Dawson v Commonwealth [1946] HCA 41; (1946) 73 CLR 157 (22 October 1946)

The plaintiff Burton Barclay Dawson agreed to buy a block of land for £200. He applied to the delegate of the Treasurer of the Commonwealth for approval of the purchase under reg. 6 of the National Security (Economic Organization) Regulations. The delegate of the Treasurer refused to give his consent to the proposed transaction but informed the applicant that consent would be given if the selling price of the land did not exceed £150. The plaintiff contends that the Regulations are and always have been invalid as not authorized by the National Security Act 1939-1943 or by the Commonwealth Constitution.

The application for consent to purchase the land was made in accordance with forms which are not prescribed by any regulation but which apparently it is the practice of the delegate of the Treasurer to use. In my opinion there is no justification in the Regulations for requiring much of the information which the parties to a transaction are required to give, but the question of the validity of the Regulations cannot depend upon the practice adopted by officers in dealing with vendors and purchasers.

In the statement of claim in the action the plaintiff alleges the surrender of all of the Governments with which His Majesty was engaged in war, the final surrender being that of Japan on 2nd September 1945, on which day hostilities ceased with all enemy nations. The National Security Act 1939-1943, s. 19, provided:—"This Act shall continue in operation until a date to be fixed by Proclamation, and no longer, but in any event not longer than six months after His Majesty ceases to be engaged in war." It is contended that His Majesty ceased to be engaged in war on 2nd September 1945 and that the operation of the Act therefore expired on 2nd March 1946. The National Security Act 1946 repealed s. 19 of the former Act and substituted a new provision in the following terms:—"This Act, and all regulations made thereunder, and all orders, rules and by-laws made in pursuance of any such regulation, shall cease to have effect at midnight on the thirty-first day of December, One thousand nine hundred and forty-six."

The plaintiff contends that, even if the Act of 1946 upon its true construction purports to allow the Regulations to continue in force till 31st December 1946, the Regulations have now become invalid or inoperative by reason of the changed position in relation to the war. The defendant has demurred to the statement of claim.

The first contention for the plaintiff was that the defence power did not at any time authorize legislation of the character contained in Part III. of the Economic Organization Regulations relating to the transfer of property. These Regulations were considered by the Court in Shrimpton v. The Commonwealth[1]. The objections now made to the Regulations on behalf of the plaintiff are the same as those which were raised and dealt with in that case. It was there contended that the Regulations, and particularly reg. 9 (2), gave the Treasurer a discretion which was not limited in any way. Regulation 6 provides that, subject to exceptions, a person shall not, without the consent in writing of the Treasurer, purchase any land or enter into other specified transactions with respect to land. Regulation 9 (2) provides that the Treasurer may in his absolute discretion grant consent either unconditionally or subject to such conditions as he thinks fit or refuse to grant consent. The attack made upon the Regulations in Shrimpton's Case[2] was based particularly upon this provision and the judgments in the case deal in detail with that objection. In Shrimpton's Case[3] I gave reasons for my opinion that the Regulations were validly made under the National Security Act 1939-1943 and it is not necessary to repeat them.

In view of some of the arguments used upon the hearing, I desire to add that it is not the duty or a function of the Court itself to consider whether in its opinion such Regulations are "necessary" for defence purposes. Questions of legislative policy are determined by the legislature, not by the Courts. If it can reasonably be considered that there is a real connection between the subject matter of the legislation and defence, the Court should hold that the legislation is authorized by the power to make laws with respect to defence. The control of the use of money for the purchase of land, or of stocks and shares, or of goods or for other purposes, is a control of finance and trade which, as Griffith C.J. said in Farey v. Burvett[4], "may be the most potent weapon of all" in conducting a war. It is not for the Court to inquire into "the degree of its necessity": a determination of that question belongs to the legislative and not to the judicial sphere[5].

It is contended, however, that the National Security Act 1939-1943 expired on 2nd March 1946 because then six months had elapsed since 2nd September 1945, when His Majesty ceased to be engaged in active hostilities, all enemy powers having surrendered. The question is whether His Majesty then ceased "to be engaged in war." It was argued that the words "engaged in war" meant actually engaged in fighting, and that therefore the continuance of the Act depended upon the date to which fighting continued. It seems to be clear that this proposition cannot be supported in its literal sense. Fighting might cease for a week or a month, but no-one could doubt that a war was still in existence if the hostile forces were still opposing each other, ready and waiting to fight. Accordingly, the criterion cannot be the actual happening or non-happening on any given day of war-like operations.

But it is said that the complete surrender of all enemy forces brings war to an end and that therefore His Majesty was not engaged in war after 2nd September 1945. It has not been suggested that in relation to this matter there are any other categories than those of war and peace. There is no intermediate state which is neither war nor peace. An alien is either an alien friend or an alien enemy. Did German and Japanese subjects become alien friends overnight on 2nd September 1945?

It is a matter of common knowledge that at the present time representatives of the allied nations are engaged in conference for the purpose of endeavouring to determine terms upon which peaceful relations may be resumed with former enemy States. No decisions have been made as to the character of the terms which will be proposed for agreement, or forcibly imposed independently of agreement. Allied forces are in occupation of enemy countries by virtue of conquest, and are exercising authority which rests entirely upon military power. Such a condition of affairs cannot, in my opinion, be described as a state of peace. In some of the conquered countries it can hardly be said that a government exists with which relations can be maintained. In my opinion the present state of affairs in relation to the enemy countries, except Thailand, with which a treaty of peace has been concluded, is a state of war. What is being done in those countries can only be justified by reason of the continuance of war. If there were a state of peace there could be no justification whatever for the occupation of enemy countries and the exercise by the allied nations of powers in those countries which are not derived from any municipal law of those countries or from any agreement with a government of those countries. It is simply a fact that the military forces of the allied nations are exercising war powers and no other powers.

In my opinion His Majesty did not cease to be engaged in war at the moment when Japan surrendered in Tokyo Bay, and His Majesty is still engaged in war. Therefore the National Security Act 1939-1943 did not come to an end on 2nd March 1946, and it has not been brought to an end by any subsequent legislation.

The National Security Act 1946 repeals s. 19 of the Act of 1939-1943 and provides that that Act and all regulations &c. made under it shall cease to have effect at midnight on 31st December 1946. Other provisions of the Act of 1939-1943 are not amended or repealed and the terms of the new s. 19 assume that regulations made under the Act will (unless themselves repealed) continue in force until the date mentioned.

The long title of the Act is "An Act to provide for the termination of the National Security Act 1939-1943." It commenced on 16th May 1946. It is contended for the plaintiff that the National Security Act 1939-1943 had already terminated on 2nd September 1945. If this is truly the case, then the 1946 Act proceeded upon a wrong assumption and is simply ineffectual to produce any legal result. So far as this argument depends upon the terms of s. 19 of the 1939-1943 Act, I have already dealt with it. I add to the considerations which I have already mentioned the fact that the 1946 Act, after reciting s. 19 of the 1939-1943 Act, further recites:—"... whereas a state of war still exists between His Majesty and Germany, Italy, Japan and other countries: And whereas some considerable time must elapse before a state of peace comes into existence with each of the countries with which a state of war still exists, and it is desirable that the National Security Act 1939-1943 should be terminated before a state of peace with all of those countries has come into existence:" I agree that recitals in a statute are not conclusive evidence of facts recited; they are prima-facie evidence—see cases cited in Craies on Statute Law, 4th ed. (1936), at pp. 41 et seq. Thus, though the recitals in the 1946 Act do not conclusively establish that a state of war still exists, they do recognize and support as a matter of evidence the other facts constituting the relationship between the Allied Nations and enemy powers to which reference has already been made.

But the plaintiff has a further argument, depending upon the nature of the constitutional power to make laws with respect to defence. It is contended, and in my opinion rightly, that the scope of possible legislation under the defence power varies from time to time in accordance with the circumstances of the time, and that the mere fact that a state of war continues does not in itself authorize the continuance of laws which may have been validly operative when made, but which cannot be regarded as having any relation to defence at a later time when their validity is challenged. To take an example—the introduction of blackout regulations, however justifiable in the past, could not be supported now as valid legislation. But this principle does not mean that the Federal defence power in relation to a particular matter ceases instanter with the disappearance of the conditions which justified the original exercise of the power. I give another example:—Let it be supposed that, under the defence power, at a time when there was, in the opinion of the Commonwealth Government, a danger of bombing attacks, regulations had been made authorizing a Commonwealth authority to erect air-raid shelters in public streets. Such regulations would be valid. Circumstances change, and there is obviously no longer any danger of such attacks. The structures in the streets do not then immediately become unlawful obstructions under State law, in relation to which the Commonwealth has no power. Federal statutes or regulations could, in my opinion, validly be made for the orderly demolition or removal of the structures. Similar considerations apply in the case of other defence measures. The defence power does not cease instantaneously to be available as a source of legislative authority with the termination of active hostilities (cf. Jerger v. Pearce[6]) or even with the end of the war (Roche v. Kronheimer[7]). The power is not cut off as with a guillotine. The defence power includes not only a power to prepare for war and to prosecute war, but also a power to wind up after a war and to restore conditions of peace—gradually if that is thought wise, and not necessarily immediately by the crude process of immediate abandonment of all Federal control. The fact that certain conditions have been created by the exercise of the defence power is itself a fact which is relevant to the validity of a continued or further exercise of that power. After the 1914-1918 war the Commercial Activities Act 1919 provided for the continuance in force of various regulations in relation to subjects which derived their existence from the exercise of defence powers during the war which had ended. I see no reason to doubt the validity of that Act.

In this case the Economic Organization Regulations, if valid when made (as in my opinion they were) do not cease to be operative when the actual war conditions with which they were designed to deal have ceased to exist. The fact that the Regulations have been in operation itself creates an economic condition which may reasonably be thought to require their continued operation for some further period in order to bring about a gradual return to what might be called more normal conditions, instead of exposing the community to the consequences of a sudden and abrupt creation of what might be a legislative vacuum. Whether such a policy is wise or not is not a matter for the Court to decide. But I am of opinion that the defence power includes a power to make laws which can continue in operation for a period not precisely coterminous with the defence emergency to meet which they were enacted, and that this period should not be held to have expired until, as I said in Australian Textiles Pty. Ltd. v. The Commonwealth[8], a stage has been reached when "it would be beyond reason to allege that the continuance of a particular war control, not within Commonwealth powers in time of peace, was necessary for defence purposes."

In my opinion, the challenged Regulations were valid when made: by virtue of s. 19 of the National Security Act 1939-1943 they continued in force notwithstanding the surrender of enemy powers: they are still valid as legislation under the defence powers: and they will come to an end at midnight on 31st December 1946 as regulations under the Act by reason of the provisions of the National Security Act 1946.

In my opinion, the demurrer should be allowed and judgment should be given for the defendants.

The Court is equally divided in opinion and accordingly the opinion of the Chief Justice prevails (Judiciary Act 1903-1946, s. 23 (2) (b)). The result is that the demurrer is allowed and judgment is given in the action for the defendants.

The present demurrer illustrates the difficulties inherent in any Federal form of government when the country which has adopted it becomes involved in a war which necessitates the direction of its whole resources to defence. It cannot hope to survive unless it submits itself for the time being to what is in effect a dictatorship with power to do anything which can contribute to its defence. It follows that the scope of the defence power of the Commonwealth becomes very wide in time of war, and does not shrink to its normal peace-time dimensions immediately on the cessation of hostilities. The question now before us is whether certain Commonwealth Economic Organization Regulations, providing that a person shall not, without the consent in writing of the Commonwealth Treasurer which he may in his absolute discretion grant or refuse, purchase any land, are a valid exercise of the defence power. I have already in the case of Shrimpton v. The Commonwealth[9], expressed my reasons for holding that they are not, and nothing that has occurred since, and none of the arguments which have been addressed to us in the present case, lead me to alter that opinion. For the reasons mentioned, which it is unnecessary for me to repeat, the demurrer should be disallowed.

Demurrer to a statement of claim which claimed a declaration that Part III. of the National Security (Economic Organization) Regulations so far as they restrict the sale or purchase of land were not authorized by the Constitution and in substance that the Regulations are no longer in operation because of the provisions in s. 19 of the National Security Act 1939-1943, under which the Regulations were made, that the Act "should continue in operation until a date to be fixed by Proclamation, and no longer, but in any event not longer than six months after His Majesty ceases to be engaged in war." Since the commencement of the action the National Security Act 1946 has been passed, which provides that the National Security Act and all regulations made thereunder and all orders made in pursuance thereof shall cease to have effect at midnight on 31st December 1946.

Doubtless, some regulation of the sale and purchase of land is a necessary war measure, to prevent the inflation of land values and a consequent rise in the costs of production, and a legitimate exercise of the defence power. The question in this case is whether the provisions contained in Part III. of the Regulations restricting the sale or purchase of land are within the constitutional power of the Commonwealth.

The Regulations provide that, subject to certain exceptions, no person shall, "without the consent in writing of the Treasurer—(a) purchase any land; (b) take an option for the purchase of any land; (c) take any lease of land; (d) take a transfer or assignment of any lease of land; or (e) otherwise acquire any land" (reg. 6 (1)). And the Regulations further provide that "the Treasurer may, in his absolute discretion, grant the consent, either unconditionally or subject to such conditions as he thinks fit, or refuse to grant the consent" (reg. 9 (2)).

The golden rule of interpretation is that the grammatical and ordinary sense of words should be adhered to unless that would lead to some absurdity or some repugnance or inconsistency with the rest of the instrument being interpreted. But that rule does not enable any power or authority to be exercised mala fide or arbitrarily or capriciously. And further, if there be two possible interpretations of a statute or regulation, one of which would render the statute or regulation bad, that interpretation should be adopted which will save the Act or regulation, ut res magis valeat quam pereat. And the Acts Interpretation Act 1901-1941, ss. 15A and 46 also provide a statutory rule of interpretation to the effect that where an Act or regulation is in excess of power it shall nevertheless be a valid enactment to the extent to which it is not in excess of power. Sometimes this process of interpretation is described as "writing down the statute or regulation" but the phrase is meaningless. The Court cannot rewrite an Act or regulation and give it an effect altogether different from that sought by the measure viewed as a whole (Pidoto v. Victoria[10]; Australian Railways Union v. Victorian Railways Commissioners[11]).

In the present case the words of the Regulations are perfectly plain: there are not two possible interpretations nor are they capable of severance. In the prescribed cases the consent of the Treasurer must be obtained and he has an absolute discretion to grant or refuse that consent unconditionally or subject to such conditions as he thinks fit.

Australia has an area of some two million square miles, much of it mere desert, and a coastline of some twelve thousand miles. Yet, subject to some unimportant exceptions, no land in Australia can be purchased or acquired without the consent of the Treasurer and then only upon such conditions as he thinks fit. The power is almost unlimited, for the exceptions are comparatively unimportant, and everything is left to the Treasurer without any rule to guide him or to protect the public. So long as the Treasurer does not act dishonestly or arbitrarily or capriciously his discretion is absolute and without control although unrelated to the defence of the Commonwealth. The Court cannot, as I have said, rewrite the Regulations so as to bring them within power. It cannot by any legitimate process of interpretation convert the absolute discretion given to the Treasurer by the Regulations into some conditional or more limited discretion.

In my opinion, the power to make laws with respect to defence does not authorize a regulation granting authority so large and so vague as that contained in the present regulation. But I do not deny that a regulation more carefully framed might well be within constitutional power.

The authority granted by the Regulations is obviously capable of great abuse and Shrimpton's Case[12] and the questionnaire scheduled to the statement of claim make it plain that the authority has been used in a manner that cannot be supported. Abuse of an authority does not, of course, affect the validity of a regulation but the possibility of abuse owing to the generality and vagueness of the Regulations cannot be ignored when its effect and operation with respect to defence is under consideration.

Stenhouse v. Coleman[13] was referred to but that case is based upon the regulations there in question. The Minister there was not at large in the same measure as is the Treasurer in the present case and to some extent the question now involved is one of degree.

The demurrer also raises the question whether the Regulations have ceased to operate because of the cessation of hostilities in September 1945.

The National Security Act 1939-1943 provides that the Act, as already stated, shall continue in operation no longer than six months after His Majesty ceases to be engaged in war. But a cessation of hostilities does not establish that His Majesty has ceased to be engaged in war. "The regular modes of termination of war are treaties of peace or subjugation; but cases have occurred in which simple cessation of all acts of war on the part of both belligerents has actually and informally brought the war to an end" though the termination of war in this manner is inconvenient and to be avoided (Oppenheim on International Law, 5th ed. (1935), vol. 2, p. 468). In the present case enemy country is occupied and a state of peace has not been proclaimed or declared. A state of war still exists and enemy nationals are still enemy subjects. It will be remembered, however, that the National Security Act 1946, provides that the National Security Act and all regulations made thereunder and all orders made in pursuance thereof shall cease to have effect at midnight on 31st December 1946.

But, though a state of war still exists, the cessation of hostilities for nearly a year materially alters the circumstances which called forth the Regulations and affords now less justification than when passed for the continued exercise of the exceptional powers conferred by the Regulations even if they were valid. That is not to say that the Parliament may not make other provisions under the defence power for regulating the purchase and acquisition of land because of consequences or conditions arising out of the war. But that is another question which does not arise upon this demurrer which, in my opinion, should be overruled.

The foundation of the plaintiff's claim for relief is the fact that the Treasurer has withheld his consent under the National Security (Economic Organization) Regulations to the proposed purchase by the plaintiff of a piece of land. In strictness, therefore, it is only so much of those Regulations as forbids the purchase of land without consent and defines the extent of the Treasurer's discretion that the plaintiff can directly call in question in these proceedings, that is to say, reg. 6 (1) (a) and, in its application to reg. 6 (1) (a), reg. 9 (2). But, though in a question of validity they may not be inseparable, the provisions contained in regs. 6, 6A, 10B, and, in their application to land, in regs. 8, 9 and 10 are so interconnected that they have naturally been drawn into the field of controversy. The efficacy of the provisions to prohibit the transaction in which the plaintiff desires to engage is denied on the ground that the material regulations never were valid and, on the further ground that, if at their inception they were valid, they can no longer lawfully operate. The contention is that at the time the regulations were made they went beyond the legislative power with respect to defence, and that, in any case, the cessation of hostilities meant that they could have no effect now, or at the date of the proposed transaction. Two reasons were given why they could no longer have any effect. The first was that on 2nd March 1946, that is to say six months after the Japanese surrender, the National Security Act 1939-1943 came to an end and with it all regulations thereunder, because s. 19, as it then stood, provided that the Act should continue in operation until a date to be fixed by proclamation and no longer, but, in any event, not longer than six months after His Majesty ceased to be engaged in war and because at the end of hostilities His Majesty did cease to be engaged in war.

As to the amendment of s. 19 by the National Security Act 1946, it was said that this neither purported to, nor could, revive the operation of the Regulations; it could not do so because the necessity had passed by which alone they could be justified, the necessity of bracing the community for a tremendous conflict with a powerful enemy.

In my opinion when the material regulations were adopted they were valid. By the material regulations I mean reg. 6 (1) (a) and reg. 9 (2) read in the light of the other provisions of Part III. In their earlier forms the provisions relating to dealings in land contained in the Economic Organization Regulations were somewhat less drastic than in the form in which we dealt with them in Shrimpton's Case[14] and that is the form in which they now stand, except for the insertion of reg. 6A. In Shrimpton's Case[15] I stated my understanding of their purpose and effect and said that I was by no means prepared to say that the control they established over land dealings went beyond the defence power[16]. I shall not repeat what I then said.

The renewed attack made in the present case upon the validity of the provisions when adopted was supported on the ground that the discretion given to the Treasurer is unlimited, or, at least, so wide that its exercise may go beyond the defence power and yet cannot be controlled. I do not know that it will add much to what I said on this score in Shrimpton's Case[17], but it is, perhaps, desirable that I should mention some of the considerations which have weighed with me against this argument. The expression in reg. 9 (2) "in his absolute discretion" was doubtless intended to protect every exercise of the discretion from attack. The word "absolute" here appears to mean "free from outside interference or restraint." But no discretion could be conferred wider than the purposes of the National Security Act or of the defence power and any attempt to make a purported exercise of discretion judicially unexaminable must to that extent fail. If reg. 9 (2) contains such an attempt, I regard it as a case completely within the application of the direction given by s. 46 (b) of the Acts Interpretation Act 1901-1941. Regulation 9 (2) must, therefore, be read and construed subject to the National Security Act and so as not to exceed the power of the Governor-General in Council to the intent that it shall be valid to the extent that it is not in excess of that power. So far, therefore, as ordinary judicial remedies extend, an exercise of the discretion may be examined, if it is impugned on the ground that it was directed to purposes foreign to those of the Act or that of the defence power. In the case of the present regulations that, I think, amounts to saying foreign to the purposes I ascribed to them in Shrimpton's Case[18].

It is complained that ordinary judicial remedies might be defeated if the Treasurer or his delegate were to adopt measures to conceal the grounds upon which his consent is withheld. The answer is that that is a complaint against the inadequacy of judicial process to uphold the law. It does not go to the intrinsic validity of the supposed acts of the Treasurer or his delegate. No doubt it is an argument against the constitutional validity of all Federal regulation which takes the form of prohibiting an act unless the consent is obtained of an administrator in whom is confided a discretion. But it is now much too late to adopt that rigid test.

The purposes of the Regulations are to be collected from their contents and the circumstances in which they were made, but the view I took of them seemed to be accepted, namely that they meant to restrain dealings in land to those considered justified by the use of the land or the needs or situation of the parties or one of them and thus to prevent speculation, the movement of land values, the withdrawal of capital from investments expressed in money and the substitution of land as a security and generally the diversion into land of funds available for investment in government securities and, as a secondary purpose, to reduce the volume of land dealings so that the energies of fewer people would be absorbed in them. Substantially I should think that to go beyond these purposes would go beyond power; but it was pointed out that a refusal of consent to an alien of enemy affiliations or to a dealing in land connected by situation with some defence project or military post or the like might, before the end of hostilities, have been justifiable under both the constitutional power and the statutory power. That may be so and, though I doubt whether the Regulations had such matters in view, I am content to include them in the list of what initially were legitimate grounds for refusing consent to a dealing in land. It is then said that such matters, as well as many of the economic considerations which during the war formed proper grounds for refusing to relax the prohibition, necessarily ceased to be relevant to the defence power as time advanced and the period of hostilities receded into the past. It was denied that the economic purpose of checking inflation fell any longer within the application of the defence power. The denial was based on a distinction drawn between, on the one hand, matters incidental to concluding a war and to establishing the community upon a footing appropriate to peace and, on the other hand, social and economic problems which, though attributable to there having been a war or to circumstances arising in or from the war, yet form part of the conditions which continue in peace to govern the life of the community and have no further or other nexus with defence. The prevention of monetary inflation was placed in the latter category. Thus there could not now, according to the argument, be any justification under the defence power for regulating land transactions or alternatively for including among the grounds for their regulation, many of the matters upon which, as I think, the present Regulations depend. Consequently the validity of the provisions complained of by the plaintiff was denied on the ground that they were, so to speak, constitutionally spent.

The argument overlooks, I think, the consideration that while, in the conditions which follow the end of actual hostilities, the defence power might not authorize a given measure, were it then to be adopted for the first time, yet the change of circumstances consisting in the surrender of the enemy and the passing of the military purposes with a view to which the country had been organized, does not mean that the measures by which it has been so organized must suffer an immediate constitutional collapse, unless new or continuing exigencies growing out of the war would justify them as fresh exercises of the defence power. To place a country on a footing to take an adequate part in such a war as that through which we have passed requires a co-ordinated and systematic series of measures which must reshape the economy of the country. It is impossible to suppose that the defence power will suffice to authorize the retention of such a legislative fabric so constructed throughout a long and indefinite period of peace. But it is apparent that the change back from a war economy to an economy appropriate to peace is a task calling for further measures of a legislative nature and the defence power, in my opinion, is not insufficient to authorize laws for that purpose. The power must, by consequence, also extend to sustaining for some reasonable interval of time the laws and regulations in force at the end of hostilities so as to enable the legislature to proceed with the task. The whole edifice does not collapse at once simply because the necessities which call it into being have passed. Further, among the things that are incidental to the power must be the fixing by the legislature itself of some reasonable time during which the regulations adopted for war are to continue in force, while the steps are taken that are considered necessary for the remission of the community to an order proper to peace. In substance I think that this is what the Parliament has done by the National Security Act 1946. It is true that both the preamble and the operative provisions of that Act appear to imply an assumption that unless positively terminated by a new statute the National Security Act 1939-1943 and the regulations thereunder would all remain in force until six months after "a state of peace comes into existence" or a proclamation is made. But I do not think that such an assumption is necessarily against the view that the Act of 1946 intends to maintain the legislative provisions until the date fixed. For it supports the conclusion that the legislature so intended.

The new s. 19, introduced into the Act of 1939-1943, provides that the Act and all regulations made thereunder and all orders, rules and by-laws made in pursuance of any such regulation shall cease to have effect at midnight on 31st December 1946. This appears to mean that, so far as the legislature has authority to enact it, the Act, regulations, rules and by-laws shall not lapse by operation of law at an earlier date or be considered to have so lapsed. I think that it is now immaterial what the former words meant, viz., the words "six months after His Majesty ceases to be engaged in war." But I am not prepared to say that His Majesty ceased to be engaged in war on 2nd September 1945. I cannot accede to the contention that the relevant provisions of the Economic Organization Regulations are such that constitutionally they must have already lapsed by reason of the alteration of circumstances resulting from the cessation of hostilities and, accordingly I think that they are maintained in force for the present.

For these reasons, I think that the demurrer should be allowed and the suit dismissed with costs.

In my opinion the demurrer should be allowed. My reasons for allowing it are the same as those of the Chief Justice. I think that it is unnecessary to add anything to his Honour's judgment.

Several points were raised during the argument of the demurrer with which I find it unnecessary to deal. It is sufficient to say that having listened carefully to Mr. Mason, I see no reason to alter the opinion expressed in Shrimpton v. The Commonwealth[19], that Part III. of the National Security (Economic Organization) Regulations, so far as it relates to the purchase of land was beyond the ambit of the defence power at the date when the Regulations were made. Regulations 6 and 9 provide in the clearest language that with certain exceptions no land shall be purchased without the consent of the Treasurer and that the Treasurer has an absolute discretion to grant or refuse his consent either unconditionally or subject to such conditions as he thinks fit. Accordingly he may require an applicant for his consent to furnish him with such particulars of the transaction as he requires: reg. 6 (4). He may also require an applicant to furnish him with a valuation by an independent approved valuer: reg. 6 (6).

The purpose of the Regulations on their plain, literal, and grammatical construction was to invest the Treasurer with a plenary administrative discretion. The only limitations on the exercise of such a discretion are that it must be authorized by the legislation and be exercised bona fide (Liversidge v. Anderson[20]; Point of Ayr Collieries Ltd. v. Lloyd-George[21]). An unreasonable exercise is not a sufficient objection to its validity (Minister of Agriculture and Fisheries v. Price[22]; Horton v. Owen[23]; Carltona Ltd. v. Commissioners of Works[24]).

The scope of the power is so wide that the Treasurer could withhold his consent because he considered it inadvisable to allow any or certain land to be sold or to be sold at any particular time or in any particular locality, or because he thought that the vendor had not a sufficient reason for selling, or the purchaser for buying the land, or the purchaser already had sufficient land, or for any other reason that had relation to the sale of land generally or of the particular parcel. I adhere to the statement in Shrimpton's Case[25]: "The effect of the regulation is ... to confer upon the Treasurer power to inquire into every particular of the transaction, and, if he does not approve of any particular, or of the transaction as a whole, to refuse his consent absolutely or to make his consent subject to some condition."

The Regulations could therefore only have been valid when made if it was within the scope of the defence power in April 1942 for the Commonwealth to take complete control of, and even to prohibit, the sale of land anywhere in the Commonwealth. They go far beyond matters such as control of the price at which land may be sold and the extent to which money may be borrowed to finance its purchase, which could have a specific connection with the prosecution of the war. They extend to matters which in no way relate to its prosecution except "in so far as all matters affecting the well-being of the community have such a relation, and that is a general and not a specific relation": Victorian Chamber of Manufactures v. The Commonwealth (Industrial Lighting Regulations)[26], per Latham C.J.

We were urged however to construe the Regulations as if they contained a recital that their object was to secure the defence of the Commonwealth and the prosecution of the war, and that they were to be construed and administered accordingly. But the Regulations do not contain such a recital. If they did, it could not qualify or limit operative provisions couched in such clear and unambiguous terms. We were also urged to apply s. 46 (b) of the Acts Interpretation Act 1901-1941. This section requires the Court so to construe a regulation, which is in excess of power, that its operation is not in excess of power. But the section can only be invoked where such a construction is open on the fair, commonsense meaning of the language. Absolute discretion can only mean one thing rough hew it as you may.

The particulars of each transaction, which the form of application for the Treasurer's consent requires, illustrate the extent of the discretion. They fill two pages for the vendor and two for the purchaser. For the purchaser they include such questions as, "Explain why you wish to buy this land and the use to which you will apply it, the reason why you wish to leave your present address, and whether you (or your husband or wife) own any other property"; and for the vendor; "Give full reasons for wanting to sell the land." All these questions appear to be well within the range of inquisitiveness contemplated by the words "such particulars of the proposed transaction as the Treasurer requires."

I would give judgment for the plaintiff and make the first declaration in the statement of claim.

Solicitor for the defendants, G. A. Watson, Acting Crown Solicitor for the Commonwealth.

[1] [1945] HCA 4; (1945) 69 C.L.R. 613.

[2] [1945] HCA 4; (1945) 69 C.L.R. 613.

[3] (1945) 69 C.L.R., at pp. 619-623.

[4] [1916] HCA 36; (1916) 21 C.L.R. 433, at p. 441.

[5] (1916) 21 C.L.R., at p. 443.

[6] [1920] HCA 42; (1920) 28 C.L.R. 588.

[7] [1921] HCA 25; (1921) 29 C.L.R. 329.

[8] [1945] HCA 35; (1945) 71 C.L.R. 161, at p. 170.

[9] [1945] HCA 4; (1945) 69 C.L.R. 613.

[10] (1943) 68 C.L.R., at p. 118.

[11] [1930] HCA 52; (1930) 44 C.L.R. 319, at pp. 385-387.

[12] [1945] HCA 4; (1945) 69 C.L.R. 613.

[13] [1944] HCA 36; (1944) 69 C.L.R. 457.

[14] [1945] HCA 4; (1945) 69 C.L.R. 613.

[15] [1945] HCA 4; (1945) 69 C.L.R. 613.

[16] (1945) 69 C.L.R., at pp. 628-630.

[17] [1945] HCA 4; (1945) 69 C.L.R. 613.

[18] (1945) 69 C.L.R., at pp. 628, 629, 630.

[19] [1945] HCA 4; (1945) 69 C.L.R. 613.

[20] [1941] UKHL 1; (1942) A.C. 206.

[21] (1943) 2 All E.R. 546.

[22] (1941) 2 K.B. 116.

[23] (1943) K.B. 111.

[24] (1943) 2 All E.R. 560.

[25] (1945) 69 C.L.R., at pp. 634, 635.

[26] (1943) 67 C.L.R., at p. 418.

High Court of Australia

Dawson v Commonwealth [1946] HCA 41; (1946) 73 CLR 157 (22 October 1946)

HIGH COURT OF AUSTRALIA