Electrolytic Refining & Smelting Company of Australia Pty Ltd v Commonwealth [1946] HCA 58; (1946) 72 CLR 480 (25 February 1946)

HIGH COURT OF AUSTRALIA

H C of A

11 April 1945

Latham C.J.

Tait K.C. and C. M. Collins, for the plaintiff.

Fullagar K.C. and Spicer, for the defendant.

C.J. Latham delivered the following written judgment:—

1945, April 11

Latham C.J.

This is an action in which the Commonwealth seeks to recover from the defendant company a sum of £2,561 18s. 1d. claimed to be due as a balance of gold tax payable in respect of 25,585 fine ounces of gold. The defendant counterclaims for £17,478 6s. 1d., money paid under protest to the Commonwealth for gold tax claimed by the Commonwealth in respect of the same gold. The parties are agreed that if tax is payable in respect of the gold the plaintiff is entitled to judgment for the amount claimed, and that if tax is not payable the plaintiff fails upon the claim and the defendant succeeds upon the counterclaim for £17,478 6s. 1d.

It will be convenient first to state the history of the gold in question. The company refines and smelts gold bullion and other materials described as primary products containing gold, such as gold-bearing ore, concentrates, slimes, blister copper, copper matte, &c. These materials are received and treated under contracts with suppliers. Under the relevant contracts the company purchased the whole of the material and became the owner of all its contents, including the resulting valuable products. These products, so far as they are commercially valuable, were stated to be gold, silver and copper. The contracts contained detailed provisions for weighing, sampling, assaying, smelting and refining and for payment for copper, silver and gold content. In some cases the full copper and silver content was paid for in the first place, but, as to gold, 98 per cent or thereabouts was so paid for. Returning charges, or charges specifically described as refining, smelting or realization charges, were paid or allowed by the seller to the buyer. Prices were adjusted in relation to London prices or, in one case, Melbourne mint prices.

No question arises in the present case as to gold bullion, which is gold in a substantially, though not completely, refined state. The question arises only with respect to gold extracted from gold-bearing material delivered to the company under the contracts mentioned. The process of treating this material occupies periods varying from three weeks up to 120 days. The material delivered by different suppliers is not separately treated, but is treated together over a period constituting what is described as a campaign. The consequence is that no particular gold can be identified with the material delivered to the company by any particular supplier. The result of a campaign is, inter alia, so many ounces of gold, for which the company pays the suppliers of the material which produced the gold in accordance with assay values and quantity delivered, subject to returning charges &c. as already stated.

The Gold Tax Act 1939, to which I shall later refer more in detail, imposed tax in respect of gold delivered to the Commonwealth Bank or an agent of the bank on or after 15th September 1939. Both parties contest these proceedings upon the basis that all the material which produced the 25,585 ounces in question was delivered to the company by its suppliers before 15th September 1939. It then contained the gold which was ultimately extracted, but that gold did not exist as refined gold until various dates after 15th September. After that date, as the gold was refined, it was physically handed over to the bank by the company.

On 28th August 1939 regulations made under the Defence Act 1903-1939 were gazetted providing for the compulsory delivery of gold to the Commonwealth Bank or an agent of the bank and the acquisition by the bank of all gold so delivered. Negotiations took place between the bank and the defendant company and the Board of the bank appointed the company to be an agent of the bank for the purposes of these and other similar regulations. There is a dispute between the parties as to the point of time from which the company should be regarded as being such an agent.

The company rightly contends that the plaintiff must, in order to show that tax is payable, prove that the 25,585 ounces of gold were delivered to the bank or to an agent of the bank after 15th September. The question is whether the gold in question was so delivered after that date. The plaintiff contends that the company received the gold-bearing material before 15th September as owner thereof and became the owner of every part of the material including the gold which was later refined therefrom, and subsequently, that is, after 15th September 1939, delivered the gold to the bank and thereupon became liable to pay the tax. The contention for the defendant company is that the company was appointed an agent of the bank for the purposes of the regulations mentioned (and other relevant regulations which replaced them) before 15th September; that it held the gold as such agent from the time of appointment, though the gold was, before extraction, contained in materials which had been previously purchased by the company and were awaiting treatment or undergoing treatment. On this view the gold was delivered to an agent of the bank before 15th September 1939. Alternatively, the company contends that if the materials themselves which contained the gold cannot be regarded as gold within the meaning of the Act, then, though it may be true that the delivery of the materials as such was not a delivery of gold, yet there was a delivery of the gold which was in the materials to the company and the company was in fact an agent for the bank. This contention is completed by the argument that when the company "delivered" the refined gold to the bank after 15th September it really only performed its duty as agent in respect of the gold, and should be regarded, not as delivering the gold to the bank, but as physically transferring to the bank the possession of the gold which it already held as the bank's agent.

In reply to these contentions the plaintiff argues that the gold-bearing material was not gold within the meaning of the Act and that, therefore, no delivery of the gold-bearing material before 15th September 1939 can be regarded as a delivery of gold within the meaning of the Act, whether or not the company was an agent of the bank at that time. The plaintiff further argues that when the relevant legislation refers to an agent of the bank it refers to an agent of the bank for the purpose of accepting delivery of gold on behalf of the bank, and that the gold in question, whether regarded as contained in the gold-bearing material or as consisting of the refined gold ultimately extracted, was delivered to and received and held by the company as the owner thereof and not otherwise, and that the appointment of the company as agent had no reference to gold which was already in possession of the company (whether contained in ore &c. or in process of treatment or as refined gold).

The liability of the defendant depends upon the Gold Tax Collection Act 1939 and the Gold Tax Act 1939. The application of these Acts depends, as already stated, on the delivery of gold to the Commonwealth Bank or to an agent of the bank. They do not contain any provision requiring gold to be delivered to the Commonwealth Bank, and accordingly would not have been very effective if other legislation had not imposed an obligation to deliver gold to the bank.

There was, however, other legislation in the form of regulations which created such an obligation. The first relevant regulations are to be found in Statutory Rules 1939 No. 77 (gazetted 28th August 1939) made under the Defence Act 1903-1939. They are entitled the Defence (Monetary Control) Regulations. I have been unable to discover any authority in the Defence Act for the making of these regulations. The regulations, however, were (except for one immaterial variation) re-enacted on 13th December 1939 by the National Security (Monetary Control) Regulations, Statutory Rules 1939 No. 91. In the meantime the National Security Act 1939, s. 7 (2), had validated the regulations made under the Defence Act. Those regulations were formally repealed on 2nd November 1939 by Statutory Rules 1939 No. 137. It will be convenient to refer to the terms of the National Security (Monetary Control) Regulations as representing the regulations in force at all material times.

It may be mentioned that by Statutory Rules 1939 No. 100 (23rd September 1939) an attempt was made to impose an excise duty in respect of the gold delivered to the Commonwealth Bank. These regulations were repealed by Statutory Rules 1939 No. 183, gazetted on 29th December 1939—by which time the Gold Tax Collection Act and the Gold Tax Act were in operation, both of them being made retrospective to 15th September 1939. On 12th December 1940 Statutory Rules 1940 No. 282 (National Security (Exchange Control) Regulations) came into operation, and by those Regulations the National Security (Monetary Control) Regulations as amended were repealed. They, however, repeated in regs. 14 and 15 the relevant provisions of the earlier Regulations.

The legislation which it is necessary to consider may therefore be regarded as consisting of the National Security (Monetary Control) Regulations (S.R. 1939 No. 91), the Gold Tax Collection Act 1939 and the Gold Tax Act 1939.

The relevant provisions which later were included in the lastmentioned Regulations were in operation from 28th August 1939. They provided (reg. 2) that "agent of the Bank" meant a person appointed by the board to be an agent of the bank for the purposes of the Regulations. Regulation 6 provided that the board might appoint any person to be agent of the bank for the purposes of the Regulations, and that any person appointed to be agent should act in accordance with instructions of the board.

Regulation 7 (1) was as follows:—" (1) Subject to this regulation and subject to any exemptions granted by the Treasurer by order, any person who has any gold in his possession or control shall deliver the gold to the Bank or an agent of the Bank— (a) if the gold is in his possession or control at the commencement of these Regulations—within one month after such commencement; or (b) if the gold has come into his possession or control after the commencement of these Regulations—within one month after it has come into his possession or control. "

It was provided in reg. 7 (2) that if any person failed to comply with reg. 7 (1) the gold in respect of which the failure occurred should be forfeited to the Crown. Regulation 7 (4) was as follows:—"All gold delivered to the Bank or an agent of the Bank in accordance with this regulation shall vest in the Bank absolutely and all the right, title and interest of the person delivering the gold shall be taken to have been converted into a right to receive payment for the gold at such price as is fixed by the Board and published in such manner as the Treasurer approves."

Under these Regulations, therefore, any person who had any gold in his possession or control was bound to deliver the gold to the bank or an agent of the bank within one month after the Regulations came into operation, or, if the gold came into his possession or control at a later date, within one month after it had come into his possession or control. Upon delivery of gold to the bank or to an agent of the bank the gold vested in the bank absolutely. The Regulations had no application to gold which was already vested in the bank.

The agency contemplated by these Regulations was plainly an agency for the purpose of accepting delivery of gold on behalf of the bank. The bank might have had agents for many purposes, but an agent for, for example, the purpose of hiring premises or of buying goods other than gold would not be an agent of the bank for the purposes of the Regulations. The purpose of the Regulations was to secure the delivery of gold to the bank or to an agent of the bank, so that the bank (not any agent of the bank) would become the owner of the gold. If, therefore, any person were appointed agent under the Regulations, and gold were delivered to that person in his capacity as such agent, the result would be that the bank would become the owner of the gold.

The Regulations have no retrospective operation. They provide for the appointment of agents to act in futuro in relation to delivery of gold thereafter to be made to them. A delivery of gold made to a person before the commencement of the Regulations would operate according to the ordinary law relating to the passing of property in chattels. If it was delivered by way of sale the property would vest in the person to whom the delivery was made. That position would not be altered by the fact that at a subsequent date that person was appointed an agent of the bank for the purpose of thereafter accepting delivery of gold on behalf of the bank.

The Monetary Control Regulations being in operation, the Gold Tax Collection Act was passed. Section 5 provides that the tax in respect of any gold (subject to certain exemptions which are immaterial—s. 6) shall be payable by the person who delivers the gold to the bank or to an agent of the bank. Section 7 provides that tax shall be a debt due by the taxpayer to the Commonwealth, and that the bank or the agent of the bank, as the case may be, shall deduct from any amount payable in respect of gold delivered to the bank, or to its agent, the amount of that tax and shall pay the amount so deducted to the Commonwealth. Section 7 (3) provides that such a deduction of any amount of tax shall operate so as to discharge the liability of the taxpayer to pay the tax; and so as to discharge, pro tanto, the liability of the bank to make payment to the taxpayer for the gold in respect of which the tax was payable.

The Gold Tax Act provides (s. 5) that a tax is imposed upon gold delivered to the Commonwealth Bank or to an agent of the bank on or after 15th September 1939, and (s. 6) that the amount of tax so imposed shall be one half of the amount by which the amount payable by the bank in respect of gold so delivered exceeds an amount calculated at the rate of £9 for each ounce of fine gold contained in the gold so delivered.

Each Act contained a provision that it should be deemed to have come into operation on 15th September 1939.

The tax is imposed only upon gold delivered to the bank or its agent. It is calculated by reference to the amount payable by the bank in respect of the gold, and it is collected by the bank or its agent by deduction from the amount payable for the gold. Thus the system of taxation depends upon the delivery of gold to the bank in such circumstances that the bank becomes the owner of the gold and must pay for it. The Monetary Control Regulations supply the basis for the operation of this system of taxation, because they create the obligation to deliver gold to the bank, and provide that the bank acquires the property in the gold and becomes bound to pay for it.

The agent of the bank referred to in the statutes must be held to be a person who is an agent of the bank for the purposes of the statutes. I repeat what I have already said with reference to the same words used in the Regulations—the agent who is referred to is an agent to accept delivery of gold on behalf of the bank.

Without setting forth in detail the correspondence which passed between the Commonwealth Bank and the company, I am prepared to assume in favour of the defendant that it became an agent of the bank for the purpose of the Regulations as from 7th September 1939. At a board meeting of the bank held from 26th August to 30th August 1939 it was resolved by the board that the defendant company should be appointed an agent of the bank "for the purpose of reg. 7." The regulation referred to was plainly reg. 7 of the Defence (Monetary Control) Regulations, No. 77 of 1939. I agree with the argument for the plaintiff that the Regulations did not confer power upon the bank to appoint as agent a person who was unwilling to act as agent, just as a power of a municipal council to appoint a town clerk does not enable a municipal council to compel a person to accept such an appointment. But on 2nd September 1939 the bank informed the defendant that it was prepared to appoint the company as agent on certain terms which were set out, and proposed to pay a commission to be thereafter fixed. On 6th September the company replied that, subject to minor modifications, it would be pleased to accept the appointment. The parties then acted as if the company had already been appointed agent and the company from time to time informed the bank of the gold (including the gold in question) which was in its possession, whether in bullion or (as estimated) in primary products, and stated when it would be "available for delivery to the bank." The terms of the agency were under discussion until 27th November. On 9th November a sum of £231 11s. 1d., "representing commission due on gold lodged during the month of September" and described as "gold agent's commission" had been paid by the bank to the company. Thus the position is that the company in fact acted as agent from 7th September 1939, but that the terms of the agency were not completely settled until 27th November 1939. But the course of conduct of the parties shows that it was understood between them that the company should be treated as having been a duly appointed agent of the bank as from the date when the company expressed its willingness to act as agent, namely 7th September 1939. An alternative view is that the relation of agency was actually established on 7th September on the terms then proposed by the bank though those terms were subsequently varied as the result of explanations and requests by the company. The latter is the view which I prefer, but on either view the position is that the company should be treated as being an agent of the bank for the purposes of the Regulations from 7th September 1939. The Gold Tax Collection Act and the Gold Tax Act were, as already stated, passed in December 1939, but they came into operation as on 15th September 1939. The company should, in my opinion, be regarded as being also an agent of the bank within the meaning of the Acts as from 15th September 1939.

On 7th September 1939, however, the company already had in its possession as owner all the gold with reference to which the question of liability to taxation arises. It had bought that gold from the suppliers of the primary products. When it received the primary products it did not receive them as agent for the bank—it was not an agent of the bank in any sense when it received them. The receipt of the primary products by the company from its suppliers did not create any relation between them and the bank. When the company treated the materials it acted on its own account in accordance with the contracts which it had made, and not on behalf of the bank. When the company was appointed as agent for the bank it was so appointed only in relation to deliveries of gold thereafter to be made in such a manner that the bank acquired the gold and became liable to pay for it. The company might, after 15th September 1939, as the Regulations then stood (they were altered in this respect by Statutory Rules 1939 No. 181) have purchased gold from AB on its own account and have received gold from XY on account of the bank. As to the purchased gold, that would not become the property of the bank until the company delivered it to the bank, as it was bound to do within one month. The company (not the vendor of the gold to the company) would then be liable for the tax on that gold. In respect of gold received by the company as agent for the bank, however, the person who delivered the gold to the company would be liable for the tax and the bank would be entitled to deduct the tax from the price. Thus the fact that the gold now in question was in the possession of the company at a time when it was agent for the bank for the purpose of receiving deliveries of gold does not show that that gold had been delivered to the company as an agent of the bank so that it became the property of the bank. If the gold had been the property of the bank before 15th September 1939, no question of liability to tax could have arisen, but it had not, at that time, by delivery to the bank, become the property of the bank. After 15th September, as the gold was refined from time to time, it was delivered to the bank by the company and the bank became liable to pay the company (not the company's suppliers) for the gold. Until delivery of the gold to the Commonwealth Bank, the gold, like the copper and silver resulting from the treatment, was the property of the company. Upon delivery of the gold to the bank, but not before, it became the property of the bank. At that time the liability to tax attached and the fact that the company was an agent within the meaning of the Act, having been appointed an agent for the purposes of the Regulations, did not alter the fact that the gold in question was not delivered by any person to the company in its capacity as agent for the bank. The gold, whether it be regarded as gold contained in the primary products, or as refined gold, came into the possession of the company as owner by right of purchase and not otherwise. There was no delivery of the gold before 15th September to the company as agent of the bank. There were deliveries of the gold by the company to the bank, such deliveries all taking place after 15th September 1939.

Upon this view the company is liable to pay the tax, even if the gold when still contained in the gold-bearing minerals is, or the materials themselves are, regarded as gold for the purpose of the Acts. Neither the Acts nor the Regulations contain any definition of gold. But I am of opinion that "gold" in the Acts and the Regulations means that which is commercially described as gold, and that the term does not cover either ores, concentrates, slimes, slag, copper blister, &c., which contain gold or the gold contained in such materials. The contracts which were put in evidence provide for the sale and delivery of hundreds of tons of gold-bearing material. In my opinion, the Regulations did not create an obligation to deliver that material to the bank or to an agent of the bank. The products of the company's operations are gold, silver, copper and residues. In my opinion, it would be as inappropriate to describe the original material as being gold as it would be to describe it as being silver or copper. If the term "gold" is understood in this manner, then the gold in question first became gold within the meaning of the Acts after the concentrates &c. had been treated so as to produce the 25,585 ounces of refined gold. That gold when produced was the property of the company, not the property of the bank. The company became liable to pay the tax when it delivered the gold to the bank.

For these reasons, I am of opinion that the plaintiff should succeed. There will be judgment for the plaintiff on the claim for £2,561 18s. 1d. and judgment for the plaintiff on the counterclaim; the defendant to pay the costs of claim and counterclaim.

From this decision, the defendant appealed to the Full Court.

Appeal dismissed with costs.

Solicitors for the appellant, Arthur Robinson & Co.

Solicitor for the respondent, H. F. E. Whitlam, Crown Solicitor for the Commonwealth.

H C of A

25 February 1946

Rich, Starke, Dixon, McTiernan and Williams JJ.

Tait K.C. and C. M. Collins, for the plaintiff.

Fullagar K.C. and Spicer, for the defendant.

C.J. Latham delivered the following written judgment:—

1945, April 11

Latham C.J.

This is an action in which the Commonwealth seeks to recover from the defendant company a sum of £2,561 18s. 1d. claimed to be due as a balance of gold tax payable in respect of 25,585 fine ounces of gold. The defendant counterclaims for £17,478 6s. 1d., money paid under protest to the Commonwealth for gold tax claimed by the Commonwealth in respect of the same gold. The parties are agreed that if tax is payable in respect of the gold the plaintiff is entitled to judgment for the amount claimed, and that if tax is not payable the plaintiff fails upon the claim and the defendant succeeds upon the counterclaim for £17,478 6s. 1d.

It will be convenient first to state the history of the gold in question. The company refines and smelts gold bullion and other materials described as primary products containing gold, such as gold-bearing ore, concentrates, slimes, blister copper, copper matte, &c. These materials are received and treated under contracts with suppliers. Under the relevant contracts the company purchased the whole of the material and became the owner of all its contents, including the resulting valuable products. These products, so far as they are commercially valuable, were stated to be gold, silver and copper. The contracts contained detailed provisions for weighing, sampling, assaying, smelting and refining and for payment for copper, silver and gold content. In some cases the full copper and silver content was paid for in the first place, but, as to gold, 98 per cent or thereabouts was so paid for. Returning charges, or charges specifically described as refining, smelting or realization charges, were paid or allowed by the seller to the buyer. Prices were adjusted in relation to London prices or, in one case, Melbourne mint prices.

No question arises in the present case as to gold bullion, which is gold in a substantially, though not completely, refined state. The question arises only with respect to gold extracted from gold-bearing material delivered to the company under the contracts mentioned. The process of treating this material occupies periods varying from three weeks up to 120 days. The material delivered by different suppliers is not separately treated, but is treated together over a period constituting what is described as a campaign. The consequence is that no particular gold can be identified with the material delivered to the company by any particular supplier. The result of a campaign is, inter alia, so many ounces of gold, for which the company pays the suppliers of the material which produced the gold in accordance with assay values and quantity delivered, subject to returning charges &c. as already stated.

The Gold Tax Act 1939, to which I shall later refer more in detail, imposed tax in respect of gold delivered to the Commonwealth Bank or an agent of the bank on or after 15th September 1939. Both parties contest these proceedings upon the basis that all the material which produced the 25,585 ounces in question was delivered to the company by its suppliers before 15th September 1939. It then contained the gold which was ultimately extracted, but that gold did not exist as refined gold until various dates after 15th September. After that date, as the gold was refined, it was physically handed over to the bank by the company.

On 28th August 1939 regulations made under the Defence Act 1903-1939 were gazetted providing for the compulsory delivery of gold to the Commonwealth Bank or an agent of the bank and the acquisition by the bank of all gold so delivered. Negotiations took place between the bank and the defendant company and the Board of the bank appointed the company to be an agent of the bank for the purposes of these and other similar regulations. There is a dispute between the parties as to the point of time from which the company should be regarded as being such an agent.

The company rightly contends that the plaintiff must, in order to show that tax is payable, prove that the 25,585 ounces of gold were delivered to the bank or to an agent of the bank after 15th September. The question is whether the gold in question was so delivered after that date. The plaintiff contends that the company received the gold-bearing material before 15th September as owner thereof and became the owner of every part of the material including the gold which was later refined therefrom, and subsequently, that is, after 15th September 1939, delivered the gold to the bank and thereupon became liable to pay the tax. The contention for the defendant company is that the company was appointed an agent of the bank for the purposes of the regulations mentioned (and other relevant regulations which replaced them) before 15th September; that it held the gold as such agent from the time of appointment, though the gold was, before extraction, contained in materials which had been previously purchased by the company and were awaiting treatment or undergoing treatment. On this view the gold was delivered to an agent of the bank before 15th September 1939. Alternatively, the company contends that if the materials themselves which contained the gold cannot be regarded as gold within the meaning of the Act, then, though it may be true that the delivery of the materials as such was not a delivery of gold, yet there was a delivery of the gold which was in the materials to the company and the company was in fact an agent for the bank. This contention is completed by the argument that when the company "delivered" the refined gold to the bank after 15th September it really only performed its duty as agent in respect of the gold, and should be regarded, not as delivering the gold to the bank, but as physically transferring to the bank the possession of the gold which it already held as the bank's agent.

In reply to these contentions the plaintiff argues that the gold-bearing material was not gold within the meaning of the Act and that, therefore, no delivery of the gold-bearing material before 15th September 1939 can be regarded as a delivery of gold within the meaning of the Act, whether or not the company was an agent of the bank at that time. The plaintiff further argues that when the relevant legislation refers to an agent of the bank it refers to an agent of the bank for the purpose of accepting delivery of gold on behalf of the bank, and that the gold in question, whether regarded as contained in the gold-bearing material or as consisting of the refined gold ultimately extracted, was delivered to and received and held by the company as the owner thereof and not otherwise, and that the appointment of the company as agent had no reference to gold which was already in possession of the company (whether contained in ore &c. or in process of treatment or as refined gold).

The liability of the defendant depends upon the Gold Tax Collection Act 1939 and the Gold Tax Act 1939. The application of these Acts depends, as already stated, on the delivery of gold to the Commonwealth Bank or to an agent of the bank. They do not contain any provision requiring gold to be delivered to the Commonwealth Bank, and accordingly would not have been very effective if other legislation had not imposed an obligation to deliver gold to the bank.

There was, however, other legislation in the form of regulations which created such an obligation. The first relevant regulations are to be found in Statutory Rules 1939 No. 77 (gazetted 28th August 1939) made under the Defence Act 1903-1939. They are entitled the Defence (Monetary Control) Regulations. I have been unable to discover any authority in the Defence Act for the making of these regulations. The regulations, however, were (except for one immaterial variation) re-enacted on 13th December 1939 by the National Security (Monetary Control) Regulations, Statutory Rules 1939 No. 91. In the meantime the National Security Act 1939, s. 7 (2), had validated the regulations made under the Defence Act. Those regulations were formally repealed on 2nd November 1939 by Statutory Rules 1939 No. 137. It will be convenient to refer to the terms of the National Security (Monetary Control) Regulations as representing the regulations in force at all material times.

It may be mentioned that by Statutory Rules 1939 No. 100 (23rd September 1939) an attempt was made to impose an excise duty in respect of the gold delivered to the Commonwealth Bank. These regulations were repealed by Statutory Rules 1939 No. 183, gazetted on 29th December 1939—by which time the Gold Tax Collection Act and the Gold Tax Act were in operation, both of them being made retrospective to 15th September 1939. On 12th December 1940 Statutory Rules 1940 No. 282 (National Security (Exchange Control) Regulations) came into operation, and by those Regulations the National Security (Monetary Control) Regulations as amended were repealed. They, however, repeated in regs. 14 and 15 the relevant provisions of the earlier Regulations.

The legislation which it is necessary to consider may therefore be regarded as consisting of the National Security (Monetary Control) Regulations (S.R. 1939 No. 91), the Gold Tax Collection Act 1939 and the Gold Tax Act 1939.

The relevant provisions which later were included in the lastmentioned Regulations were in operation from 28th August 1939. They provided (reg. 2) that "agent of the Bank" meant a person appointed by the board to be an agent of the bank for the purposes of the Regulations. Regulation 6 provided that the board might appoint any person to be agent of the bank for the purposes of the Regulations, and that any person appointed to be agent should act in accordance with instructions of the board.

Regulation 7 (1) was as follows:—" (1) Subject to this regulation and subject to any exemptions granted by the Treasurer by order, any person who has any gold in his possession or control shall deliver the gold to the Bank or an agent of the Bank— (a) if the gold is in his possession or control at the commencement of these Regulations—within one month after such commencement; or (b) if the gold has come into his possession or control after the commencement of these Regulations—within one month after it has come into his possession or control. "

It was provided in reg. 7 (2) that if any person failed to comply with reg. 7 (1) the gold in respect of which the failure occurred should be forfeited to the Crown. Regulation 7 (4) was as follows:—"All gold delivered to the Bank or an agent of the Bank in accordance with this regulation shall vest in the Bank absolutely and all the right, title and interest of the person delivering the gold shall be taken to have been converted into a right to receive payment for the gold at such price as is fixed by the Board and published in such manner as the Treasurer approves."

Under these Regulations, therefore, any person who had any gold in his possession or control was bound to deliver the gold to the bank or an agent of the bank within one month after the Regulations came into operation, or, if the gold came into his possession or control at a later date, within one month after it had come into his possession or control. Upon delivery of gold to the bank or to an agent of the bank the gold vested in the bank absolutely. The Regulations had no application to gold which was already vested in the bank.

The agency contemplated by these Regulations was plainly an agency for the purpose of accepting delivery of gold on behalf of the bank. The bank might have had agents for many purposes, but an agent for, for example, the purpose of hiring premises or of buying goods other than gold would not be an agent of the bank for the purposes of the Regulations. The purpose of the Regulations was to secure the delivery of gold to the bank or to an agent of the bank, so that the bank (not any agent of the bank) would become the owner of the gold. If, therefore, any person were appointed agent under the Regulations, and gold were delivered to that person in his capacity as such agent, the result would be that the bank would become the owner of the gold.

The Regulations have no retrospective operation. They provide for the appointment of agents to act in futuro in relation to delivery of gold thereafter to be made to them. A delivery of gold made to a person before the commencement of the Regulations would operate according to the ordinary law relating to the passing of property in chattels. If it was delivered by way of sale the property would vest in the person to whom the delivery was made. That position would not be altered by the fact that at a subsequent date that person was appointed an agent of the bank for the purpose of thereafter accepting delivery of gold on behalf of the bank.

The Monetary Control Regulations being in operation, the Gold Tax Collection Act was passed. Section 5 provides that the tax in respect of any gold (subject to certain exemptions which are immaterial—s. 6) shall be payable by the person who delivers the gold to the bank or to an agent of the bank. Section 7 provides that tax shall be a debt due by the taxpayer to the Commonwealth, and that the bank or the agent of the bank, as the case may be, shall deduct from any amount payable in respect of gold delivered to the bank, or to its agent, the amount of that tax and shall pay the amount so deducted to the Commonwealth. Section 7 (3) provides that such a deduction of any amount of tax shall operate so as to discharge the liability of the taxpayer to pay the tax; and so as to discharge, pro tanto, the liability of the bank to make payment to the taxpayer for the gold in respect of which the tax was payable.

The Gold Tax Act provides (s. 5) that a tax is imposed upon gold delivered to the Commonwealth Bank or to an agent of the bank on or after 15th September 1939, and (s. 6) that the amount of tax so imposed shall be one half of the amount by which the amount payable by the bank in respect of gold so delivered exceeds an amount calculated at the rate of £9 for each ounce of fine gold contained in the gold so delivered.

Each Act contained a provision that it should be deemed to have come into operation on 15th September 1939.

The tax is imposed only upon gold delivered to the bank or its agent. It is calculated by reference to the amount payable by the bank in respect of the gold, and it is collected by the bank or its agent by deduction from the amount payable for the gold. Thus the system of taxation depends upon the delivery of gold to the bank in such circumstances that the bank becomes the owner of the gold and must pay for it. The Monetary Control Regulations supply the basis for the operation of this system of taxation, because they create the obligation to deliver gold to the bank, and provide that the bank acquires the property in the gold and becomes bound to pay for it.

The agent of the bank referred to in the statutes must be held to be a person who is an agent of the bank for the purposes of the statutes. I repeat what I have already said with reference to the same words used in the Regulations—the agent who is referred to is an agent to accept delivery of gold on behalf of the bank.

Without setting forth in detail the correspondence which passed between the Commonwealth Bank and the company, I am prepared to assume in favour of the defendant that it became an agent of the bank for the purpose of the Regulations as from 7th September 1939. At a board meeting of the bank held from 26th August to 30th August 1939 it was resolved by the board that the defendant company should be appointed an agent of the bank "for the purpose of reg. 7." The regulation referred to was plainly reg. 7 of the Defence (Monetary Control) Regulations, No. 77 of 1939. I agree with the argument for the plaintiff that the Regulations did not confer power upon the bank to appoint as agent a person who was unwilling to act as agent, just as a power of a municipal council to appoint a town clerk does not enable a municipal council to compel a person to accept such an appointment. But on 2nd September 1939 the bank informed the defendant that it was prepared to appoint the company as agent on certain terms which were set out, and proposed to pay a commission to be thereafter fixed. On 6th September the company replied that, subject to minor modifications, it would be pleased to accept the appointment. The parties then acted as if the company had already been appointed agent and the company from time to time informed the bank of the gold (including the gold in question) which was in its possession, whether in bullion or (as estimated) in primary products, and stated when it would be "available for delivery to the bank." The terms of the agency were under discussion until 27th November. On 9th November a sum of £231 11s. 1d., "representing commission due on gold lodged during the month of September" and described as "gold agent's commission" had been paid by the bank to the company. Thus the position is that the company in fact acted as agent from 7th September 1939, but that the terms of the agency were not completely settled until 27th November 1939. But the course of conduct of the parties shows that it was understood between them that the company should be treated as having been a duly appointed agent of the bank as from the date when the company expressed its willingness to act as agent, namely 7th September 1939. An alternative view is that the relation of agency was actually established on 7th September on the terms then proposed by the bank though those terms were subsequently varied as the result of explanations and requests by the company. The latter is the view which I prefer, but on either view the position is that the company should be treated as being an agent of the bank for the purposes of the Regulations from 7th September 1939. The Gold Tax Collection Act and the Gold Tax Act were, as already stated, passed in December 1939, but they came into operation as on 15th September 1939. The company should, in my opinion, be regarded as being also an agent of the bank within the meaning of the Acts as from 15th September 1939.

On 7th September 1939, however, the company already had in its possession as owner all the gold with reference to which the question of liability to taxation arises. It had bought that gold from the suppliers of the primary products. When it received the primary products it did not receive them as agent for the bank—it was not an agent of the bank in any sense when it received them. The receipt of the primary products by the company from its suppliers did not create any relation between them and the bank. When the company treated the materials it acted on its own account in accordance with the contracts which it had made, and not on behalf of the bank. When the company was appointed as agent for the bank it was so appointed only in relation to deliveries of gold thereafter to be made in such a manner that the bank acquired the gold and became liable to pay for it. The company might, after 15th September 1939, as the Regulations then stood (they were altered in this respect by Statutory Rules 1939 No. 181) have purchased gold from AB on its own account and have received gold from XY on account of the bank. As to the purchased gold, that would not become the property of the bank until the company delivered it to the bank, as it was bound to do within one month. The company (not the vendor of the gold to the company) would then be liable for the tax on that gold. In respect of gold received by the company as agent for the bank, however, the person who delivered the gold to the company would be liable for the tax and the bank would be entitled to deduct the tax from the price. Thus the fact that the gold now in question was in the possession of the company at a time when it was agent for the bank for the purpose of receiving deliveries of gold does not show that that gold had been delivered to the company as an agent of the bank so that it became the property of the bank. If the gold had been the property of the bank before 15th September 1939, no question of liability to tax could have arisen, but it had not, at that time, by delivery to the bank, become the property of the bank. After 15th September, as the gold was refined from time to time, it was delivered to the bank by the company and the bank became liable to pay the company (not the company's suppliers) for the gold. Until delivery of the gold to the Commonwealth Bank, the gold, like the copper and silver resulting from the treatment, was the property of the company. Upon delivery of the gold to the bank, but not before, it became the property of the bank. At that time the liability to tax attached and the fact that the company was an agent within the meaning of the Act, having been appointed an agent for the purposes of the Regulations, did not alter the fact that the gold in question was not delivered by any person to the company in its capacity as agent for the bank. The gold, whether it be regarded as gold contained in the primary products, or as refined gold, came into the possession of the company as owner by right of purchase and not otherwise. There was no delivery of the gold before 15th September to the company as agent of the bank. There were deliveries of the gold by the company to the bank, such deliveries all taking place after 15th September 1939.

Upon this view the company is liable to pay the tax, even if the gold when still contained in the gold-bearing minerals is, or the materials themselves are, regarded as gold for the purpose of the Acts. Neither the Acts nor the Regulations contain any definition of gold. But I am of opinion that "gold" in the Acts and the Regulations means that which is commercially described as gold, and that the term does not cover either ores, concentrates, slimes, slag, copper blister, &c., which contain gold or the gold contained in such materials. The contracts which were put in evidence provide for the sale and delivery of hundreds of tons of gold-bearing material. In my opinion, the Regulations did not create an obligation to deliver that material to the bank or to an agent of the bank. The products of the company's operations are gold, silver, copper and residues. In my opinion, it would be as inappropriate to describe the original material as being gold as it would be to describe it as being silver or copper. If the term "gold" is understood in this manner, then the gold in question first became gold within the meaning of the Acts after the concentrates &c. had been treated so as to produce the 25,585 ounces of refined gold. That gold when produced was the property of the company, not the property of the bank. The company became liable to pay the tax when it delivered the gold to the bank.

For these reasons, I am of opinion that the plaintiff should succeed. There will be judgment for the plaintiff on the claim for £2,561 18s. 1d. and judgment for the plaintiff on the counterclaim; the defendant to pay the costs of claim and counterclaim.

From this decision, the defendant appealed to the Full Court.

Appeal dismissed with costs.

Solicitors for the appellant, Arthur Robinson & Co.

Solicitor for the respondent, H. F. E. Whitlam, Crown Solicitor for the Commonwealth.