Controller of Enemy Property & the Commonwealth v Thornthwaite [1960] HCA 78; (1960) 104 CLR 168 (8 November 1960)

HIGH COURT OF AUSTRALIA

THE CONTROLLER OF ENEMY PROPERTY AND THE COMMONWEALTH OF AUSTRALIA v. THORNTHWAITE [1960] HCA 78; (1960) 104 CLR 168

National Security

High Court of Australia
Dixon C.J.(1), Fullagar(1), Kitto(1), Menzies(1) and Windeyer(1) JJ.

CATCHWORDS

National Security - Enemy property - State of war - Enemy subject - Property held by local agent - Controller of Enemy Property - Power to order sale of property - Power to order account of property sold - Claim by Controller for proceeds of sale - Demurrer - Defence (Transitional Provisions) Act 1946 (Cth), s. 8 (4) - National Security (Enemy Property) Regulations 1939, regs. 3, 8 (1) - National Security (Enemy Property) Regulations 1942, regs. 3 (2), 6, 11.

HEARING

Sydney, 1960, August 23; November 8. 8:11:1960
DEMURRER.

DECISION

November 8.
THE COURT delivered the following written judgment:-
This demurrer by the defendant to the plaintiffs' statement of claim was

2. In the first place, the allegation that the plaintiff, the Controller of Enemy Property, is a corporation sole constituted by the National Security (Enemy Property) Regulations 1939 was challenged. (at p173)

3. Under the 1939 Regulations, a Controller of Enemy Property was appointed, who by force of reg. 3 became a corporation sole. When the 1939 Regulations were repealed by the National Security (Enemy Property) Regulations 1942, it was provided by reg. 3 (2) that notwithstanding the repeal, "the Controller of Enemy Property appointed under the repealed Regulations shall continue to hold office as if he had been appointed under these Regulations". In the 1942 Regulations, "the Controller" was defined to mean "the Controller of Enemy Property holding office under these Regulations", and reg. 6 provided: "(1) For the purposes of these Regulations, there shall be a Controller of Enemy Property, who shall be appointed by the Governor-General and shall hold office during his pleasure. (2) The Controller of Enemy Property shall be a corporation sole under that name with perpetual succession and an official seal, and shall be capable of suing and being sued". Notwithstanding the overlapping that probably results from the unreflecting repetition of reg. 3 of the 1939 Regulations in reg. 6 of the 1942 Regulations, we have reached the conclusion that the corporation constituted under the 1939 Regulations became the Controller of Enemy Property under the 1942 Regulations. When by virtue of reg. 3 (2) the Controller of Enemy Property continued to hold office, he became the Controller of Enemy Property for the purposes of the 1942 Regulations, and reg. 6 (2), included ex abundanti cautela, did not have the effect of consituting a second corporation. Accordingly, after the coming into operation of the 1942 Regulations, there was but one corporation sole with incorporation dating from the first appointment under the 1939 Regulations. There is, however, a further complication. The Defence (Transitional Provisions) Act 1946, which continued the operation of the 1942 Regulations, did so with the omission inter alia of reg. 3 which, it will be recalled, continued the office of the Controller of Enemy Property appointed under the 1939 Regulations. This Act provided by s. 8 (4) that each authority constituted under the provisions of any National Security Regulation, the title of which is specified in the First Schedule, should be deemed to be constituted under the Regulations in force by virtue of the Act provided the specified Regulations contain substantially the same provision as those with the same title which are in force by virtue of the Act. The National Security (Enemy Property) Regulations fulfilled this condition and were specified in the First Schedule. (at p174)

4. Upon consideration of all the foregoing provisions, we have reached the conclusion that the corporation that was constituted by the 1939 Regulations became the Controller of Enemy Property for the purposes of the 1942 Regulations, and the Defence (Transitional Provisions) Act 1946. The consequence of all this is that there still remains in existence a corporation sole, the Controller of Enemy Property, which is the same corporation sole as was constituted under the 1939 Regulations, and the first ground upon which the demurrer was supported fails. (at p174)

5. Then it was argued that the Controller cannot maintain an action for the proceeds of the enemy property sold by the defendant upon the instructions of the Controller, because not only had the Controller no property in what was sold but, further, he was not authorized by the Regulations to direct that enemy property should be sold and the proceeds paid to him. From the outset, however, the Controller was charged with the duty of dealing with enemy property that should come into his possession pursuant to the Regulations which provided that any person who held property for or on behalf of an enemy subject should comply with the directions given to him by the Controller in respect of that property. These provisions do, we think, warrant a conclusion that the Controller did have power to direct the defendant to sell the enemy property that he held and to pay the Controller what, upon sale, would then otherwise be held for Maschinenfabrik Augsburg-Nurnburg A.G. (M.A.N.). (at p174)

6. Moreover, the further argument that the statement of claim does not allege that all the property that was sold as directed was sold while M.A.N. was an enemy subject is, as it seems to us, met by the allegation in each relevant paragraph of the statement of claim, that the proceeds "if a state of war had not been in existence would have been due to M.A.N.". There is implicit in this allegation that each sale with which the statement of claim is concerned took place while there was a state of war in existence. (at p175)

7. It was further contended that the direction alleged to have been given by the Controller on 27th March 1958 to account for the gross proceeds of the enemy property directed to be sold, less commission or selling charges, was unauthorized. We consider, however, that if the Controller had the power to direct a sale of enemy property, he had the power both to require an account of what was sold, the cost of selling, and payment to him of the balance. The Controller was by the Regulations given dominion over enemy property, and instead of requiring its delivery to him, he could direct its sale and require the payment to him of the proceeds of the sale, less selling expenses. It is to be observed that reg. 11 of the 1942 Regulations requires a person holding property on behalf of an enemy subject to comply "with any directions given to him by the Controller in respect of that property" and prohibits him, without the consent in writing of the Controller, from dealing with or disposing of the property "except in accordance with directions given to him by the Controller in respect thereof". This provision assumes that the Controller may give directions for the disposition of enemy property. This regulation would, we consider, authorize the direction referred to in par. 10 of the amended statement of claim. Section 8 of the 1930 Regulations, although less particular, is to a similar effect and did authorize the direction (of 12th December 1939) alleged in par. 9 of the statement of claim, although instead of the phrase "the amount thereby becoming payable" some words such as "if a state of war had not been in existence would have become payable" might more appropriately have been used. (at p175)

8. The rejection of the points which we have already considered does dispose of the demurrer, but there is one other matter to which we should refer. Paragraph 17 of the amended statement of claim alleged an undertaking by the defendant "to pay to the Controller when so directed by him any money which might be due to the supplier of the goods or to any person acting for the supplier". This was an alternative claim and the objection which was made to it was that it was not alleged to whom the defendant gave the undertaking. Our construction of par. 17 is that the undertaking was given to the Controller and the objection to par. 17 is unfounded. (at p175)

9. For the foregoing reasons we consider the demurrer should be overruled. (at p176)

ORDER

Demurrer overruled with costs.