Commonwealth v Welsh [1947] HCA 14; (1947) 74 CLR 245 (8 May 1947)

This is an appeal by special leave from a judgment of the Full Court of the Supreme Court of New South Wales upon a special case stated in an action by P.L. Welsh against the Commonwealth. On 23rd September 1939 the plaintiff answered an advertisement offering commissions in the Citizen Air Force to persons qualified as flying instructors. This advertisement offered deferred pay at a stated rate per annum. In response to the plaintiff's application for appointment, particulars of rates of pay were forwarded to him, including a rate of deferred pay per diem, the deferred pay to be withheld until the completion of the officer's commission, when it was to be paid plus three and one half per cent interest on the yearly balance. The rates stated were the rates provided by existing regulations under the Air Force Act 1923. The plaintiff was appointed to commissioned rank as pilot officer as from 16th October 1939. He was subsequently promoted to flying officer and ultimately to temporary squadron leader. The rates of pay set forth in the particulars referred to did not refer to any rank higher than that of flight lieutenant. Thus no rates of pay were mentioned for squadron leaders. The plaintiff was in fact paid the rates of pay provided for his rank by the regulations from time to time. On 12th September 1942 he embarked for the Territory of Papua, where he served on operational flights until 24th December 1942. On 10th September 1945 he was discharged from the Air Force.

Regulations provided that Citizen Air Force officers should be paid the rates of active pay and deferred pay prescribed for members of corresponding ranks in the Permanent Air Force. These provisions applied to the plaintiff.

Under the regulations deferred pay was payable in respect of the whole period of service of an officer, together with interest. The plaintiff received credits of deferred pay annually in accordance with the regulations.

Regulation 32 of the Air Force Regulations made under the Act is as follows:—"The appointment or promotion of an officer under these Regulations shall not create a civil contract between the King or the Commonwealth and the officer." This regulation states the principle of the common law applying to the relation between a member of the armed services and the Crown. The engagement of a member of the Forces does not result in the creation of a contract between him and the Crown. He holds his position at the pleasure of the Sovereign; he may be dismissed at any time; he can bring no action for damages for wrongful dismissal, nor can he claim to be discharged from his obligations by reason of any alleged breach of duty on the part of the Crown (Dunn v. The Queen[1]; Leaman v. The King[2]; The Commonwealth v. Quince[3]).

Regulation 31 of the Air Force Regulations is in the following terms:—"Any person who has been a member may, after having ceased to be a member, recover from the Commonwealth by suit in any court of competent jurisdiction any moneys which under his engagement or by any agreement with the Commonwealth are due to him." It is under this regulation that the plaintiff makes his claim. He claims alternatively under an agreement and under an engagement with the Commonwealth. His claim is for deferred pay for the whole of his period of service, that is for the period 16th October 1939 to 10th September 1945.

In so far as his case is based on an agreement, it has been rejected in the Supreme Court, where it was held, and in my opinion rightly, that there was no agreement between the plaintiff and the Crown. The plaintiff became bound, by reason of the law applying to service in the forces, to perform the duties of his position, but the Crown made no promises to him. There was no agreement which he can say binds the Crown. His claim depends upon the existence of rights under the Air Force Act and the regulations made thereunder.

The defence of the Commonwealth to the action depends upon an amendment of regulations made by Statutory Rules 1943 No. 93 under the Air Force Act 1923-1941. These regulations, entitled Air Force (War Financial) Regulations, were notified in the Commonwealth Gazette of 13th April 1943 and became effective on that date. Regulation 8 (1) provided that deferred pay should be credited to the account of a member in respect of his service on and after the date of his embarkation at rates specified in the First Schedule. Regulation 8 (7) reduced the rate of interest payable for the period from and including 1st January 1941 to 31st December 1942 from three and one half to three per cent per annum and thereafter fixed the interest at such rate as should be from time to time fixed by the Treasurer by notice in the Gazette. Regulation 2 (1) of these regulations provided that the regulations should, except where otherwise prescribed in the regulations, "be deemed to have come into operation as on and from the sixth day of October 1939"; that is at a date before the date of the notification which, as already stated, was 13th April 1943. Regulation 5 (2) was in the following terms:—"If, in respect of the period from and including the sixth day of October, 1939, to the date of notification in the Gazette of these Regulations, the total amount of daily pay and allowances prescribed by the Air Force Regulations as payable to any member to whom these regulations apply (other than a member to whom the proviso to sub-regulation (1.) of this regulation applies) was higher than the total amount of daily pay and allowances payable under these regulations, the member shall not be entitled to recover the amount of the difference." This regulation therefore, if it is valid, deprived the plaintiff of any right to recover deferred pay in respect of the period between his appointment as an officer and the date of his embarkation. The Commonwealth relies upon these regulations as an answer to the plaintiff's claim.

The plaintiff, on the other hand, contends that the regulations are invalid by reason of the provisions of the Acts Interpretation Act 1901-1941, s. 48 (2), which is in the following terms:—"Regulations shall not be expressed to take effect from a date before the date of notification in any case where, if the regulations so took effect—(a) the rights of a person (other than the Commonwealth or an authority of the Commonwealth) existing at the date of notification, would be affected in a manner prejudicial to that person; and (b) liabilities would be imposed on any person (other than the Commonwealth or an authority of the Commonwealth) in respect of anything done or omitted to be done before the date of notification, and where, in any regulations, any provision is made in contravention of this sub-section, that provision shall be void and of no effect."

It was held in the Full Court that the regulations were void and of no effect in so far as they deprived the plaintiff of the right to recover deferred pay and interest at three and one half per cent thereon in respect of any period before 13th April 1943, but that the regulations were effective as to the period beginning on 13th April 1943. The court relied upon various provisions in the regulations that members of the forces "shall be paid" at certain rates of payment, that money shall be "due" to them, and that they shall be "entitled to" payment at certain rates. It was held that these provisions created a right in a member of the forces as against the Crown to payment at the rates provided in the regulations and that reg. 31 of the Air Force Regulations merely postponed the right of recovering moneys which had actually become due to him. It was held that, as the new reg. 5 (2) of 1943 deprived the plaintiff of any right to recover those moneys in respect of a past period, an existing right of the plaintiff was prejudicially affected and that the regulation was pro tanto invalid.

Section 48 of the Acts Interpretation Act applies in the case of regulations which are expressed to take effect from a date before the date of notification. The provision contained in reg. 2 of the War Financial Regulations that the regulations shall be deemed to have come into operation as on and after 6th October 1939 brings these regulations within this description. It is, I think, plain that that they are expressed to take effect from a date prior to the date of notification.

The next question is whether the challenged regulation is of such a character that if it took effect from a date before the date of notification it would result in the rights of a person existing at the date of notification being affected in a manner prejudicial to him. What were the rights of the plaintiff existing at the date of notification?

There are, it is true, many provisions in the regulations which refer to pay being due and to a member of the forces being entitled to pay: see, e.g. the use in the War Financial Regulations of the words "entitled to pay" in regs. 13, 14, 15, 16 and 22 and provisions that a member "shall be paid" at certain rates, e.g. regs. 17, 18, 19 and 21; and see also references to moneys "due" to a member in reg. 31 of the Air Force Regulations and in reg. 31 of the War Financial Regulations and in other regulations. There are provisions in the Imperial Army Act 1881, e.g. in ss. 136, 137, 138 and 140, which require pay to be paid subject only to authorized deductions or which refer to pay as being due. An argument might have been founded upon these provisions to the effect that the Act conferred a right to pay upon a member of the Forces, but it has never been suggested that such provisions affect in any way the general principle laid down in Dunn v. The Queen[4] and other cases that a member of the forces has no rights against the Crown in respect of his pay. In my opinion the regulations mentioned and other similar regulations do not result in creating rights which reg. 32 denies to an officer or in giving a right of action beyond that expressly given by reg. 31. Those regulations are intended to bring about the result that the only right of a member of the forces against the Commonwealth shall be a right to sue for moneys payable under the Act and regulations after he has been discharged from the forces, but that otherwise the position at common law shall continue. In my opinion reg. 541 of the Air Force Regulations is directed to establishing this position. It is in the following terms:—"A member or other person, for whom provision is made in these regulations shall not be recognized as having any vested rights to any rate of pay, deferred pay, allowance, or any other emolument, except as specially provided herein, and such a member or person shall not be entitled to claim the issue of any emolument, whether under these regulations or as a reserved right, under special conditions which are not herein provided for." In my opinion the effect of this regulation is that the member of the forces has the rights under the regulations read as a whole and no others. The Supreme Court was of opinion that the rights were rights to the pay prescribed but with the right of action postponed. The alternative view is that the only right was a right of action which came into existence only when the member was discharged.

In deciding between these two views it is important to remember that what is in issue in the action is the right to recover the moneys sued for. If there is no right to recover the plaintiff must fail. The right to recover is admittedly a right which came into existence only when the plaintiff was discharged from the forces. Regulation 31 of the Air Force Regulations is explicit in this respect. Until discharged he had only the possibility of obtaining that right. He did not possess the right itself. Regulation 5 (2) of the War Financial Regulations deals expressly and precisely only with the right to recover. It does not purport to deal with any other right. The final words of the regulation are "the member shall not be entitled to recover the amount of the difference." Thus the regulation deals only with a right which had not accrued in the case of the plaintiff when the regulation was notified in the Commonwealth Gazette. The regulation therefore did not affect in any manner—prejudicially or otherwise—any right existing at the date of the notification of the regulation. Thus, even if the regulations as a whole can be construed as giving a right to deferred pay in some sense but with the right of recovery postponed until after discharge, the latter right can be affected by a regulation expressed to take effect before the date of notification in the case of any member of the forces who has not been discharged before the date of notification. The result is that the plaintiff's right to recover deferred pay could be and was validly affected by the regulations.

In my opinion the appeal should be allowed and the questions in the case should be answered in favour of the Commonwealth.

I abstain from animadverting upon the action of the Commonwealth Government in altering the regulations notwithstanding the terms of appointment of the plaintiff, and doubtless of other officers. There may possibly have been some compensating advantage for the disadvantageous alteration. The Court has no information on the matter. But the Commonwealth Government was not either bound or invited to defend its action upon any other than a purely legal basis.

The question for determination in this appeal is whether a former officer of the Air Force is entitled to certain pay which the Air Force Regulations under which he served provided should be paid to him, or whether a regulation notified on 13th April 1943, and purporting to operate retrospectively, was effective to deprive him of the right to receive, up to that date, what the earlier regulation had promised. It is not disputed that the 1943 regulation is effective as to any pay accruing after its date. The question is whether it is effective to deprive him of what had previously accrued. It is contended for the Commonwealth that it is, because any promise of pay made to him by the regulations was in law a nullity. It was a promise which the Commonwealth could honour or repudiate at will. Hence, the 1943 regulation, which purports to operate retrospectively did not take away any legal right of the airman (this being prohibited by s. 48 (2) of the Acts Interpretation Act 1901-1941), but merely repudiated a promise which was not legally binding upon the Commonwealth, and this, whatever other epithet may be applied to it, is at any rate not illegal.

The general rule is well established that at common law the Crown is not contractually bound to persons whom it takes into its military or civil service, and may at its will dismiss them or refuse to pay them (The Commonwealth v. Quince[5]). It is equally well established that the Crown's right to treat such engagements as purely voluntary may be effectually abridged or nullified by statute. It is evident that the draftsman of the relevant regulations was fully alive to the common law position. By reg. 32 it was expressly provided that the appointment or promotion of an officer should not create a civil contract between the Commonwealth and the officer. Regulation 31, however, contemplated that, notwithstanding the rule of the common law, moneys might become legally due to a member of the Air Force by the Commonwealth under the regulations, because it expressly provided that such a person, after he had ceased to be a member, might recover from the Commonwealth by suit in any court of competent jurisdiction any moneys which under his engagement or by any agreement with the Commonwealth are due to him. Regulation 541 provided that a member shall not be recognized as having any vested rights to any rate of pay, deferred pay, allowance, or any other emolument, but this was "except as specially provided herein" and reg. 646 (4) provided that a member of the citizen air force (and the respondent air officer was a member) "shall be paid" the rates of active pay and deferred pay and receive the allowances prescribed for a member of the same rank in the permanent air force. It was his claim to receive this up to the date of the 1943 regulation which was upheld by the Supreme Court. I see no reason for disagreeing with the conclusion of that Court. There is nothing to entitle us to assume that these regulations (which have the force of law) were intended to be read in a sense which would encroach as little as possible on the common law position of the Crown vis-à-vis persons in its military service. On the contrary, although the regulation-making authority recognizes that position in reg. 32, in reg. 31 it makes an express provision very substantially encroaching upon it. I see no reason why other express provisions should not be treated as equally valid and operative. A provision, having the force of law, that a member of the forces "shall be paid" is inconsistent with the Commonwealth being at liberty to pay him or not as it chooses; and the express provision of reg. 31 that an action may be brought by him against the Commonwealth after he ceases to be a member of the forces to recover what is due to him emphasizes the inconsistency.

Appeal by special leave from a judgment of the Supreme Court of New South Wales in Full Court upon a special case stated pursuant to the provisions of the Common Law Procedure Act 1899 N.S.W. in an action to recover from the Commonwealth—the appellant here—deferred pay and interest thereon claimed to be due to the plaintiff in the action—the respondent here—as a former officer of the Air Force under the Air Force Regulations in force prior to 13th April 1943 when the Air Force (War Financial) Regulations were gazetted.

The questions stated were:—(1) Whether the moneys claimed by the plaintiff or any part thereof were moneys due and payable by the defendant to the plaintiff under an agreement with the defendant within the meaning of reg. 31 of the Air Force Regulations or s. 12 of the Defence Act 1903-1941? (2) Whether the moneys claimed by the plaintiff were moneys due and payable by the defendant to the plaintiff under his engagement in the Royal Australian Air Force? (3) If questions 1 and/or 2 were answered in the affirmative what amount was due by the defendant to the plaintiff?

The Supreme Court answered:—Question (1) in the negative; Question (2) "Yes, subject to the prospective operation of the Air Force (War Financial) Regulations No. 93 of 1943, that is to say so much of the said moneys as relate to the period of the plaintiff's engagement prior to 13th April 1943 are so due and payable"; and Question (3) was "left to be calculated by the parties" who accordingly calculated the amount in the sum of £247 7s. 10d., whereupon judgment was entered accordingly.

But for the passing of the Air Force (War Financial) Regulations 1943 No. 93, the plaintiff, it was conceded by the Commonwealth, would have been entitled to recover the moneys claimed by him.

The plaintiff's claim against the Commonwealth cannot, however, be supported on any contractual basis for "all engagements between those in the military service of the Crown and the Crown are voluntary only ... and give no occasion for an action in respect of any alleged contract" (Dunn v. The Queen[6], citing Mitchell v. The Queen[7]; R. Venkata Rao v. Secretary of State for India[8]). This principle is enforced by the Air Force Regulations which provide (reg. 72) that an officer shall hold his appointment during the pleasure of the Governor-General and (reg. 32) that the appointment or promotion of an officer under the regulations should not create any civil contract between the King or the Commonwealth and the officer and also (reg. 541) that a member or other person for whom provision is made by the regulations should not be recognized as having any vested rights to any rate of pay, deferred pay, allowance or other emolument except as specially provided therein.

But the Air Force Regulations (reg. 31) provide that any person who has been a member may, after having ceased to be a member, recover from the Commonwealth by suit in any court of competent jurisdiction any moneys which under his engagement or by any agreement with the Commonwealth are due to him. (See also Defence Act 1903-1941, s. 12).

The plaintiff was commissioned as from 16th October 1939 as a pilot officer in the Air Force and was subsequently promoted to the rank of flying officer, flight lieutenant and squadron leader (temporary). He embarked on 12th September 1942 for service overseas and on 10th September 1945 he was discharged from the Air Force, on account of illness, and ceased to be a member of it.

And but for the passing of the Air Force (War Financial) Regulations the plaintiff would have been entitled by force of reg. 31 to sue for and recover the deferred pay and interest thereon claimed by him.

The Air Force (War Financial) Regulations were made and they were gazetted on 13th April 1943 and except where otherwise provided came into operation on 6th October 1939. Regulation 5 (1) provided: "These regulations shall have effect notwithstanding anything contained in the Air Force Regulations, and any provision of those regulations which is inconsistent with these regulations shall, to the extent of the inconsistency, be deemed not to apply to or in relation to a member... (2) If, in respect of the period from and including the sixth day of October, 1939, to the date of notification in the Gazette of these regulations," (13th April 1943) "the total amount of daily pay and allowances prescribed by the Air Force Regulations as payable to any member to whom these regulations apply ... was higher than the total amount of daily pay and allowances payable under these regulations, the member shall not be entitled to recover the amount of the difference." And reg. 8 (1) provided: "Subject to these regulations, deferred pay shall be credited to the account of each member in respect of his service on and after the date of his embarkation at the rate specified" in the schedule... (4) "Interest at the prescribed rate shall be credited to the account of a member at the end of the second and each subsequent year of his service after the date of his embarkation on the amount of deferred pay accumulated to his credit at the end of the previous year of that service. Interest credited to a member's deferred pay account shall be considered as part of his accumulated deferred pay and shall bear interest accordingly."

The regulations it will be observed operate retrospectively and deprive the plaintiff of the benefits in respect of deferred pay and interest that he claims in this action and might have recovered under the Air Force Regulations in force before the Air Force (War Financial) Regulations were gazetted.

Subject, however, to the provisions of the Acts Interpretation Act 1901-1941, which I shall presently consider, the regulations are within the powers conferred upon the Governor-General to make regulations, by the Air Force Act 1923-1941, ss. 3 (3), 9 and by s. 7 of the Air Force Act 1939; the Defence Act 1903-1941, Part XI. and the Acts Interpretation Act 1901-1941, s. 33 (4). And the powers conferred upon the Governor-General are expressed in such general terms that they may be exercised retrospectively as well as prospectively if the intention to do so is apparent (cf. Australian Coal and Shale Employees Federation v. Aberfield Coal Mining Co. Ltd.[9]).

But it is contended that the Air Force (War Financial) Regulations (regs. 5 (2), 8) are void and of no effect by reason of the provisions of s. 48 (2) of the Acts Interpretation Act 1901-1941 which provides that "Regulations shall not be expressed to take effect from a date before the date of notification in any case where, if the regulations so took effect—(a) the rights of a person ... existing at the date of notification, would be affected in a manner prejudicial to that person ... and where, in any regulations, any provision is made in contravention of this sub-section, that provision shall be void and of no effect." The Air Force (War Financial) Regulations are expressed to take effect from a date before the date of notification (See regs. 2, 5 (2)) and therefore are subject to the limitations imposed by s. 48 (2) of the Acts Interpretation Act 1901-1941 (See Australian Coal and Shale Employees Federation v. Aberfield Coal Mining Co. Ltd.[10]). But I doubt whether that Act was rightly applied in the case of Toowoomba Foundry Pty. Ltd. v. The Commonwealth[11] and whether the decision in that case is not inconsistent with the interpretation given to the section in the Australian Coal and Shale Employees Federation Case[12].

The critical question in the present case is whether any rights of the plaintiff existing at the date of the notification of the Air Force (War Financial) Regulations on 13th April 1943 were affected in a manner prejudicial to him. Apart from reg. 31 of the Air Force Regulations the plaintiff in the action had no rights to deferred pay or interest thereon which could be asserted against the Commonwealth. It is contended, however, that the regulation upon its proper construction entitled him to the moneys which he has claimed in this action, namely, deferred pay and interest at the rate in force before the Air Force (War Financial) Regulations were gazetted. But the rights created by reg. 31 are in respect of moneys due; and the moneys due and which can be recovered when a member of the Air Force ceases to be a member, are neither more nor less than the amount provided by the regulations. And the Air Force (War Financial) Regulations prescribe the amount of deferred pay and interest thereon to which a member of the Air Force is entitled when he ceases to be a member. Those regulations are definitive of the measure of the plaintiff's rights and they are so expressed that they operate both retrospectively and prospectively.

The result, I fear, works a great injustice to the plaintiff and other airmen in the same position but the Court's function is to construe the regulations as it finds them much as one may regret the policy that dictated them and the injustice done to the plaintiff and others.

The appeal should be allowed, the decision of the Supreme Court set aside, the questions stated answered:—(1) No. (2) No.

In the judgments delivered in the Supreme Court the provisions made by and under statute that are material to this case have received a very full examination. The result has been to reduce the whole matter to the simple question whether reg. 2 (1.) and reg. 5 (2) of the Air Force (War Financial) Regulations are valid. The inquiry into the validity of the two sub-regulations is itself reduced to the question whether the retrospective provision contained in them is consistent with s. 48 (2) of the Acts Interpretation Act 1901-1941.

It is true there is a passage in the judgment of Davidson J. which suggests that he was not satisfied that s. 9 of the Air Force Act 1923-1941 or s. 7 of the Air Force Act 1939 would, in any case, authorize the sub-regulations. But the matter was not pursued and I think that to say that those sections, apart from the restriction imposed by s. 48 (2) of the Acts Interpretation Act do not cover the sub-regulations, would unduly narrow a common form of power to make regulations necessary or convenient for carrying out or giving effect to a statute.

We are concerned with that portion of s. 48 (2) which protects rights existing at the time a regulation is notified. The point in the case is the existence of the rights. The material words of the sub-section are these: "Regulations shall not be expressed to take effect from a date before the date of notification in any case where, if the regulations so took effect—(a) the rights of a person ... existing at the date of notification would be affected in a manner prejudicial to that person ... and where in any regulations any provision is made in contravention of this sub-section that provision shall be void and of no effect." Regulation 2 (1) provides that the regulations shall take effect on an antecedent date and the effect is to reduce the aggregate amount of deferred pay which otherwise the plaintiff would have received in respect of the period he had served prior to the actual date of notification.

The effectiveness of this sub-regulation must, therefore, depend on the question whether at that time a right to the deferred pay existed in the plaintiff. Regulation 5 (2) expressly disables a man in the plaintiff's position from recovering the excess over the reduced amount of his pay and is consequential upon reg. 2 (1.). For that reason and also because of the express references to a period of time antecedent to the notification, I think that its effectiveness or validity must depend upon the same question.

I regret to say that I find myself unable to adopt the view that the effect of the Air Force Regulations was to give the plaintiff before the termination of his service a right to deferred pay, a right which existed then but could not be enforced until after his period of service terminated. The conditions governing the plaintiff's appointment were such as to entitle him to expect, until the adoption of the Air Force (War Financial) Regulations, that he would receive the deferred pay at the rates which had been in force and had been advertised. It is, therefore, with regret that I conclude that in point of law no right arose entitling him to that which he had been encouraged to expect and that consequently a retrospective regulation is effective to disappoint his legitimate expectations.

In stating my reasons I begin with the words "rights ... existing" in s. 48 (2). These are words susceptible of very great variation and extension of meaning. Most changes in the law affect rights, and regulations made under a statutory power make changes in the law. Clearly, however, it is to rights fixed by events before the regulation is notified that the sub-section refers. Again the word "right" might conceivably be applied to any interest which, to however slight a degree or in whatever aspect, the law recognizes and protects. But I think that it is used in sub-s. (2) of s. 48 in a much more limited and definite sense. It means an acquired or accrued right as specific and definite as those to which s. 50 (a) of the Acts Interpretation Act refers.

In the next place, in considering the meaning and effect of the Air Force Regulations their purpose cannot be neglected, namely to provide rules to govern one of the armed forces of the Crown. The relation to the Crown of members of the armed forces is no new subject; the rules of the common law define it. The regulations are not to be read in disregard of those rules and of the long tradition to which they have contributed. At common law neither commission nor enlistment in the services does or can amount to a contract with the Crown and neither officer nor man obtains any legal right against the Crown to pay, deferred pay, half pay, pension or emolument. "All engagements between those in the military service of the Crown and the Crown are voluntary only on the part of the Crown, and give no occasion for an action in respect of any alleged contract:" per Lord Esher M.R. in Dunn v. The Queen[13]: see Macdonald v. Steele[14]; Gibson v. East India Co.[15]; R. v. Secretary of State for War[16]; Leaman v. The King[17]: Lucas v. Lucas[18].

Under the Air Force Regulations it is the Governor-General who may appoint and promote officers and issue commissions (reg. 45); their appointments are gazetted and promulgated in orders (reg. 58); they hold during pleasure (reg. 72.) By regs. 31 and 32, which are the counterparts of ss. 12 and 13 of the Defence Act, provisions are made which, in part, vary and, in part, confirm the common law rule. Regulation 31 says that any person who has been a member of the Air Force may, after having ceased to be a member, recover from the Commonwealth in a court of competent jurisdiction any moneys which under his engagement or by agreement with the Commonwealth are due to him. This breaks in upon the common law, but the right of action which it gives is strictly conditioned and arises only on the termination of the member's service. Neither the words "engagement" nor "agreement" implied any legal right flowing from the fact of engaging or agreeing, except that given by the regulation. Regulation 32 is confirmatory of the common law and shows that reg. 31 must be read as a limited exception from the principle that nothing justiciable grew out of the service of officer or man. Regulation 541 then forces home the consequence by an express denial to the members of "vested rights." So much turns upon its terms that the text must be quoted:—"A member or other person, for whom provision is made in these Regulations shall not be recognized as having any vested rights to any rate of pay, deferred pay, allowance, or any other emolument, except as specially provided herein, and such a member or person shall not be entitled to claim the issue of any emolument, whether under these Regulations or as a reserved right, under special conditions which are not herein provided for."

To my mind the purpose of this provision is to ensure that no right to any form of emolument should vest in a member of the Air Force. The words, it is true, are "any rate" of pay &c. and not "amount." But I think the context shows that the reference is to rates for periods served and it is not confined to excluding rights to have existing rates continued so as to apply to future service. Davidson J. thought that the word "issue" showed that pay and deferred pay could not be included in the statement that a member or person should not be entitled to claim the issue of any emolument, because you do not "issue" them, you "pay" them. But reg. 528 (1.) speaks of pay being "issued." Jordan C.J., as I understand him, regarded the words "except as specially provided herein" as placing outside the operation of reg. 541 the provisions of the regulations which state what officers shall be paid. For instance, reg. 646 (4) provides that a member of the Citizen Air Force, while serving under s. 46 of the Defence Act, shall be paid the rates of active pay and receive the allowances prescribed for a member of the same rank in the Permanent Air Force. The plaintiff fell within this provision. Regulation 548 (1.) stated what the rates for the Permanent Air Force should be, but it contains no express corresponding direction that the officer "shall be paid" the rates. His Honour considered that these mandatory words of reg. 646 (4) were peremptory and overrode the common law and created vested rights, though the enjoyment of some of them was postponed and none of them could be enforced by judicial process until the member left the Service.

But, for my part, I cannot see that the words "except as specially provided" are satisfied by such a provision as that stating that a member "shall be paid" certain rates. They are, however, satisfied by the provisions of reg. 31 and that, I should have thought, was the chief regulation they contemplated.

Roper J. did not deal specifically with the meaning of reg. 541. He referred, however, to reg. 549 which requires that deferred pay at the prescribed rates should be credited to the account of the officer annually, but that payment should not be made till his appointment in the Air Force is terminated. His Honour's view was, in effect, that the result of reg. 31 was to place the plaintiff in the position of having "a present right to the future payment of deferred pay and interest although the right could not be enforced by action until the time for payment itself arrived." It may perhaps be added that reg. 31 of the Air Force (War Financial) Regulations provides for payment to the person "entitled to administer the air-force estate of the member," if he dies or becomes insane. So all possible events are covered, and, in aid of the argument it may be said that, except for a change in the regulations, there is no contingency which would mean that deferred pay was never payable.

However even so, I think that, in view both of the common law rule and of reg. 541 the real meaning of the regulations is clear and it is impossible to spell out of them a present accrued right to deferred pay enforceable de futuro. It is doing violence to the actual intention.

In my opinion the appeal should be allowed. The order of the Full Court should be discharged and the first and second questions in the special case stated should be answered—No.

In my opinion the questions in this case should be answered in favour of the Commonwealth. I agree with the reasons of the Chief Justice of this Court. The appeal should, in my opinion, be allowed.

This is an appeal by special leave by the defendant from an order of the Full Supreme Court of New South Wales that judgment in the action be entered for the plaintiff for the sum of £247 7s. 10d. The Supreme Court ordered that judgment should be entered for this sum pursuant to the unanimous answers which it gave to the first two questions asked in the special case stated pursuant to ss. 55 and 57 of the Common Law Procedure Act 1899 N.S.W.. The first question is:—Whether the moneys claimed by the plaintiff in par. 27 of the special case or any part thereof are moneys due and payable by the defendant to the plaintiff under an agreement with the defendant within the meaning of reg. 31 of the Air Force Regulations or s. 12 of the Defence Act 1903-1941? The Supreme Court answered this question in the negative. If it had answered this question in the affirmative the plaintiff presumably would have submitted that judgment should be entered for the plaintiff for the whole sum of £441 5s. 4d. claimed in par. 27 of the special case.

The second question is:—Whether these moneys are moneys due and payable by the defendant to the plaintiff under his engagement in the Royal Australian Air Force? The Supreme Court answered this question in the affirmative, subject to the prospective operation of the Air Force (War Financial) Regulations, No. 93 of 1943, that is to say, so much of the said moneys as relates to the period of the plaintiff's engagement prior to 13th April 1943 are so due and payable.

As appears from par. 27 of the special case and from these questions and answers, the dispute between the parties relates to the amount of deferred pay to which the plaintiff became entitled whilst he was an officer in the Citizen Air Force.

The facts and relevant provisions of the Defence Act 1903-1941, the Air Force Act 1923-1941, the Air Force Regulations, and the Air Force (War Financial) Regulations are set out in the special case, and in the judgments of the members of the Supreme Court, and I shall not repeat them in any detail.

The plaintiff became an officer in the Citizen Air Force, General Duties Branch, on 16th October 1939. He obtained his commission pursuant to an application made in response to an advertisement inserted by the Air Board in the Sydney Morning Herald on 13th September 1939. The advertisement stated that successful applicants would be granted the rank of pilot officer whilst undergoing a training course with pay at £330 and £36 10s. deferred pay per annum; and that after graduation they would be promoted to flying officer with pay at £421 and £36 10s. deferred pay per annum. The form of application provided by the Air Board, which the plaintiff signed, was accompanied by a document setting out the standard rates of pay and allowances, including particulars of active and deferred pay per diem for officers holding the ranks of pilot officers, flying officers, and flight lieutenants. One of the particulars stated that deferred pay would be withheld until the completion of an officer's commission when it would be paid plus three and one half per cent interest on yearly balance.

At the date that the plaintiff applied for his commission, the Citizen Air Force had been called out for war service by a proclamation issued by the Governor-General made under the Defence Act, and it is common ground that this proclamation had the effect under reg. 646 (4) of the Air Force Regulations of causing the plaintiff to become entitled to be paid the same rates of active and deferred pay and to receive the same allowances as those prescribed by those regulations for an officer of similar rank in the Permanent Air Force. The relevant regulations of the Air Force Regulations relating to deferred pay for officers of the Permanent Air Force when the plaintiff became an officer were: reg. 528 (1)—Pay shall be issued for each day of service: reg. 548 (1)—The daily rate of deferred pay for an officer of the Permanent Air Force shall be according to his branch and rank as follows:—(then followed particulars of the rates in (a) the general duties branch and medical branch, and (b) the equipment branch): reg. 549 (1)—Deferred pay at the prescribed rates shall be credited to the account of each officer annually. (3) Except as prescribed, payment of deferred pay shall not be made until an officer's appointment in the Air Force is terminated: reg. 551 (1)—Interest at the rate of three and one half per cent per annum shall be credited annually on 30th June in each year on the amount of accumulated deferred pay standing at the credit of each officer on 30th June of the previous year. (2) Interest added to the deferred pay shall be considered as part of accumulated deferred pay and shall bear interest in like manner. From 16th October 1939 until 13th April 1943, the plaintiff was credited with deferred pay in accordance with these regulations.

The Air Force (War Financial) Regulations were notified in the Commonwealth Gazette on 13th April 1943, and came into force on that date: Acts Interpretation Act 1901-1941, s. 48 (1) (b). Regulation 2 (1) of these regulations provides that they shall, except where otherwise prescribed in these regulations, be deemed to have come into operation as on and from 6th October 1939. Regulation 5 (2) provides that if, in respect of the period from and including 6th October 1939, to the date of notification in the Gazette of these regulations, the total amount of daily pay and allowances prescribed by the Air Force Regulations as payable to any member to whom these regulations apply ... was higher than the total amount of daily pay and allowances payable under these regulations, the member shall not be entitled to recover the amount of the difference. Regulation 8 (1) provides that, subject to these regulations, deferred pay shall be credited to the account of each member in respect of his service on and after the date of his embarkation at the rate and in the manner therein specified.

On 12th September 1942 the plaintiff embarked for the Territory of Papua where he served on operational flights against the enemy over the high seas and the Mandated Territory of New Guinea until 24th December 1942, when he was returned to Australia on account of illness. On 10th September 1945 the plaintiff was discharged from the Royal Australian Air Force.

Regulation 31 of the Air Force Regulations, which is in similar terms to s. 12 of the Defence Act, provides that any person who has been a member may, after having ceased to be a member, recover from the Commonwealth by suit in any court of competent jurisdiction any moneys which under his engagement or by any agreement with the Commonwealth are due to him. Regulation 32 of these regulations provides that the appointment or promotion of an officer under these regulations shall not create a civil contract between the King or the Commonwealth and the officer. Regulation 541 provides that a member or other person for whom provision is made in these regulations shall not be recognized as having any vested rights to any rate of pay, deferred pay, allowance, or any other emolument except as specially provided herein, and such a member or person shall not be entitled to claim the issue of any emolument, whether under these regulations or as a reserved right, under special conditions which are not herein provided for.

The plaintiff contended before the Supreme Court, and has renewed his contention before us, that his application for a commission was an offer by him to serve as an officer in the Citizen Air Force upon the terms and conditions contained in the advertisement of 23rd September 1939 and the document forwarded with the application form, and that when his offer was accepted by the defendant appointing him an officer, an agreement was made within the meaning of reg. 31, between him and the Commonwealth, that he should serve in the Air Force for the duration of the war, and that he should be paid the rates of active and deferred pay, and receive the allowances referred to in the advertisement and document. In my opinion, quite apart from the effect of reg. 32, these facts are not sufficient to create such an agreement. For one thing, the rates of active and deferred pay and other allowances set out in the advertisement and document only refer to the rates for the ranks of pilot officer, flying officer and flight lieutenant. The plaintiff was promoted to the rank of temporary squadron leader on 1st December 1943 and retained this rank until he was discharged, so that if his right to pay and allowances depended upon an agreement, there was no express agreement relating to the temporary rank he held after 1st December 1943. The rates are described in the document as standard rates of pay, and were evidently inserted to inform intending applicants of the rates of pay and allowances then payable to junior officers in the Citizen Air Force when called out for war service. No question therefore arises of attempting to reconcile the meaning of agreement in reg. 31 with the provisions of reg. 32. The plaintiff must seek to recover the amount of deferred pay and interest set out in par. 27 as moneys which are due to him under his engagement with the Commonwealth within the meaning of reg. 31.

Apart from statute, the employment of servants by the Crown, naval, military or civil, is at the will of the Crown, so that the Crown is entitled to dismiss them at any time without notice. They are dependent upon the bounty of the Crown for the payment of their remuneration, which does not create a debt, so that they are unable to sue the Crown if the Crown refuses to pay them (The Commonwealth v. Quince[19]). It was contended that reg. 32 was inserted in the Air Force Regulations to give statutory force to this principle of the common law, so that the provisions relating to pay and allowances should be construed, not as giving members of the Air Force a legal right to recover as a debt the pay and allowances prescribed for their respective ranks, but merely as authorizing the responsible officers of the Air Force to make the payments as agents of the Commonwealth and thereby carry out the wishes of the Commonwealth which is under no responsibility to make the payments except by way of bounty. In my opinion it is unnecessary to decide whether in the absence of reg. 31 the regulations would have created any legal debt. Regulation 31 refers to moneys which are due to a member under his engagement with the Commonwealth and to my mind this can only mean that the Commonwealth becomes indebted from time to time to members of the Air Force for the pay and allowances which accrue due to them under the regulations mostly from day to day; although in the case of an officer the debt in the case of deferred pay only becomes payable when he ceases to be a member, and in the case of any member any debt only becomes enforceable by action when he ceases to be a member.

On 13th April 1943, therefore, the date on which the War Financial Regulations came into force, the Commonwealth was indebted to the plaintiff for the daily issue of deferred pay and annual interest to which he had become entitled up to that date under the Air Force Regulations. This was a rate of deferred pay specially provided for therein so that his right to be paid this amount was a right which had then vested in him within the meaning of reg. 541. As Roper J. said in the Court below: "The plaintiff then had a present right to the future payment of the deferred pay and interest although that right could not be enforced by action until the time for payment itself arrived."

As deferred pay only became payable upon embarkation under the War Financial Regulations, the effect of reg. 5 (2) was substantially to forfeit the amount of deferred pay which had accrued due to the plaintiff up to 13th April 1943. But the power to give regulations a retrospective operation is subject to the provisions of s. 48 (2) of the Acts Interpretation Act. This sub-section provides that:—Regulations shall not be expressed to take effect from a date before the date of notification in any case where, if the regulation so took effect—(a) the rights of a person (other than the Commonwealth or an authority of the Commonwealth) existing at the date of notification, would be affected in a manner prejudicial to that person; and (b) liabilities would be imposed on any person (other than the Commonwealth or an authority of the Commonwealth) in respect of anything done or omitted to be done before the date of notification, and where, in any regulations, any provision is made in contravention of this sub-section, that provision shall be void and of no effect. The meaning of this sub-section has been considered by this Court in three recent cases: Australian Shale & Coal Employees Federation v. Aberfield Coal Mining Co. Ltd.[20]; Victorian Chamber of Manufactures v. The Commonwealth (Women's Employment Regulations)[21], and Toowoomba Foundry Pty. Ltd. v. The Commonwealth[22]. In the last-mentioned case[23], I expressed my view, which I shall not repeat, of the meaning of the sub-section construed in the light of the reasons given by the majority of the Court in the Australian Coal and Shale Employees Federation Case[24].

Regulation 5 (2) of the War Financial Regulations is expressed to take effect in respect of a period from and including 6th October 1939 up to the date of notification and so has a wholly retrospective operation. As the plaintiff on 13th April 1943 had a vested right to the deferred pay which had up till then accrued due under the Air Force Regulations, the attempt to deprive the plaintiff of this deferred pay by reg. 5 (2) clearly affected this right in a manner prejudicial to the plaintiff so that reg. 5 (2) is void and of no effect against the plaintiff. But this does not invalidate the whole of the War Financial Regulations. They are only invalidated pro tanto.

For these reasons I agree with the answers of the Supreme Court to the questions in the special case and I would dismiss the appeal.

Appeal allowed. Appellant to pay respondent's costs of appeal. Order of Supreme Court discharged. First and second questions in the case answered—No. Action dismissed.

Solicitor for the appellant, George A. Watson, Acting Crown Solicitor for the Commonwealth.

[1] (1896) 1 Q.B. 116.

[2] (1920) 3 K.B. 663.

[3] [1944] HCA 1; (1944) 68 C.L.R. 227.

[4] (1896) 1 Q.B. 116.

[5] [1944] HCA 1; (1944) 68 C.L.R. 227.

[6] (1896) 1 Q.B., at p. 122.

[7] (1896) 1 Q.B. 121 (n), at p. 122.

[8] (1937) A.C. 248.

[9] (1942) 66 C.L.R., at p. 185.

[10] [1942] HCA 23; (1942) 66 C.L.R. 161.

[11] [1945] HCA 15; (1945) 71 C.L.R. 545.

[12] [1942] HCA 23; (1942) 66 C.L.R. 161.

[13] (1896) 1 Q.B., at p. 122.

[14] [1820] EngR 46; (1792) Peake 253 [170 E.R. 140].

[15] [1839] EngR 366; (1839) 5 Bing. (N.C.) 262, at pp. 274, 275 [1839] EngR 366; [132 E.R. 1105, at p. 1110].

[16] (1891) 2 Q.B. 326, at p. 338.

[17] (1920) 3 K.B. 663.

[18] (1943) P. 68.

[19] [1944] HCA 1; (1944) 68 C.L.R. 227.

[20] [1942] HCA 23; (1942) 66 C.L.R. 161.

[21] [1943] HCA 21; (1943) 67 C.L.R. 347.

[22] [1945] HCA 15; (1945) 71 C.L.R. 545.

[23] (1945) 71 C.L.R., at pp. 586-588.

[24] [1942] HCA 23; (1942) 66 C.L.R. 161.

High Court of Australia

Commonwealth v Welsh [1947] HCA 14; (1947) 74 CLR 245 (8 May 1947)

HIGH COURT OF AUSTRALIA