment in Fisher v. The Queen[45] . Madden C.J. said, referring to the earlier judgment of Stawell C.J.:—"But his Honor says that "a specific appropriation must be of a specific sum for a specific definite object which Parliament can estimate, and in consideration of which it is prepared to forego its privilege of an annual appropriation after full discussion." But is this so? Parliament has equal authority to make special appropriations, which may be definite or indefinite in amount as it pleases. If it can arrive safely at a specific amount, and yet a special appropriation is desirable to protect the public interest by preventing delay in payments, and by making them certain, there is nothing ultra vires or even unwise in providing that when moneys of a definite kind, not at present ascertainable, can be and shall be ascertained later, the consolidated revenue shall be specially appropriated to meet them. Of course Parliament would not commit the ascertainment of such payments to any but highly responsible persons, whose judgment could be in any case final."
The judgment of Madden C.J. on this point seems to bear the general approval of the Privy Council in R. v. Fisher[46] . In my opinion, it is absolutely correct. Appropriation of public funds by Act of Parliament may take many and varied forms, so long as no overriding constitutional provision exists to control the method of appropriation. Two illustrations may be given.
In the year 1878 the law officers of the Crown in England advised that the moneys necessary to defray the costs, charges and expenses incident to the collection, management and receipt of the public revenue of Victoria were already appropriated by sec. 45 of the Constitution Statute, 18 & 19 Vict. c. 55, so that there was no necessity for any further grant or appropriation of the moneys by the Parliament of Victoria (Todd, Parliamentary Government in the British Colonies (1894), pp. 219, 734).
A further illustration is given by Anson, who says:—"In times of emergency, such as war actual or threatened, recourse may be had to a vote of credit. In such a case the Crown asks for a grant of money in general terms, it being impossible at the moment to furnish (as in an ordinary estimate) a detailed statement of the manner in which it will be spent; and Parliament, by acceding to the request, in effect places the money at the disposal of the Executive to be spent at the discretion of the latter on any object within the terms of the vote (5th ed. (1922), vol. i., p. 289)."
Hearn, who was closely associated with the Victorian Upper House, did not fail to suggest that a Legislative Council may have a legitimate grievance against the representative Assembly in cases where the ordinary constitutional practice of passing an Appropriation Act is departed from by the Crown's advisers and the Assembly to which they are responsible. But such irregularity cannot affect the strict legal position.
In the present case, the position as it existed on 30th June, 1932, was that (a) the Crown had made contracts with the plaintiff, and (b) moneys had been made legally available by the Supply Acts, including that of June, 1932. It is admitted that the advertising service vote, if otherwise sufficient to satisfy the rule in Churchward's Case[47] , covered the service called for by the contracts with the plaintiff. On 30th June, therefore, there was (a) an existing contract, (b) a sufficient compliance with the rule in Churchward's Case[48] , (c) a proved performance by the plaintiff of the contract on his part, (d) proved non-payment for this service for five weeks at £29 12s. 6d. per week, that is, £148 2s. 6d. in all.
It cannot be too strongly emphasized at all points of this case that the plaintiff's contracts were not with the Ministers individually or collectively, but with the Crown. As Viscount Cave said in Attorney-General v. Great Southern and Western Railway Co. of Ireland[49] :—"My Lords, the liability to pay the costs of replacement undertaken by the agreements of March, 1917, and September, 1918, was of course a liability of the British Crown, which on maturity would fall to be discharged out of moneys to be provided for that purpose by the Parliament of the United Kingdom. The nature and incidence of a debt so incurred has been authoritatively described in such cases as Churchward v. The Queen[50] , and is not open to question. This being so, the transfer by the Act of 1919 and the Order of 1920 of the powers and liabilities of the Board of Trade in relation to railways to the Minister of Transport is of little importance in this case. The contingent liability to pay for replacing the rails remained after that transfer a liability of the Crown, the only change being in the Minister entrusted with the duty of advising the Crown upon the matter."
The Crown is represented in New South Wales by the Governor, who is always in office, and is the supreme head of the Executive Government. The honour of the Crown demands that, subject to Parliament's having made one or more funds available, all contracts for the Crown's departments and services should be honoured. The position on 30th June, 1932, having been examined, what was the position existing on 1st July, 1932, the first day of the financial year 1932-1933? In my opinion, it was plainly this, that the plaintiff's contract with the Crown was still on foot. The plaintiff did not accept the implied offer to rescind contained in the letter of cancellation or repudiation forwarded to him during the month of May. The condition that payments thereunder depended upon moneys being made legally available by Parliament still subsisted, but the contract was not inchoate or suspended but existing. (See the argument before the Privy Council in Kidman v. The Commonwealth[51] .) (See also per Higgins J. in Kidman v. The Commonwealth[52] .)
The only question, therefore, is whether in respect to the year 1932-1933 also the condition of Churchward's Case[53] was satisfied. Two points arise. The first is whether sufficient moneys had been made available for the provision of advertising services to enable the officers of the Crown to pay the plaintiff from that source. The second is whether the Court should draw the inference that, because a particular Ministry desired to avoid paying the plaintiff in respect of his services, the Court should infer that the moneys if legally "available" otherwise, were at least not "available" to pay him.
Dealing with the first question, Mr. Kelly prepared a statement which, in respect of the year 1932-1933, assumed that £94 18s. 8d. came to hand week by week for the Government's advertising services. Upon this basis the account runs into debit as early as 1st September, 1932. But there are two reasons why this statement cannot be acted upon for the purpose of the present case. For one thing, it includes in its expenditure moneys paid in relation to the Crown's trading concerns which were not treated as part of the advertising grant to the Department of the Premier. Payments to provide advertising for the purpose of such trading concerns were made by the Premier's Department in the first instance, though subsequent recoupment was obtained from the funds of the appropriate trading concern. Therefore, although the statement shows the vote in debit on 1st September, 1932, this is a nominal debit, and a true debit would have been reached only about April of the year 1933.
Moreover, it is not accurate to assume a weekly incoming of a proportion of the yearly appropriation for advertising. It appears from the estimates for the financial year 1932-1933 that, for the service of advertising, the sum of £4,950 was voted by Parliament. This vote was included in a very much more general vote contained in the Appropriation Act. We find that, upon the passing of the Appropriation Act on 8th November, 1932, the sum of £4,950 was then made available by Parliament for the purposes of the service of advertising. Upon that date (8th November) the plaintiff had become entitled to be paid about £700 in all under his two contracts, having completed one contract on or about 28th October, 1932. The other contract was not completed until 31st March, 1933, when the total liability of the State to him in accordance with the contract amounted to £1,114 10s. So far as the financial year 1932-1933 was concerned, about £550 was the total liability incurred by the Crown to the plaintiff on 8th November, when the Appropriation Act became law. On 31st March, 1933, the total sum of £1,114 10s. now sued for, was owing to the plaintiff, but £148 2s. 6d. has to be deducted to obtain the sum referable to 1932-1933, the total sum covering, as we have seen, services rendered in the previous financial year.
In order to secure a judgment declaring the Crown's liability, a person who has a subsisting contract with the Crown satisfies the constitutional doctrine laid down in Churchward's Case[54] in respect of payments accruing during the financial year when he completes the performance of his contract if, at the time of such completion, there exists in respect of such financial year sufficient moneys in the vote for the relevant service to enable the payments in question to be lawfully made. I also think that the plaintiff is entitled to say that the constitutional doctrine was satisfied in respect of all payments falling due between 1st July, 1932, and the date of his completing his contract if, at the date of the passing of the Appropriation Act (8th November, 1932), enough moneys to pay him in full could have been lawfully paid or set aside to pay him from moneys then remaining from the parliamentary grant in respect of advertising. From a close consideration of the figures and evidence, I draw the inferences of fact that (a) on 8th November, 1932, sufficient moneys were available to pay him what was then owing to him in respect of services rendered in the year 1932-1933, and (b) sufficient moneys from the same grant were also available to pay him in full on 31st March, when he finally completed the performance of his contracts.
In such a case as this I do not think any question of "priority" really arises. And I do not agree for a moment that the plaintiff should be deemed bound to wait for payment until the end of the financial year, until the Government completes payment under all advertising contracts whether or not such contracts were entered into after the time when the plaintiff made his contracts, or after the time when he performed all his services under the contracts, or after the passing of the Appropriation Act in November, 1932. I am rather inclined to think that the proper date to which the plaintiff is entitled to be referred, is, not the actual time when the Appropriation Act was passed in November, 1932, but 1st July, 1932, the commencement of the financial year. If that be so, an immediate call upon the vote of £4,950 for 1933 could have been made in order to make payments to the plaintiff and those others (including the Sydney Morning Herald proprietor) who had contracts with the Crown extending from the previous financial year into the financial year beginning on 1st July, 1932. And the vote of £4,950, was, I also find, amply sufficient to make payments under all other contracts current on 1st July, 1932, as well as the plaintiff's two contracts.
The second point made by Mr. Flannery remains to be considered. What inference is to be drawn from the fact that in 1932 the Crown's advisers stated their intention not to pay the plaintiff? It should be inferred, so it is said, that, in the sum of £4,950 which the Crown asked for and received, by way of grant from Parliament for advertising services, there could hardly have been included the very amounts which the Ministers intended to avoid paying to the plaintiff. This argument might be very formidable if the matter rested upon mere inference, ignoring the separate and distinct position of the Crown and its Ministers for the time being. It seems to me that a Court of justice is not entitled to find from a mere expression of intention of the Ministers to repudiate a contract with a subject, that intention being expressed to the subject and not to Parliament, that the Crown may successfully argue as follows:—"Our Ministers desired to repudiate. They said nothing to Parliament about the matter. But be pleased to infer (1) that Parliament supported our Ministers' desire to repudiate, and (2) that upon the statutory grant of money for advertising services a special exception should be engrafted excluding payments under the contract repudiated by Ministers."
The true test is, I think, whether the Ministers could have retraced their steps (say) in December, 1932, or March, 1933, and paid the plaintiff. In my opinion, they, or other Ministers, could lawfully have paid the plaintiff, assuming, as is conceded throughout, that there is nothing in the class of services contemplated by the Premier's Department advertising vote which would exclude the services called for by the contracts with the plaintiff.
The above reasoning shows that the plaintiff is entitled to succeed in the argument based on Churchward's Case[55] . And the same conclusion may be reached in a much more direct method. By the Special Deposits (Industrial Undertakings) Act 1912, provision was made by the New South Wales Parliament for the constitution of special deposit accounts in the Treasury and for the receipt and payment of moneys relating to certain industrial undertakings of the Government, such as the State Brick Works and Metal Quarries. The Act applied to any other industrial undertaking which the Governor specified by notification in the Gazette. In the case of the Tourist Bureau of New South Wales, which is an important trading concern, this power was exercised by the Governor, and it is admitted that its exercise was valid, so that the Tourist Bureau is to be regarded as an industrial undertaking for the purpose of the statute in question.
The scheme of 1912 was to enable the concerns in question to acquire such a degree of autonomy as would enable their business to be carried on to the best advantage and without the necessity of annual parliamentary appropriation or grant of moneys in order to defray the running expenses of the business. It was contemplated that the receipts of such undertaking from all sources would be paid into the special account at the Treasury. From this account, sec. 3 provides that "there shall be paid ... any expenditure of or in relation to the industrial undertaking to which it relates, including charges for management, maintenance, working expenses and interest on capital." Subsequent amendments to the Act were all designed to the same end, power, for instance, being given in 1916 by Act No. 77 for the Minister to carry trading balances to reserve account.
It is clear from secs. 5, 6, and 7 of the Act of 1912 that the control and direction of the industrial undertaking was committed to the responsible Minister of the Crown. In relation to the Tourist Bureau, the responsible Minister was the Chief Secretary of New South Wales, which office was, in April, 1932, filled by Mr. Gosling of the Lang Ministry. I have already pointed out that it was from Mr. Lang himself that the authority proceeded to Mr. Harpur to enter into the contracts with the plaintiff. This was done, as Mr. Hay, the Under Secretary explained in evidence, as a matter of Government policy, and to this policy Mr. Gosling was as much a party, and accepted as much responsibility, as the Premier himself. Of course, as is well known, the Special Deposits (Industrial Undertakings) Act does not exclude the constitutional practice of collective Ministerial responsibility for the control of the undertakings. On the contrary, it requires it, and ensures it by making it perfectly clear that the responsibility for its control rests with the appropriate Minister of the Crown.
This position was quite well understood in New South Wales. For instance, the permanent officer who was managing the Tourist. Bureau at the relevant dates, after stating that he furnished the copy for advertising in the plaintiff's newspaper, said:—"Q. What is your procedure with regard to advertisements for your Bureau? A. We ask the Superintendent of Advertising in the Premier's Department to arrange any contracts that we desire.
Q. What about payment? A. The payment comes from the Tourist Bureau Working Account, Special Deposit Account.
Q. In the first instance? A. No, we recoup the Premier's Department for original payments.
Q. Does it rest with the Premier's Department whether your advertisement will be published or not? A. Yes. The Premier's Department could, by Ministerial direction, restrict me from advertising any further.
Q. That is what you take to be your position? A. Yes.
His Honor: Q. The Tourist Bureau is not an independent body? A. It is in a measure. It is a State industrial undertaking, but it is always subject to Ministerial direction.
Mr. Watt: Q. I think you work under the Chief Secretary's Department, but your advertising is done by the Premier's Department? A. Yes, by Ministerial minute we submit our advertising requirements to the Premier's Department.
"From this it appears clearly that the responsibility of the Chief Secretary as the "responsible" Minister of the Crown was, in accordance with the doctrine of collective ministerial responsibility, shared with the Premier and the other members of the Cabinet.
No doubt, in respect of ordinary routine administration, directions would not be given by the Cabinet either to the permanent officer managing the industrial concern or to any other public servant such as Mr. Harpur, whose duty it became to assist the concern in certain parts of its administration. But, even then, ministerial and executive responsibility could never be surrendered by the Ministry, all the assets and receipts of the undertaking being assets and receipts of the Crown, all its liabilities and expenses being the liabilities and expenses of the Crown, and the executive Government being always responsible to Parliament for the whole course of administration of the undertaking.
In the case of the contracts with the plaintiff, however, for reasons with which we need not be concerned, the executive Government, including the Premier and Chief Secretary, authorized and required advertising contracts to be made with the plaintiff, it being intended both by the plaintiff and the Tourist Bureau that advertisements should appear in the newspaper throughout the agreed period.
This being so, the Ministry, including the Chief Secretary, duly authorized the expenditure of money "in relation to the industrial undertaking," and sec. 3 of the Act of 1912 commands that such expenditure shall be paid out of the special account opened in the Treasury, the account being kept so that the receipts of the undertaking shall always be available as a separate fund for the purpose of meeting all expenditure by or in relation to the undertaking. The statute deliberately avoids the necessity either for the receipts being paid into the Consolidated Revenue Fund, or an annual grant of moneys by Parliament out of the Consolidated Revenue Fund to meet working expenses. Sec. 3 may be said to operate as a continuing and permanent appropriation for the purposes therein specified.
Mr. Flannery urged that it was not competent for one Minister of the Crown, e.g., the Attorney-General, to give a direction that contracts in relation to an industrial undertaking shall be given to a contractor against the will or without the knowledge of the Minister of the Crown in charge of the undertaking. If such a thing occurred, either the Attorney-General or the responsible Minister would soon cease to be a member of the Cabinet, for the position of the Premier would become intolerable. But what happened in the present case was not analogous to the suggested illustration. For it is clear, I find, that Mr. Lang as Premier acted not against the will or without the knowledge of the Chief Secretary, but with his full knowledge and approval.
One other circumstance should now be mentioned. The manager of the Tourist Bureau was informed by Mr. Harpur that, as between the Bureau and the Premier's Department, the payments called for by one or more of the plaintiff's contracts would be met out of the Premier's Department grant for advertising. The question of the validity of such an inter-departmental arrangement does not directly arise in these proceedings, but I am bound to say that the general scheme of the 1912 Act is that the working expenses of the industrial undertakings shall come out of the fund constituted by their own receipts, and shall not be borne by votes for the services of the ordinary departments of the Executive Government. There is, of course, no obstacle in the way of Parliament's granting moneys to assist a particular industrial undertaking. This may be done by means of the usual Appropriation Act, but, if so, the vote should indicate not merely e.g., that it relates to "Advertising," or "Fuel," or "Furniture," but that it grants money to a specified industrial undertaking for the provision of any such service.
In the present case this procedure was never followed, so that it would not have been permissible for the Premier's Department, relying merely upon its general advertising vote, to pay into the funds of the Tourist Bureau an equivalent of such moneys as should or might have been paid to the plaintiff from the account of the Bureau.
Of course, the point may be pressed still further, though no such argument was advanced before me; for it may be said that, by reason, not only of the 1912 statute, but also of the meaning of the phrase itself, the Premier's Department vote for "governmental advertising" must be regarded as a vote in relation to "governmental" or "non-trading" departments, as distinct from the industrial and trading concerns specified in or pursuant to the 1912 statute, or otherwise carried on by the Crown. And, although the parties have conducted their case upon the assumption that "governmental" should not be so construed, an assumption which is in accordance with the practice adopted in relation to the plaintiff's contracts, much may be said in favour of the restricted meaning of "governmental" advertising. And I do not overlook the fact that the adoption of this view would tell strongly against the view I have expressed earlier, based upon the hypothesis that the Premier's Department vote for advertising is of itself sufficient to satisfy the rule in Churchward's Case[56] .
In the circumstances, whatever difficulties were attached to the scheme of inter-departmental recoupment in respect of moneys payable to the plaintiff, I am quite satisfied that the plaintiff should succeed, even if he fails to show a sufficient and relevant grant of moneys either in the Supply Act and the Audit Act, or in the Appropriation Act of 1932.
His contracts were made, not with the Premier's Department, not with the Tourist Bureau, but with the Crown alone. As Lord Dunedin said in Attorney-General v. Great Southern and Western Railway Co. of Ireland[57] :—"The learned Judges of the Court of Appeal found difficulty in thinking that there was a departmental liability. I cannot say such difficulty affects me. I do not know what a departmental liability is, except a liability on behalf of the Government and which is only enforceable as the noble Viscount has said. A Government department never binds itself personally, i.e., in the persons of the officers who compose it."
Lord Phillimore[58] , in the same case:"As to the distinction sought to be drawn between the liability of the Crown and the liability of a department, I agree with the noble and learned Lord, Lord Dunedin, that there is no such thing as a departmental liability as distinct from the liability or quasi-liability of the Crown."
Did the officer who made the contracts have authority? The answer is that he had specific and definite authority to do so from the Government; that is, the Premier and Ministers, including the responsible Minister, the Chief Secretary. Further, the contracts were made in relation to the Tourist Bureau and in accordance with previous directions, the promised service of advertising was fully rendered by the plaintiff for the benefit of the Tourist Bureau.
Having regard to the statute of 1912, dealing with industrial undertakings, the plaintiff shows that the rule in Churchward's Case[59] is satisfied, because sec. 3 of the statute operates as a continuing appropriation of all receipts from the Tourist Bureau to working expenses, including, of course, advertising.
The plaintiff cannot be affected by any inter-departmental arrangement for recouping. The evidence shows that he did not even know that such an arrangement was proposed or agreed to. He has proved a binding agreement with the Crown, acting through the Ministry of the day, a breach of such agreement, and a compliance with the constitutional rule that payments under the contract should bear the authority of the Parliament of New South Wales.
I therefore hold that the plaintiff succeeds. I make a declaration that the plaintiff is entitled to be paid the sum of £1,114 10s., which is the undisputed amount of liability in this action. The defendant must pay the costs of the action.
From this decision the defendant appealed to the Full Court.
Appeal dismissed with costs.
Solicitor for the appellant, J. E. Clark, Crown Solicitor for New South Wales.
Solicitor for the respondent, Abram Landa.
H C of A
On appeal from Evatt J.
30 November 1934
Gavan Duffy C.J., Rich, Starke, Dixon and McTiernan JJ.
Watt K.C. (with him Evatt and Thomas), for the plaintiff.
Flannery K.C. and Jordan K.C. (with them Nicholas), for the defendant.
April 4, 1934
Evatt J
. delivered the following written judgment:—In this action the plaintiff claims that there is owing to him from the State of New South Wales the sum of £1,114 10s. in respect of advertisements inserted by the plaintiff in a newspaper called the Labor Weekly. The newspaper circulated in New South Wales. Its owner, the plaintiff, was at all material times a resident of South Australia.
The case comes before this Court under sec. 75 (IV.) of the Constitution, which vests original jurisdiction in this Court in all "matters between States, or between residents of different States or between a State and a resident of another State." (See also Judiciary Act 1903-1933, secs. 58, 64.)
The actual decision of the Full Court of this Court in The Commonwealth v. New South Wales[60] , is that sec. 75 (III.) of the Constitution enables an action for tort to be brought by the Commonwealth against a State without the consent of that State. But the reasoning of the Court extends equally to sec. 75 (IV.). Thus Knox[61] :—"This power is conferred by the Constitution itself on this Court to take cognizance of this matter. Any legislation by Parliament directed to conferring this power would, therefore, be as superfluous as legislation by Parliament to restrict the limits of the jurisdiction would be ineffective."And Isaacs, Rich and Starke[62] :—"The cause of action, as a tort in its inherent nature, would as between subject and subject be justiciable in a competent Court. It therefore falls within the meaning of the word "matters" in sec. 75 of the Commonwealth Constitution."[63] :—"Obviously the matter was one to be dealt with by the Constitution, which created mutual rights and obligations between Commonwealth and States and foresaw the necessity of some tribunal, not the judicial organ of any one State exclusively, to determine or finally determine possible disputes between Commonwealth and States, and between different States, and between States and residents of other States. As to these the Constitution at once enacted sec. 75 as a self-executing provision in the terms mentioned. The words "in all matters" are the widest that can be used to signify the subject matter of the Court's jurisdiction in the specified cases. "Matters" read with the context and in relation to "judicial power" are limited by the inherent sense of matters which a Court of law can properly determine, that is, by some legal standard."Isaacs, Rich and Starke JJ. also pointed out that the word, i.e., "matters," must"[64] ."
The case therefore establishes that in the present action against the State of New South Wales by the plaintiff, a resident in another State, the question for the Court to determine is whether a breach of contract has been proved. (See Daly v. Victoria[65] ; Judiciary Act, secs. 58 and 64.)
At this stage two points should be mentioned. I assume in favour of the defendant State that it is not, by sec. 75 (IV.), or by secs. 58 and 64 of the Judiciary Act, placed in precisely the same position as a subject who is sued for breach of contract, so that it is entitled to invoke any constitutional immunity from liability other than the general liability for breach of contract implied by the Constitution or imposed by the Judiciary Act. This assumption may find support in sec. 106 of the Constitution and in the opinions expressed in the case of Australian Railways Union v. Victorian Railways Commissioners[66] .
I also assume in favour of the defendant State that the governing law to be applied in ascertaining and measuring the obligation of the contract is that of the State of New South Wales. It may be—I express no opinion on the point—that the express stipulation in the first contract is sufficient to ensure such a reference to the law of South Australia as will exclude the application of that part of the constitutional law of New South Wales which is invoked by the defendant. On the other hand, much is to be said in favour of the view that the constitutional doctrine in question applies whether or not the governing law of the contract is that of South Australia. At any rate, I assume in favour of the defendant that the doctrine is applicable.
The first advertising agreement which the plaintiff made with the defendant is embodied in a document dated 1st April, 1931. It provided for 5,000 inches of advertising space to be inserted in his newspaper between 2nd April, 1931, and April, 1932. The total moneys payable thereunder were to amount to £1,000. But the full 5,000 inches was not used during such period of twelve months, only 3,900 inches of advertisement being inserted. Payments to the plaintiff for the space used were made regularly by the government officers, including those whose duty it was to see that the payments were authorized by Parliament. When the first contract period was about to end the plaintiff interviewed Mr. Harpur, who was Superintendent of Advertising and had the management of all the Crown's advertising. The plaintiff pointed out that 1,100 inches had not been inserted during the year. He suggested an arrangement under which (a) 3,900 inches would be inserted over the next ensuing twelve months, and (b) the 1,100 inches available under the previous contract would be used at the rate of 45 inches per weekly insertion over a period commencing at once and ending about the end of October, 1932.
The plaintiff's proposal was accepted and the arrangement as to the 3,900 inches was embodied in a written document signed by Mr. Harpur as Editor of Publications and Superintendent of Advertising. It requested the Labor Weekly to have advertisements "re Government Tourist Bureau or other matter" inserted in its columns between 1st April, 1932, and 11th April, 1933, the minimum space per week to be 75 inches and the rate being 5s. 6d.
The full arrangement of April, 1932, was put into effect; advertisements were inserted and payment made regularly until 17th May, 1932, when the Under Secretary of the Premier's Department informed the plaintiff that he was directed by the Premier to inform him "that it is not intended to utilize any further space in your paper for Government advertising." Upon inquiry at the Premier's office the plaintiff was informed that this unilateral termination of the running agreements was taken upon the direct responsibility of the new Ministers of the Crown, who replaced the previous administration which had held office under Mr. Lang as Premier. The plaintiff refused to accept the breach. It may here be noted that the bona fides of the agreement with the plaintiff has not been impugned in any way in these proceedings.
Refusing to accept the breach, the plaintiff treated the agreements as still on foot and duly inserted advertisements throughout the agreed period in accordance with the standing copy which had been supplied to him by the Government Tourist Bureau through Mr. Harpur, the instruction having been that the last copy was to stand until the Government desired fresh copy to be inserted. To the manner or form of the advertisements no objection was raised by the Government either whilst they were being inserted or during the present hearing, where the State took its stand upon legal considerations of a technical character. That the Government was quite aware of the form of the advertisements inserted by the plaintiff appears from a letter dated 1st November, 1932, from the Under Secretary of the Premier's Department to a body called the Sane Democracy League, which seems to have complained that Government advertisements were being inserted in a Labour newspaper. The same knowledge on the part of the Government is shown by the letter dated 1st June, 1932.
The first question which arises is whether the plaintiff has shown that the agreement entered into in April, 1932, was authorized by the then Ministers of the Crown, that is, whether Mr. Harpur had sufficient authority on behalf of the Crown to enter into the transaction in question. In my opinion, this question admits of only one answer. The insertion of advertisements for Government trading concerns such as the Tourist Bureau, and also for ordinary administration purposes, was essential to the proper functioning of the Executive Government of the State of New South Wales. This is shown by the long-continued practice of Parliament's voting moneys for advertising services and by the setting up of an officer like Mr. Harpur to act as a permanent official for dealing exclusively with all Government advertising. Not only was the insertion of Tourist Bureau advertisements within the ordinary scope of administration; in the present case it is abundantly clear that the responsible Ministers required that the transactions should be entered into and did so "as a matter of Government policy." The actual directions to Mr. Harpur proceeded from the secretary of the Premier, Mr. Lang, one of whose Cabinet colleagues was Mr. Gosling, the Chief Secretary, to whose responsibility in the first instance the industrial undertaking known as the Tourist Bureau was committed. No objection was raised to the admissibility in evidence of conversations between the permanent Under Secretary, Mr. Hay, and the Premier, the Premier's private secretary and Mr. Harpur; and these conversations prove a direct chain of authority from the first Minister of the Crown as representing the Cabinet to Mr. Harpur, who made the final and formal arrangements with the plaintiff. There was no statutory or other authority which required such transactions to be documented or evidenced by Order in Council or in any other special manner.
The suggested defence that the contract was not authorized by the Government completely fails. It is only right to add that, although raised in the pleadings, this defence was not seriously pressed at the hearing.
The main, indeed the only real defence relied upon by the State of New South Wales, was that Parliament did not make public moneys available for the express purpose of paying the plaintiff for his advertising services. The defence is, of course, quite unmeritorious, and its success might tend to establish a dangerous precedent in the future. But it raises an interesting question of law, the examination of which shows that the repudiation of subsisting agreements by a new administration can seldom be ventured upon with success.
The facts in relation to the relevant grants of public money by Parliament are somewhat complicated. The two financial years to be considered are 1931-1932 and 1932-1933 for, as I have already explained, the agreements sued on by the plaintiff, although made in April, 1932, stipulated for the performance of advertising services not only during the then current financial year, but the succeeding financial year also. I now deal with the financial year 1931-1932. The Supply Act (No. 5) (No. 46 of 1931) was assented to on 6th October, 1931. It recited a resolution of the Assembly to grant to the Crown a sum mentioned in the statute and then proceeded, in the ordinary form, to make good the grant by authorizing the issue and application out of the Consolidated Revenue Fund of the specified sum "to be expended at the rates which are shown on the estimates for the financial year ending thirtieth day of June, One thousand nine hundred and thirty-two, as laid upon the table of the House, to defray the expenses of the various departments and services of the State during the months of October and November or following month of the financial year ending thirtieth day of June, One thousand nine hundred and thirty-two, subject to the rate of any reduction that may hereafter be made in the expenditure of the year 1931-1932."
It will be observed that this temporary Supply Act referred to the estimates as laid upon the table of the House. Those estimates are in evidence. At page 35, one of the enumerated "functions of the Department" of the Premier is No. 7, "Government Advertising and issue of Government Publications," and No. 8, "Publicity for all Departments." At page 41 the annual estimate for "Governmental Advertising" is £6,600.
The next Supply Act was Act No. 58 of 1931. In form it followed the Supply Act already mentioned. It authorized expenditure for December, January and February at the rate shown on the estimates referred to above. This Supply Act was followed by one passed on 7th March, 1932 (Act No. 1 of 1932). By this Act authority was given to issue moneys from the Consolidated Revenue Fund to make good supplies voted for the months of March and April, 1932. Act No. 8 of 1932 followed the same form as the three previous temporary Supply Acts, and authorized expenditure in respect of the month of May, 1932. These four Acts were based upon the current estimates for 1931-1932.
Finally, Act No. 11 of 1932 authorized the application of certain sums out of the Consolidated Revenue Fund to make good grants in respect of the month of June, 1932. In this case, however, the money was authorized to be expended at the rates shown in the estimates for the previous financial year, that is, 1930-1931, which had been embodied in the usual Appropriation Act. The appropriation for the year 1930-1931 for the Government Advertising (Premier's Department service) was £9,900.
The ordinary Appropriation Act was not passed in respect of the year 1931-1932. I do not suggest that either administration was at fault in the matter, but, in any event, responsibility must be borne both by the Lang and Stevens administrations, the former holding office for about ten months of the financial year, and the latter for about two months.
It will be observed that the five Supply Acts for 1931-1932 granted supplies for the Government services for only nine months of the financial year. In respect of the first three months, sec. 33 of the Audit Act provides that if, before the close of any financial year, no Act is passed granting and appropriating moneys out of the Consolidated Revenue Fund to meet the requirements for the next succeeding financial year, the Treasurer may pay moneys in order to meet current and accruing requirements, subject to certain conditions. Under these conditions the authority of the Treasurer ceases upon the passing of the Appropriation Act for the next succeeding financial year, and does not, in any event, extend beyond the first three months of that year. Further, when the Appropriation Act is passed, all payments are to be treated as made out of the supply granted by the Appropriation Act under the respective divisions and heads of services. Further, the authorized rates of payment are to be based upon the Appropriation Act of the immediately preceding financial year "in respect of all salaries ... contracts, supplies, services ... and other recurrent charges."
Sec. 33 (1) (d) also provides that, when the estimates of expenditure for the year are presented to Parliament and the rate of expenditure in such estimates is in any case lower for any service than that authorized by the previous Appropriation Act, the payments under the authority of sec. 33 shall not exceed the lower rates.
It appears that the estimates for the year 1931-1932 were laid before the Assembly on 27th August 1931. The event mentioned in sec. 33 (1) (d) having happened, the result in respect of Government advertising was to limit the authority to make advertising payments to the rate of £6,600 per year, instead of £9,900 per year, which was the appropriation in respect of 1930-1931. It would appear doubtful whether sec. 33 (1) (d) operates in respect of that portion of the months of July, August and September which have elapsed before the estimates are presented to Parliament. I shall assume that there is a retroactive operation so that, in respect of the Government advertising service for the whole financial year 1931-1932, eleven months out of the twelve should be treated upon the basis of an annual vote of £6,600 per annum, in accordance with the current estimates, only the last month, June, 1932, being treated upon the basis of an annual vote of £9,900. The net result is that the total supply which Parliament made available during the year for Government advertising can be reckoned as amounting to eleven-twelfths of £6,600, plus one-twelfth of £9,900, that is, £6,875 in all.
It appears from the statement prepared by Mr. Kelly, Chief Accountant at the Treasury, that if payment had been made to the plaintiff in respect of the advertisements inserted before the end of the financial year, 30th June, 1932, but not paid for, the total expenditure for the service would only have amounted to £4,595 18s., a figure considerably lower than the assumed minimum supply voted by Parliament, that is, £6,875. At the same time it may be noted that upon the hypothesis mentioned, the statement erroneously treats the total supply available in respect of 1931-1932 as £7,700, for such figure does not apply the condition mentioned in sec. 33 (1) (d) of the Audit Act and discussed above.
Before referring to what took place in the financial year 1932-1933, it is convenient to consider the legal position as it existed on and in respect of 30th June, 1932. It was argued for the State that it was a condition of the contracts with the plaintiff that all payments of money thereunder should be authorized by Act of Parliament, and it was said that no person can successfully sue the State of New South Wales in the absence of a precise or specific Parliamentary allocation of public moneys for the purpose of making payments under the contracts. It was further contended that, even in an Appropriation Act, the constitutional condition of such contracts is not fulfilled unless it can be shown that Parliament's intention was directed to the particular payment to the particular contractor.
Certainly, the New South Wales Constitution Act does contemplate that subject to the payments to be made in pursuance of the Constitution Act itself, the Consolidated Revenue Fund should be subject to be appropriated to such "specific purposes" as may be prescribed by any Act in that behalf (sec. 45). But this section is necessarily subject to the terms of any subsequent Act passed by Parliament, this part of the Constitution of New South Wales being of a flexible character. For the principle of McCawley v. The King[67] is that, in dealing with public moneys or indeed any other subject not governed by a special method of law-making, Parliament is not bound to adhere to the letter or spirit of sec. 45, but is, on the contrary, empowered to make any provision it thinks fit, whether consistent or not with sec. 45.
Whilst the validity of the various Supply Acts for 1931-1932 have not, and cannot, be impugned, the question still remains whether their terms are sufficient to enable the plaintiff to satisfy the constitutional doctrine invoked by the defendant to defeat his present claim.
In the well-known case of Churchward v. The Queen[68] , Shee J., in a passage often cited, adopted the principle that, in the case of a contract by a subject with the Crown, there should be implied a condition that the providing of funds by Parliament is a condition precedent to the Crown's liability to pay moneys which would otherwise be payable under the contract. In that case the actual promise was to pay a sum "out of the moneys to be provided by Parliament" (see Churchward v. The Queen[69] ); so that the judgment of Shee J. went beyond the actual point necessary to determine the case. Churchward's Case[70] was decided upon demurrer, the third plea alleging that "no moneys were ever provided by Parliament for the payment to the suppliant for, or out of which the suppliant could be paid for the performance of the said contract, for any part of the said period subsequent to the 20th June, 1863, or for the payment to the suppliant for, and in respect of, or out of which the suppliant could be paid or compensated for, in respect of any damages sustained by the suppliant by reason of any of the breaches of the said contract committed subsequent to the said 20th of June, 1863" [71] . (I italicize certain words.)
Further, the Appropriation Acts referred to in that case expressly provided that Churchward's claim was to be excluded from the large sum of money (£950,000) thereby voted for the general purposes of providing and maintaining the Post Office Packet Service.
The judgment of Shee J. has always been accepted as determining the general constitutional principle. But it should be added that Cockburn[72] :"I agree that, if there had been no question as to the fund being supplied by Parliament, if the condition to pay had been absolute, or if there had been a fund applicable to the purpose, and this difficulty did not stand in the petitioner's way, and he had been throughout ready and willing to perform this contract, and had been prevented and hindered from rendering these services by the default of the Lords of the Admiralty, then he would have been in a position to enforce his right to remuneration."
It appears clear that the first part of this passage has not been acted upon by the Courts in the cases subsequently determined, and that, even where the contract to pay is in terms "absolute" and the contract fails to state that the fund has to be "supplied by Parliament," the Crown is still entitled to rely upon the implied condition mentioned by Shee J.
The second part of Cockburn's C.J. statement, that, if there is a fund "applicable to the purpose" of meeting claims under the contract, the contractor may enforce his right to remuneration, has never, so far as I know, been questioned. Moreover, its correctness was assumed by the terms of the Crown's third plea in Churchward's Case[73] which denies that moneys were ever provided by Parliament "out of which the suppliant could be paid for the performance of the said contract."
Mr. Flannery, for the Crown, relied upon Commonwealth v. Colonial Ammunition Co.[74] [75] Isaacs and Rich JJ. discussed the general object of parliamentary supply and appropriation under the system of responsible government. But it is clear that the discussion was entered upon in order to show that the mere inclusion in an Appropriation Act of a general reference to some Government service cannot be relied upon in order to work a legalization or validation of every contract which related to such service, but which has been rendered invalid by the non-observance of the conditions of a prior statute. In the Colonial Ammunition Case[76] the contract should, in accordance with sec. 63 of the Defence Act[77] . There being no Order in Council, reliance was placed upon certain Appropriation Acts. But Isaacs and Rich[78] :—"The object of Parliament in such a case is financial, not regulative. In doing that, it is not concerned with general legislation, and is acting wholly alio intuitu (see May's Parliamentary Practice, 10th ed., p. 562). It thereby neither betters nor worsens transactions in which the Executive engages within its constitutional domain, except so far as the declared willingness of Parliament that public moneys should be applied and that specified funds should be appropriated for such a purpose is a necessary legal condition of the transaction. It does not annihilate all other legal conditions."
From this it appears that the learned Judges considered that the somewhat general appropriation there relied upon was sufficient to satisfy one "necessary legal condition of the transaction," though not all other legal conditions. The condition which was satisfied is, of course, the condition referred to by Shee J. in Churchward's Case[79] , and here invoked by the defendant.
That this is a correct view of the Colonial Ammunition Case[80] is shown by the judgment of Isaacs J. in The Commonwealth v. Colonial Combing, Spinning and Weaving Co. (Wooltops Case[81] , where it is stated that Parliament may sanction the expenditure of public money payable under contracts with the Crown "either by direct legislation or by appropriation of funds."
I quite agree that ne her the reference in the Colonial Ammunition Case[82] nor the passage mentioned in the Wooltops Case[83] is directed to determining the question, what degree of authorization or reference in an Act is to be deemed sufficient to comply with the constitutional condition mentioned by Shee J. in Churchward's Case[84] . But at the very least the cases do not qualify in any way the observation of Cockburn[85] , to which I have referred.
In Commercial Cable Co. v. Government of Newfoundland[86] Viscount Haldane said:"For all grants of public money, either direct or by way of prospective remission of duties imposed by statute, must be in the discretion of the Legislature, and where the system is that of responsible government, there is no contract unless that discretion can be taken to have been exercised in some sufficient fashion."
This general principle adopts the main principle of Churchward v. The Queen[87] , though expressing it somewhat differently. However, the statement affords no guidance as to what will, under any particular circumstances, constitute a "sufficient" expression of the exercise of the Legislature's discretion to grant or withhold public moneys.
In Auckland Harbour Board v. The King[88] the facts were somewhat analogous to those in the Colonial Ammunition Case[89] . A New Zealand statute had provided that the sum in respect of which the Auckland Harbour Board petitioned against the Government of New Zealand was payable to the Board by the Government, but only subject to a condition described in the statute. This condition was not, in fact, satisfied, and the Board then sought to rely upon a subsequent Appropriation Act, in which Parliament granted public moneys in general terms for railway purposes. This was said to be capable of dispensing with the non-fulfilment of the condition of liability expressly laid down in the prior statute. But it was held by the Privy Council that it had no such operation. Chapman[90] , when the case was before the New Zealand Supreme Court:—"As to the effect of the parliamentary appropriation—a question on which we have not had the advantage of hearing argument—I cannot conceive that this covers or was intended by Parliament to cover the mistake that has been made. There is a general vote for opened lines in the North Island, but that refers to lawful expenditure. A specific mention of this sum would, of course, have ended all controversy, but here there is nothing to show that Parliament expressed its will with reference to what was otherwise an unauthorized payment."
Hosking[91] : "It appears to me to be clear that, although moneys are appropriated by Parliament in anticipation for particular purposes, no part of them can be disbursed by the officers of the Crown until that part has become payable according to the law governing its payment."
These opinions of Chapman and Hosking[92] .
The opinion expressed by Chapman J. was that a specific mention of the sum in dispute "would, of course, have ended all controversy," but, as the grant was general, it could not be regarded as an authorization of expenditure otherwise unlawful because it did not sufficiently appear that the condition of the earlier statute had been waived by Parliament.
It is abundantly clear, I think, that the Auckland Harbour Board Case[93] does not justify the theory that, where there is nothing unlawful in a contract entered into by the Crown, and that contract is authorized by responsible Ministers, and made by them in the ordinary course of administering the affairs of Government, a detailed reference to the particular contract must be found in the statutory grant in order to satisfy the constitutional condition laid down in Churchward's Case[94] .
Incidentally it should be noted that the Auckland Harbour Board Case[95] shows that payments made from the Consolidated Revenue Fund in the absence of a "sufficient" parliamentary authority may be recovered back by the Government if they can be traced. In these circumstances, it would be an extraordinary if not disastrous doctrine if the law is, as the Crown contends, that not a single contract made by the Crown with a subject is enforceable against the Crown, and every payment made thereunder is recoverable back from the subject, unless a clear reference to payments under the particular contract is contained in an Act of Parliament. This doctrine would reduce almost to a nullity the responsibility of Ministers for the ordinary course of governmental administration, and would compel Parliament to devote all its time and attention to administrative, as distinct from legislative, duties. The position may be illustrated.
It has been the practice of the Government to enter into advertising contracts, the performance of which extends or may extend into more than one financial year, apart altogether from the innumerable contracts for single insertion advertisements in newspapers and periodicals. For instance, on 1st June, 1932, the Government entered into a contract with the proprietor of the Sydney Morning Herald, and accepted a heavy liability for advertisements covering the month of June in the financial year 1931-1932, and eleven months during the following financial year. Payments were made to the proprietor from time to time in accordance with the contract. But no reference whatever was made to this particular contract in any Act of Parliament. If the argument for the State is right, this money is recoverable back from the proprietor, although the contract has been fully performed on the part of the newspaper. Contracts of a like character were admitted in evidence in order to show the practice of the Government in relation to the Government advertising business of the State and in order to measure the precise surplus or deficiency in the Parliamentary grants for advertising. But the contracts also show that it has never been the practice for Parliament itself to consider with particularity that large number of contracts payments under all of which are made in reliance upon the general Parliamentary grant for Government advertising.
Further illustrations suggest themselves. During the course of argument I mentioned the expenditure on books in the library attached to the Attorney-General's Department. This expenditure has been covered only by a general vote for the library. It would be preposterous if Parliament should have to address its attention to each contract for the purchase of books for this library and determine, with fitting solemnity, what firm or company should supply each book or each parcel of books.
Again, as was stated in evidence, the Crown enters into many transactions under which it becomes lessee of premises. Rent thus becomes payable by the Crown weekly, monthly or yearly. But it has never been the practice that leases should be submitted to Parliament for approval, or that the individual lessors should be mentioned by name or other description in some portion of the Supply or Appropriation Act.
From convincing illustration, one may turn to the discussion of learned writers. Thus Durell in his work on Parliamentary Grants says:—"It is not its (i.e. Parliament's) duty to decide upon matters of administration itself, but to take care that the persons who have to decide them are the proper persons, and are honestly and intelligently chosen. "Deliberation, and not despatch, is the duty of the House of Commons." Again, "when a popular body knows what it is fit for and what it is unfit for, it will more and more understand that it is not its business to administer, but that it is its business to see that the administration is done by proper persons, and to keep them to their duties." The working of constitutional government necessitates the delegation of certain powers to every department. If such powers are exercised with the knowledge of Parliament and subject to its control, they can be more advantageously discharged by the responsible Minister or his department, which has the special or local knowledge, than by direct parliamentary action (p. 20)."
Durell adds, with reference to the "course of expenditure" : "The control of Parliament over the course of expenditure is limited to its control over the Executive; and so long as the Government possesses the confidence of the House, no active exercise of control would take place except in case of suspected illegality" (p. 21).
Maitland, in his Constitutional History of England (1908), pp. 445, 446, says:—"But statute does not say to the queen, "You shall spend so much on your embassies, so much on your navy." Rather its language is: "Here is money for this purpose and for that; spend it if you please; we trust the discretion of your advisers; the account of the expenditure will be presented to us and votes of censure may follow." This, however, applies only to expenditure within the limits laid down by the Act; here are two and a quarter millions for war-like stores, £100,000 for the royal parks, one hundred guineas for expenses connected with the observation of the transit of Venus; if more is drawn out for any of these purposes, some one will have committed a crime, indeed in all probability several persons will have conspired to commit a crime."
It may be added that one of the grants which Maitland (at p. 385) describes as appropriated "with great minuteness" includes "£2,902,900 for the payment of seamen and marines, £964,400 for their victuals and clothing, £11,477 for the maintenance of the British Museum and the Natural History Museum, £2,100,000 for public education, £1,000 as a gratuity for the widow of a certain distinguished public servant."
Later (at p. 445), he describes an appropriation as "pretty minute" which includes £1,639,300 "for the expense of dockyards and naval yards at home and abroad," and £50,000 "for Her Majesty's foreign and other secret service."
Durell fully discusses the legal position, and concludes:—"If, as is the case, Parliament grants to the Crown a certain sum for a certain service in a given year, without any more definite appropriation in the terms of the grant, it is legally competent to the Executive to expend that sum at discretion in the year upon that service. That is to say, since the parliamentary enactment deals with the vote only, the Government is not legally bound to adhere to the details submitted to Parliament, provided the expenditure is restricted to "the four corners of the vote." Morally, however, the Government must adhere to those details as far as is consistent with the interests of the public service, since its good faith is pledged by the details given to Parliament, and the Comptroller and Auditor-General would correctly bring divergencies to notice. This being so, it follows that if Parliament wishes to definitely prohibit the use of a vote for a service which would be covered by the terms of the resolution granting the vote, even though no mention is made of it in the details of the estimates, the resolution must contain a special proviso to that effect. By this means only can Parliament ensure that a particular service is not carried out, for then there would be no funds which could legally be applied to it. In the absence of such a proviso there would be no technical incorrectness in charging the expenditure against the vote, even though the service were for a purpose for which Parliament had not wished to provide. This point is admitted by the Treasury, which points out that, even if the amount of a vote is reduced in supply, there is no guarantee that expenditure will not take place upon the object in respect of which such reduction is made (pp. 296, 297)."
A case in which the views of Maitland and Durell, though not referred to, seem to be applied to their full extent, is the decision of the Full Court of New South Wales in Commonwealth of Australia v. Kidman[96] . In that case it was held that a contract between the Commonwealth of Australia and the then respondent had been recognized as valid by certain Appropriation Acts of the Commonwealth Parliament. These Acts authorized the payment of moneys in respect to "Commonwealth Shipbuilding" and the "construction of ships." The Court held that as payments under the contract were made, or could be presumed to have been made, under the Appropriation Acts in question, it was impossible for the Court to treat the contract as being invalid.
Without necessarily following Durell to the full extent of his argument, I am satisfied that, in the absence of some controlling statutory provision, contracts are enforceable against the Crown if (a) the contract is entered into in the ordinary or necessary course of Government administration, (b) it is authorized by the responsible Ministers of the Crown, and (c) the payments which the contractor is seeking to recover are covered by or referable to a parliamentary grant for the class of service to which the contract relates. In my opinion, moreover, the failure of the plaintiff to prove (c) does not affect the validity of the contract in the sense that the Crown is regarded as stripped of its authority or capacity to enter into the contract. Under a constitution like that of New South Wales where the legislative and executive authority is not limited by reference to subject matter, the general capacity of the Crown to enter into a contract should be regarded from the same point of view as the capacity of the King would be by the Courts of common law. No doubt the King had special powers, privileges, immunities and prerogatives. But he never seems to have been regarded as being less powerful to enter into contracts than one of his subjects. The enforcement of such contracts is to be distinguished from their inherent validity.
It appears that no Appropriation Act eo nomine was enacted for the year 1931-1932. We have seen that the responsibility for this omission lies upon the two governments which held office during that financial year. It was suggested that the absence of an Appropriation Act is fatal to the plaintiff's claim.
In my opinion, the English practice of Parliament's covering expenditure early in the financial year by passing Consolidated Fund Acts and subsequently appropriating the same amounts retrospectively in the Appropriation Act, has caused some misconception as to the precise legal situation in New South Wales. As to the English practice, Durell says:—"All grants in supply are strictly appropriated to the service of the financial year in which provision is made, and no issues can be made from the consolidated fund on account of unspent grants in one year for use, even temporarily, in the following year. Unless, therefore, the services are to be brought to a standstill, it is absolutely essential that provision for carrying them on should be made before 1st April. The Treasury, moreover, has no power to authorize issues out of the consolidated fund except under statute. It is therefore necessary to pass before 1st April, a Consolidated Fund Bill which empowers the Treasury to issue out of the consolidated fund, for the service of the departments for whose use the grants are voted, such sums as they require, in anticipation of the statutory sanction to be conferred by the Appropriation Act. Similar Bills may also be required between 1st April and the date on which the Appropriation Act is passed, if the supply made available by the first one becomes exhausted (pp. 29, 30)."
And he adds:—"When all the estimates of the year have been voted, the Appropriation Bill is brought in. The passing of this gives final and full legal sanction to the votes on account which have previously been passed, by appropriating them to their respective services. The issues out of the consolidated fund are legalized by the passing of Consolidated Fund Bills, but these bills give no legal effect to the votes as such. If a prorogation or a dissolution takes place before the Appropriation Act is passed, all the grants made are nullified and would require to be re-voted in the next session before a legal appropriation could ensue. It is therefore necessary that before a dissolution takes place, all grants on account should be legalized by an Appropriation Act (p. 35)."
Why should a dissolution or a prorogation nullify a grant on account? Hearn in The Government of England (1886), p. 370, points out that these grants on account are "towards making good the services voted in the present session" And he adds that"the word "vote" is a term of art and implies that the resolution thereby announced ends with the current session. Hence if, as has sometimes happened, the session terminates without an Appropriation Act, there remains nothing upon which the Ways and Means Act can operate. They are not repealed, and payments already made under them are valid, but as they are limited to "services voted in that session," and as these votes no longer exist, the grants become inoperative, and must be re-voted when Parliament has again assembled (p. 370)."
For this proposition of law, Hearn relies in the main upon the case of Alcock v. Fergie[97] [98] :—"But to render any part of the consolidated revenue legally available for and applicable to the payment of the amount of this judgment, Parliament must have voted and actually appropriated the money for the purpose; and this must have been effected either by a general, or a special, Appropriation Act; or the moneys comprised in what is known as a Supply Bill must have been applied to the particular purpose during the operation of the measure. It is admitted that no general Appropriation Act has passed, and that the session terminated before the contract was made. The operation of the Supply Bill therefore lapsed."
Turning to the form of the so-called Supply Bill, No. 322, it provided that "there shall and may be issued out of the consolidated revenue and applied from time to time to such services as shall then have been voted by the Legislative Assembly of Victoria in this present session of Parliament, any sums of money not exceeding £300,000" [99] .
This was a very curious form of wording, and it was quite capable of being regarded as meaning that unless, at the time of payment out of the consolidated revenue, there was existing a resolution of the Assembly covering or referring to the services, no payment should be made. And, as Hearn points out or implies, a mere resolution of one House of Parliament ceases to have any living force or effect after a prorogation or dissolution. In striking contrast to the Victorian Act No. 322, which was dealt with in Alcock v. Fergie[100] , is the Victorian Act No. 327, sec. 2 of that Act providing: "There shall and may be issued out of the consolidated revenue and applied for or towards making good the supply granted to Her Majesty for the service of the year one thousand eight hundred and sixty-eight the sum of one million pounds."
This latter provision is more in keeping with the form of the English Consolidated Fund Acts, for, although it makes a reference to the grant of supply to the Crown, it makes no reference, either expressly or impliedly, to the existence of Assembly resolutions at the time of payment out of revenue for the services of the Crown.
The English practice is referred to by Durell in the passage already cited. The form of the Consolidated Fund Acts is that the Treasurer may issue out of the consolidated fund and apply towards making good the supply granted to the Crown for the services of the year, a certain sum of money. Later when the Appropriation Act is passed (that is in England), it always contains a section appropriating, as from the date of their original passing, the sums granted in the Consolidated Fund Acts towards the services and purposes expressed for the first time in the Schedule to the Appropriation Act.
It is quite clear that Durell's reference at page 35, quoted above, that grants contained in the Consolidated Fund Acts are nullified upon prorogation or dissolution, whilst certainly emphasizing the usual constitutional practice, contains a legal opinion of very doubtful import. The authority quoted by Durell is May, who says (13th ed. (1924), p. 499):—"The grants on account caused by a dissolution should be legalized by an Appropriation Act, passed before Parliament is dissolved, appropriating in detail all the supply voted in the expiring session in the manner used at the close of an ordinary session; and the amount of supply left unvoted is dealt with by the succeeding Parliament. The prorogation or dissolution of Parliament without an Appropriation Act is a constitutional irregularity, as thereby all the grants of the Commons are nullified, and the sums must be voted again in the next session, before a legal appropriation can be effected. This course was followed on the two occasions when Parliament was dissolved, no Appropriation Act having been passed. On the occasion of the dissolution of 1820, the Commons did not pass a Bill to effect the due appropriation of certain temporary supplies; a course which drew from the Lords a remonstrance, which that House recorded on its journal."
It is also true, as May noted, that the Commons in 1784 resolved that persons who acted on supply grants not covered by an Appropriation Act would be guilty of a high crime and misdemeanour, but this resolution of the House of Commons was only intended, as most historians agree, to deter Pitt from securing from George III. a dissolution of Parliament. In spite of the threat, Pitt acted on supply grants, and Parliament was dissolved without an Appropriation Act. The statement in Alcock v. Fergie[101] attributed to counsel, of whom Hearn himself was one, that Pitt, trusting to obtain a majority in the new House of Commons, looked to an indemnity from the future Parliament, and duly obtained it, is quite incorrect. The contrary is not only asserted, but commented upon by the standard authorities. For instance, Tomline says: "Nor was any Bill of indemnity passed, or even called for, by those who had in the old Parliament declared that it would be necessary in case of a dissolution" (Memoirs of the Life of the Rt. Hon. William Pitt (1822), vol. i., p. 507). And Stanhope emphasizes the same fact, and comments:—"Thus worthless was the resolution which the late House of Commons had carried on this subject. So completely had all the threats antecedent to the dissolution fallen to the ground" (Life of the Rt. Hon. William Pitt (1861), vol. i., p. 224).
It may also be noted that the Acts under which Pitt acted were two, one granting to the Crown certain excise duties, and the other a land tax (24 Geo. III., sess. 1, cc. 1 and 4). These Acts bear little resemblance to the modern Consolidated Fund Acts, which are concerned not at all with authorizing the imposition of taxation, but only with the provision of a key to enable the Executive to unlock the Treasury so as to meet the exigencies of the public service. It is, of course, true that by 24 Geo. III., sess. 2, c. 44, the moneys arising from the excise duties and land tax were duly appropriated. But no inference can or should be drawn that any illegality would have been committed merely by reason of the absence of an Appropriation Act. May's note on the subject seems to have been affected, to some extent at least, by the original Whig tradition that the danger to be guarded against was actually misappropriation by the Crown of moneys intended to be allocated to a specific purpose.
In truth, the modern Supply Acts, such as those passed in New South Wales during the financial year 1931-1932, are not merely Supply Acts but also Appropriation Acts so far as they operate and extend. The constitutional practice is that such Acts are subsequently embodied in one Appropriation Act which deals with the whole financial year. In this sense the Appropriation Act replaces them, and they cease to govern the situation. But it must be taken that the New South Wales Parliament deliberately chose to dispense with an Appropriation Act in respect of the year 1931-1932, and to rest content with the Supply Acts which, with the Audit Act, covered the full twelve months' supply. The possibility of variation or replacement by an Appropriation Act never having eventuated, one is necessarily referred back to the Supply Acts and the Audit Act themselves. In such circumstances all that a Court of law can do is to attend to their terms and give them full force and effect. Doing this, the result is a distinct authorization to the Executive to pay moneys from the Consolidated Revenue Fund (the only fund now in question) upon the basis of the estimates referred to in the Acts, the fund being made available in order to defray the expenses of the Crown in the various departments and services during the months specified in the Acts. It is not possible to treat the Supply Act and the Audit Act as ceasing to operate because prorogation or dissolution took place in May, 1932, and no Appropriation Act in the usual form has ever been passed. Of course the authorization to pay extends only to the various months of the year 1931-1932, and ceased to have effect on 30th June, 1932. But this is also the case when the Appropriation Act is passed in the usual way.
The actual point of Alcock v. Fergie[102] concerned the effective recovering of moneys payable originally under a contract entered into after the session had closed, and said to be irrecoverable in any event because, at the time of suit, no moneys were legally available for the purpose of payment. An important part of the reasoning in Alcock v. Fergie[103] was subsequently rejected by Madden C.J., in his illuminating judgment in Fisher v. The Queen[104] . Madden C.J. said, referring to the earlier judgment of Stawell C.J.:—"But his Honor says that "a specific appropriation must be of a specific sum for a specific definite object which Parliament can estimate, and in consideration of which it is prepared to forego its privilege of an annual appropriation after full discussion." But is this so? Parliament has equal authority to make special appropriations, which may be definite or indefinite in amount as it pleases. If it can arrive safely at a specific amount, and yet a special appropriation is desirable to protect the public interest by preventing delay in payments, and by making them certain, there is nothing ultra vires or even unwise in providing that when moneys of a definite kind, not at present ascertainable, can be and shall be ascertained later, the consolidated revenue shall be specially appropriated to meet them. Of course Parliament would not commit the ascertainment of such payments to any but highly responsible persons, whose judgment could be in any case final."
The judgment of Madden C.J. on this point seems to bear the general approval of the Privy Council in R. v. Fisher[105] . In my opinion, it is absolutely correct. Appropriation of public funds by Act of Parliament may take many and varied forms, so long as no overriding constitutional provision exists to control the method of appropriation. Two illustrations may be given.
In the year 1878 the law officers of the Crown in England advised that the moneys necessary to defray the costs, charges and expenses incident to the collection, management and receipt of the public revenue of Victoria were already appropriated by sec. 45 of the Constitution Statute, 18 & 19 Vict. c. 55, so that there was no necessity for any further grant or appropriation of the moneys by the Parliament of Victoria (Todd, Parliamentary Government in the British Colonies (1894), pp. 219, 734).
A further illustration is given by Anson, who says:—"In times of emergency, such as war actual or threatened, recourse may be had to a vote of credit. In such a case the Crown asks for a grant of money in general terms, it being impossible at the moment to furnish (as in an ordinary estimate) a detailed statement of the manner in which it will be spent; and Parliament, by acceding to the request, in effect places the money at the disposal of the Executive to be spent at the discretion of the latter on any object within the terms of the vote (5th ed. (1922), vol. i., p. 289)."
Hearn, who was closely associated with the Victorian Upper House, did not fail to suggest that a Legislative Council may have a legitimate grievance against the representative Assembly in cases where the ordinary constitutional practice of passing an Appropriation Act is departed from by the Crown's advisers and the Assembly to which they are responsible. But such irregularity cannot affect the strict legal position.
In the present case, the position as it existed on 30th June, 1932, was that (a) the Crown had made contracts with the plaintiff, and (b) moneys had been made legally available by the Supply Acts, including that of June, 1932. It is admitted that the advertising service vote, if otherwise sufficient to satisfy the rule in Churchward's Case[106] , covered the service called for by the contracts with the plaintiff. On 30th June, therefore, there was (a) an existing contract, (b) a sufficient compliance with the rule in Churchward's Case[107] , (c) a proved performance by the plaintiff of the contract on his part, (d) proved non-payment for this service for five weeks at £29 12s. 6d. per week, that is, £148 2s. 6d. in all.
It cannot be too strongly emphasized at all points of this case that the plaintiff's contracts were not with the Ministers individually or collectively, but with the Crown. As Viscount Cave said in Attorney-General v. Great Southern and Western Railway Co. of Ireland[108] :—"My Lords, the liability to pay the costs of replacement undertaken by the agreements of March, 1917, and September, 1918, was of course a liability of the British Crown, which on maturity would fall to be discharged out of moneys to be provided for that purpose by the Parliament of the United Kingdom. The nature and incidence of a debt so incurred has been authoritatively described in such cases as Churchward v. The Queen[109] , and is not open to question. This being so, the transfer by the Act of 1919 and the Order of 1920 of the powers and liabilities of the Board of Trade in relation to railways to the Minister of Transport is of little importance in this case. The contingent liability to pay for replacing the rails remained after that transfer a liability of the Crown, the only change being in the Minister entrusted with the duty of advising the Crown upon the matter."
The Crown is represented in New South Wales by the Governor, who is always in office, and is the supreme head of the Executive Government. The honour of the Crown demands that, subject to Parliament's having made one or more funds available, all contracts for the Crown's departments and services should be honoured. The position on 30th June, 1932, having been examined, what was the position existing on 1st July, 1932, the first day of the financial year 1932-1933? In my opinion, it was plainly this, that the plaintiff's contract with the Crown was still on foot. The plaintiff did not accept the implied offer to rescind contained in the letter of cancellation or repudiation forwarded to him during the month of May. The condition that payments thereunder depended upon moneys being made legally available by Parliament still subsisted, but the contract was not inchoate or suspended but existing. (See the argument before the Privy Council in Kidman v. The Commonwealth[110] .) (See also per Higgins J. in Kidman v. The Commonwealth[111] .)
The only question, therefore, is whether in respect to the year 1932-1933 also the condition of Churchward's Case[112] was satisfied. Two points arise. The first is whether sufficient moneys had been made available for the provision of advertising services to enable the officers of the Crown to pay the plaintiff from that source. The second is whether the Court should draw the inference that, because a particular Ministry desired to avoid paying the plaintiff in respect of his services, the Court should infer that the moneys if legally "available" otherwise, were at least not "available" to pay him.
Dealing with the first question, Mr. Kelly prepared a statement which, in respect of the year 1932-1933, assumed that £94 18s. 8d. came to hand week by week for the Government's advertising services. Upon this basis the account runs into debit as early as 1st September, 1932. But there are two reasons why this statement cannot be acted upon for the purpose of the present case. For one thing, it includes in its expenditure moneys paid in relation to the Crown's trading concerns which were not treated as part of the advertising grant to the Department of the Premier. Payments to provide advertising for the purpose of such trading concerns were made by the Premier's Department in the first instance, though subsequent recoupment was obtained from the funds of the appropriate trading concern. Therefore, although the statement shows the vote in debit on 1st September, 1932, this is a nominal debit, and a true debit would have been reached only about April of the year 1933.
Moreover, it is not accurate to assume a weekly incoming of a proportion of the yearly appropriation for advertising. It appears from the estimates for the financial year 1932-1933 that, for the service of advertising, the sum of £4,950 was voted by Parliament. This vote was included in a very much more general vote contained in the Appropriation Act. We find that, upon the passing of the Appropriation Act on 8th November, 1932, the sum of £4,950 was then made available by Parliament for the purposes of the service of advertising. Upon that date (8th November) the plaintiff had become entitled to be paid about £700 in all under his two contracts, having completed one contract on or about 28th October, 1932. The other contract was not completed until 31st March, 1933, when the total liability of the State to him in accordance with the contract amounted to £1,114 10s. So far as the financial year 1932-1933 was concerned, about £550 was the total liability incurred by the Crown to the plaintiff on 8th November, when the Appropriation Act became law. On 31st March, 1933, the total sum of £1,114 10s. now sued for, was owing to the plaintiff, but £148 2s. 6d. has to be deducted to obtain the sum referable to 1932-1933, the total sum covering, as we have seen, services rendered in the previous financial year.
In order to secure a judgment declaring the Crown's liability, a person who has a subsisting contract with the Crown satisfies the constitutional doctrine laid down in Churchward's Case[113] in respect of payments accruing during the financial year when he completes the performance of his contract if, at the time of such completion, there exists in respect of such financial year sufficient moneys in the vote for the relevant service to enable the payments in question to be lawfully made. I also think that the plaintiff is entitled to say that the constitutional doctrine was satisfied in respect of all payments falling due between 1st July, 1932, and the date of his completing his contract if, at the date of the passing of the Appropriation Act (8th November, 1932), enough moneys to pay him in full could have been lawfully paid or set aside to pay him from moneys then remaining from the parliamentary grant in respect of advertising. From a close consideration of the figures and evidence, I draw the inferences of fact that (a) on 8th November, 1932, sufficient moneys were available to pay him what was then owing to him in respect of services rendered in the year 1932-1933, and (b) sufficient moneys from the same grant were also available to pay him in full on 31st March, when he finally completed the performance of his contracts.
In such a case as this I do not think any question of "priority" really arises. And I do not agree for a moment that the plaintiff should be deemed bound to wait for payment until the end of the financial year, until the Government completes payment under all advertising contracts whether or not such contracts were entered into after the time when the plaintiff made his contracts, or after the time when he performed all his services under the contracts, or after the passing of the Appropriation Act in November, 1932. I am rather inclined to think that the proper date to which the plaintiff is entitled to be referred, is, not the actual time when the Appropriation Act was passed in November, 1932, but 1st July, 1932, the commencement of the financial year. If that be so, an immediate call upon the vote of £4,950 for 1933 could have been made in order to make payments to the plaintiff and those others (including the Sydney Morning Herald proprietor) who had contracts with the Crown extending from the previous financial year into the financial year beginning on 1st July, 1932. And the vote of £4,950, was, I also find, amply sufficient to make payments under all other contracts current on 1st July, 1932, as well as the plaintiff's two contracts.
The second point made by Mr. Flannery remains to be considered. What inference is to be drawn from the fact that in 1932 the Crown's advisers stated their intention not to pay the plaintiff? It should be inferred, so it is said, that, in the sum of £4,950 which the Crown asked for and received, by way of grant from Parliament for advertising services, there could hardly have been included the very amounts which the Ministers intended to avoid paying to the plaintiff. This argument might be very formidable if the matter rested upon mere inference, ignoring the separate and distinct position of the Crown and its Ministers for the time being. It seems to me that a Court of justice is not entitled to find from a mere expression of intention of the Ministers to repudiate a contract with a subject, that intention being expressed to the subject and not to Parliament, that the Crown may successfully argue as follows:—"Our Ministers desired to repudiate. They said nothing to Parliament about the matter. But be pleased to infer (1) that Parliament supported our Ministers' desire to repudiate, and (2) that upon the statutory grant of money for advertising services a special exception should be engrafted excluding payments under the contract repudiated by Ministers."
The true test is, I think, whether the Ministers could have retraced their steps (say) in December, 1932, or March, 1933, and paid the plaintiff. In my opinion, they, or other Ministers, could lawfully have paid the plaintiff, assuming, as is conceded throughout, that there is nothing in the class of services contemplated by the Premier's Department advertising vote which would exclude the services called for by the contracts with the plaintiff.
The above reasoning shows that the plaintiff is entitled to succeed in the argument based on Churchward's Case[114] . And the same conclusion may be reached in a much more direct method. By the Special Deposits (Industrial Undertakings) Act 1912, provision was made by the New South Wales Parliament for the constitution of special deposit accounts in the Treasury and for the receipt and payment of moneys relating to certain industrial undertakings of the Government, such as the State Brick Works and Metal Quarries. The Act applied to any other industrial undertaking which the Governor specified by notification in the Gazette. In the case of the Tourist Bureau of New South Wales, which is an important trading concern, this power was exercised by the Governor, and it is admitted that its exercise was valid, so that the Tourist Bureau is to be regarded as an industrial undertaking for the purpose of the statute in question.
The scheme of 1912 was to enable the concerns in question to acquire such a degree of autonomy as would enable their business to be carried on to the best advantage and without the necessity of annual parliamentary appropriation or grant of moneys in order to defray the running expenses of the business. It was contemplated that the receipts of such undertaking from all sources would be paid into the special account at the Treasury. From this account, sec. 3 provides that "there shall be paid ... any expenditure of or in relation to the industrial undertaking to which it relates, including charges for management, maintenance, working expenses and interest on capital." Subsequent amendments to the Act were all designed to the same end, power, for instance, being given in 1916 by Act No. 77 for the Minister to carry trading balances to reserve account.
It is clear from secs. 5, 6, and 7 of the Act of 1912 that the control and direction of the industrial undertaking was committed to the responsible Minister of the Crown. In relation to the Tourist Bureau, the responsible Minister was the Chief Secretary of New South Wales, which office was, in April, 1932, filled by Mr. Gosling of the Lang Ministry. I have already pointed out that it was from Mr. Lang himself that the authority proceeded to Mr. Harpur to enter into the contracts with the plaintiff. This was done, as Mr. Hay, the Under Secretary explained in evidence, as a matter of Government policy, and to this policy Mr. Gosling was as much a party, and accepted as much responsibility, as the Premier himself. Of course, as is well known, the Special Deposits (Industrial Undertakings) Act does not exclude the constitutional practice of collective Ministerial responsibility for the control of the undertakings. On the contrary, it requires it, and ensures it by making it perfectly clear that the responsibility for its control rests with the appropriate Minister of the Crown.
This position was quite well understood in New South Wales. For instance, the permanent officer who was managing the Tourist. Bureau at the relevant dates, after stating that he furnished the copy for advertising in the plaintiff's newspaper, said:—"Q. What is your procedure with regard to advertisements for your Bureau? A. We ask the Superintendent of Advertising in the Premier's Department to arrange any contracts that we desire.
Q. What about payment? A. The payment comes from the Tourist Bureau Working Account, Special Deposit Account.
Q. In the first instance? A. No, we recoup the Premier's Department for original payments.
Q. Does it rest with the Premier's Department whether your advertisement will be published or not? A. Yes. The Premier's Department could, by Ministerial direction, restrict me from advertising any further.
Q. That is what you take to be your position? A. Yes.
His Honor: Q. The Tourist Bureau is not an independent body? A. It is in a measure. It is a State industrial undertaking, but it is always subject to Ministerial direction.
Mr. Watt: Q. I think you work under the Chief Secretary's Department, but your advertising is done by the Premier's Department? A. Yes, by Ministerial minute we submit our advertising requirements to the Premier's Department.
"From this it appears clearly that the responsibility of the Chief Secretary as the "responsible" Minister of the Crown was, in accordance with the doctrine of collective ministerial responsibility, shared with the Premier and the other members of the Cabinet.
No doubt, in respect of ordinary routine administration, directions would not be given by the Cabinet either to the permanent officer managing the industrial concern or to any other public servant such as Mr. Harpur, whose duty it became to assist the concern in certain parts of its administration. But, even then, ministerial and executive responsibility could never be surrendered by the Ministry, all the assets and receipts of the undertaking being assets and receipts of the Crown, all its liabilities and expenses being the liabilities and expenses of the Crown, and the executive Government being always responsible to Parliament for the whole course of administration of the undertaking.
In the case of the contracts with the plaintiff, however, for reasons with which we need not be concerned, the executive Government, including the Premier and Chief Secretary, authorized and required advertising contracts to be made with the plaintiff, it being intended both by the plaintiff and the Tourist Bureau that advertisements should appear in the newspaper throughout the agreed period.
This being so, the Ministry, including the Chief Secretary, duly authorized the expenditure of money "in relation to the industrial undertaking," and sec. 3 of the Act of 1912 commands that such expenditure shall be paid out of the special account opened in the Treasury, the account being kept so that the receipts of the undertaking shall always be available as a separate fund for the purpose of meeting all expenditure by or in relation to the undertaking. The statute deliberately avoids the necessity either for the receipts being paid into the Consolidated Revenue Fund, or an annual grant of moneys by Parliament out of the Consolidated Revenue Fund to meet working expenses. Sec. 3 may be said to operate as a continuing and permanent appropriation for the purposes therein specified.
Mr. Flannery urged that it was not competent for one Minister of the Crown, e.g., the Attorney-General, to give a direction that contracts in relation to an industrial undertaking shall be given to a contractor against the will or without the knowledge of the Minister of the Crown in charge of the undertaking. If such a thing occurred, either the Attorney-General or the responsible Minister would soon cease to be a member of the Cabinet, for the position of the Premier would become intolerable. But what happened in the present case was not analogous to the suggested illustration. For it is clear, I find, that Mr. Lang as Premier acted not against the will or without the knowledge of the Chief Secretary, but with his full knowledge and approval.
One other circumstance should now be mentioned. The manager of the Tourist Bureau was informed by Mr. Harpur that, as between the Bureau and the Premier's Department, the payments called for by one or more of the plaintiff's contracts would be met out of the Premier's Department grant for advertising. The question of the validity of such an inter-departmental arrangement does not directly arise in these proceedings, but I am bound to say that the general scheme of the 1912 Act is that the working expenses of the industrial undertakings shall come out of the fund constituted by their own receipts, and shall not be borne by votes for the services of the ordinary departments of the Executive Government. There is, of course, no obstacle in the way of Parliament's granting moneys to assist a particular industrial undertaking. This may be done by means of the usual Appropriation Act, but, if so, the vote should indicate not merely e.g., that it relates to "Advertising," or "Fuel," or "Furniture," but that it grants money to a specified industrial undertaking for the provision of any such service.
In the present case this procedure was never followed, so that it would not have been permissible for the Premier's Department, relying merely upon its general advertising vote, to pay into the funds of the Tourist Bureau an equivalent of such moneys as should or might have been paid to the plaintiff from the account of the Bureau.
Of course, the point may be pressed still further, though no such argument was advanced before me; for it may be said that, by reason, not only of the 1912 statute, but also of the meaning of the phrase itself, the Premier's Department vote for "governmental advertising" must be regarded as a vote in relation to "governmental" or "non-trading" departments, as distinct from the industrial and trading concerns specified in or pursuant to the 1912 statute, or otherwise carried on by the Crown. And, although the parties have conducted their case upon the assumption that "governmental" should not be so construed, an assumption which is in accordance with the practice adopted in relation to the plaintiff's contracts, much may be said in favour of the restricted meaning of "governmental" advertising. And I do not overlook the fact that the adoption of this view would tell strongly against the view I have expressed earlier, based upon the hypothesis that the Premier's Department vote for advertising is of itself sufficient to satisfy the rule in Churchward's Case[115] .
In the circumstances, whatever difficulties were attached to the scheme of inter-departmental recoupment in respect of moneys payable to the plaintiff, I am quite satisfied that the plaintiff should succeed, even if he fails to show a sufficient and relevant grant of moneys either in the Supply Act and the Audit Act, or in the Appropriation Act of 1932.
His contracts were made, not with the Premier's Department, not with the Tourist Bureau, but with the Crown alone. As Lord Dunedin said in Attorney-General v. Great Southern and Western Railway Co. of Ireland[116] :—"The learned Judges of the Court of Appeal found difficulty in thinking that there was a departmental liability. I cannot say such difficulty affects me. I do not know what a departmental liability is, except a liability on behalf of the Government and which is only enforceable as the noble Viscount has said. A Government department never binds itself personally, i.e., in the persons of the officers who compose it."
Lord Phillimore[117] , in the same case:"As to the distinction sought to be drawn between the liability of the Crown and the liability of a department, I agree with the noble and learned Lord, Lord Dunedin, that there is no such thing as a departmental liability as distinct from the liability or quasi-liability of the Crown."
Did the officer who made the contracts have authority? The answer is that he had specific and definite authority to do so from the Government; that is, the Premier and Ministers, including the responsible Minister, the Chief Secretary. Further, the contracts were made in relation to the Tourist Bureau and in accordance with previous directions, the promised service of advertising was fully rendered by the plaintiff for the benefit of the Tourist Bureau.
Having regard to the statute of 1912, dealing with industrial undertakings, the plaintiff shows that the rule in Churchward's Case[118] is satisfied, because sec. 3 of the statute operates as a continuing appropriation of all receipts from the Tourist Bureau to working expenses, including, of course, advertising.
The plaintiff cannot be affected by any inter-departmental arrangement for recouping. The evidence shows that he did not even know that such an arrangement was proposed or agreed to. He has proved a binding agreement with the Crown, acting through the Ministry of the day, a breach of such agreement, and a compliance with the constitutional rule that payments under the contract should bear the authority of the Parliament of New South Wales.
I therefore hold that the plaintiff succeeds. I make a declaration that the plaintiff is entitled to be paid the sum of £1,114 10s., which is the undisputed amount of liability in this action. The defendant must pay the costs of the action.
From this decision the defendant appealed to the Full Court.
Appeal dismissed with costs.
Solicitor for the appellant, J. E. Clark, Crown Solicitor for New South Wales.
Solicitor for the respondent, Abram Landa.
2. (1923) 32 C.L.R., at pp. 206, 207.
3. (1923) 32 C.L.R., at p. 207.
4. (1923) 32 C.L.R., at pp. 211, 212.
5. (1923) 32 C.L.R., at p. 213.
7. [1930] HCA 52; (1930) 44 C.L.R. 319.
8. [1920] UKPCHCA 1; (1920) A.C. 691; 28 C.L.R. 106.
9. (1865) L.R. 1 Q.B. 173, at pp. 209, 210; [1865] EngR 744; 122 E.R. 1391.
10. (1865) L.R. 1 Q.B., at p. 174.
11. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
12. (1865) L.R. 1 Q.B. at p. 183.
13. (1865) L.R. 1 Q.B., at p. 201.
14. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
15. [1924] HCA 5; (1924) 34 C.L.R. 198.
16. (1924) 34 C.L.R., at pp. 222, 225.
17. [1924] HCA 5; (1924) 34 C.L.R. 198.
18. (1924) 34 C.L.R., at p. 220.
19. (1924) 34 C.L.R., at pp. 222, 225.
20. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
21. [1924] HCA 5; (1924) 34 C.L.R. 198.
22. [1922] HCA 62; (1922) 31 C.L.R. 421, at p. 451.
23. [1924] HCA 5; (1924) 34 C.L.R. 198.
24. [1922] HCA 62; (1922) 31 C.L.R. 421, at p. 451.
25. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
26. (1865) L.R. 1 Q.B., at p. 201.
27. (1916) 2 A.C. 610, at p. 617.
28. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
30. [1924] HCA 5; (1924) 34 C.L.R. 198.
31. (1919) N.Z.L.R. 419, at pp. 434, 435.
32. (1919) N.Z.L.R., at p. 443.
37. (1923) 23 S.R. (N.S.W.) 590.
38. (1867) 4 W.W. & a'B. (L.) 285.
39. (1867) 4 W.W. & a'B. (L.), at p. 316.
40. (1867) 4 W.W. & a'B. (L.), at pp. 306, 307.
41. (1867) 4 W.W. & a'B. (L.), at p. 296.
42. (1867) 4 W.W. & a'B. (L.), at p. 296.
43. (1867) 4 W.W. & a'B. (L.) 285.
44. (1867) 4 W.W. & a'B. (L.) 285.
45. (1901) 26 V.L.R. 781, at p. 800.
46. (1903) A.C. 158, at p. 167.
49. (1925) A.C. 754, at pp. 763, 764.
52. [1925] HCA 55; (1925) 37 C.L.R. 233, at p. 248.
61. (1923) 32 C.L.R., at pp. 206, 207.
62. (1923) 32 C.L.R., at p. 207.
63. (1923) 32 C.L.R., at pp. 211, 212.
64. (1923) 32 C.L.R., at p. 213.
66. [1930] HCA 52; (1930) 44 C.L.R. 319.
67. [1920] UKPCHCA 1; (1920) A.C. 691; 28 C.L.R. 106.
68. (1865) L.R. 1 Q.B. 173, at pp. 209, 210; [1865] EngR 744; 122 E.R. 1391.
69. (1865) L.R. 1 Q.B., at p. 174.
70. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
71. (1865) L.R. 1 Q.B. at p. 183.
72. (1865) L.R. 1 Q.B., at p. 201.
73. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
74. [1924] HCA 5; (1924) 34 C.L.R. 198.
75. (1924) 34 C.L.R., at pp. 222, 225.
76. [1924] HCA 5; (1924) 34 C.L.R. 198.
77. (1924) 34 C.L.R., at p. 220.
78. (1924) 34 C.L.R., at pp. 222, 225.
79. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
80. [1924] HCA 5; (1924) 34 C.L.R. 198.
81. [1922] HCA 62; (1922) 31 C.L.R. 421, at p. 451.
82. [1924] HCA 5; (1924) 34 C.L.R. 198.
83. [1922] HCA 62; (1922) 31 C.L.R. 421, at p. 451.
84. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
85. (1865) L.R. 1 Q.B., at p. 201.
86. (1916) 2 A.C. 610, at p. 617.
87. [1865] EngR 744; (1865) L.R. 1 Q.B. 173; 122 E.R. 1391.
89. [1924] HCA 5; (1924) 34 C.L.R. 198.
90. (1919) N.Z.L.R. 419, at pp. 434, 435.
91. (1919) N.Z.L.R., at p. 443.
96. (1923) 23 S.R. (N.S.W.) 590.
97. (1867) 4 W.W. & a'B. (L.) 285.
98. (1867) 4 W.W. & a'B. (L.), at p. 316.
99. (1867) 4 W.W. & a'B. (L.), at pp. 306, 307.
100. (1867) 4 W.W. & a'B. (L.), at p. 296.
101. (1867) 4 W.W. & a'B. (L.), at p. 296.
102. (1867) 4 W.W. & a'B. (L.) 285.
103. (1867) 4 W.W. & a'B. (L.) 285.
104. (1901) 26 V.L.R. 781, at p. 800.
105. (1903) A.C. 158, at p. 167.
108. (1925) A.C. 754, at pp. 763, 764.
110. (1926) A.L.R. 1, at p. 2.
111. [1925] HCA 55; (1925) 37 C.L.R. 233, at p. 248.
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