Attorney-General (Cth) v Schmidt (No 3) [1963] HCA 12; (1963) 109 CLR 169 (24 April 1963)

HIGH COURT OF AUSTRALIA

ATTORNEY-GENERAL (CTH) v. SCHMIDT (No. 3) [1963] HCA 12; (1963) 109 CLR 169

Defence and War

High Court of Australia
Kitto J.(1)

CATCHWORDS

Defence and War - Trading with the enemy - Enemy property - Application for transfer of moneys etc. to Controller of Enemy Property - Power of High Court to give directions as to application of moneys - "Just claims" - Claims adverse to ownership terminated by vesting - Claims of legal right - Trading with the Enemy Act 1939-1952 (Cth), s. 13D.

HEARING

Sydney, 1963, March 20, 21; April 24. 24:4:1963
APPLICATION under s. 13D of the Trading with the Enemy Act 1939-1952 (Cth).

DECISION

April 24.
KITTO J. delivered the following written judgment:-
This is an application by the Attorney-General of the Commonwealth for The principal order sought is that all moneys (including interest) and all investments representing moneys (including investments representing interest and moneys in an account with a bank) standing to the credit of the High Court of Australia Suitors' Fund as a result of payments into Court by a controller appointed by the Court on 16th December 1939 in respect of the business of Dohnert Muller Schmidt & Co. (also spelt Doehnert Mueller Schmidt & Co.) be paid and transferred to the Controller of Enemy Property appointed under the National Security (Enemy Property) Regulations. An order is also sought that possession of all books and accounts relating to the same business lodged in the Court by the controller appointed by the Court and in the possession of the Court be transferred to the Controller of Enemy Property. (at p170)

2. The moneys and investments referred to, and the possession (that is, the right to possession) of the books and accounts, are vested in the Controller of Enemy Property by the operation of s. 13C, subject to the provision in s. 13D that the same shall not be paid or transferred to the Contoller except in pursuance of an order of the Court under the latter section. Sub-section (3) of s. 13D makes the Attorney-General the proper applicant for such an order. (at p170)

3. The validity of the sections, which were inserted in the Act in 1952, has been established by a decision of the Full Court: Attorney-General (Cth) v. Schmidt [1961] HCA 21; (1961) 105 C.L.R. 361. The Attorney-General has a prima facie right to the orders applied for. There is no opposition to the order as to books and accounts; but as regards the moneys and investments the Court is asked by certain persons whom I have made respondents to the application to exercise in their favour powers given to the Court by pars. (a) and (c) of sub-s. (2) of s. 13D. Those paragraphs enable the Court to direct the retention in Court, or the application as directed by the Court, of moneys or investments which, in the opinion of the Court, should be retained or applied for the purposes of meeting just claims, or to direct that the payment of moneys or transfer of investments to the Controller of Enemy Property be subject to such conditions as the Court thinks fit. (at p171)

4. One of the respondents is a Mrs. Gertrude Schottlander, a daughter of Arthur Mueller, formerly one of the partners in the firm above-mentioned, who died in 1946. He was a German national, domiciled at his death in Germany: he died intestate, and by German law his two daughters, Mrs. Schottlander and a Mrs. Simon, are entitled to one-half each of his estate. They have obtained a grant of administration to their father's estate in Germany, but no grant has been made in Australia. Mrs. Schottlander is a naturalized British subject. She claims to be beneficially entitled in consequence of her late father's intestacy to one-half of his share of the moneys and investments in Court, and seeks the intervention of the Court under par. (a) or par. (c) of s. 13D(2) to give effect to her rights if she can prove that they exist. (at p171)

5. Having regard to the text of the Act, the manifest nature and purpose of its provisions, and the terms of the Agreement on Reparations from Germany which s. 15A shows was before the Parliament when it enacted ss. 13C and 13D, I am of opinion that the expression "just claims" in par. (a) of s. 13D(2) does not include claims in virtue of the ownership which the vesting effected by s. 13C has terminated, but only claims which, if that vesting had not been enacted, would have been adverse to the owner. (at p171)

6. I hold that I have no authority under par. (a) to make an order amounting to a reversal of the vesting, even in favour of a British subject. That conclusion applies also to par. (c). I find myself unable, therefore, to make any order under s. 13D(2) in favour of Mrs. Schottlander. (at p171)

7. Another respondent is Mrs. Juliana Hertha Schmidt, the widow of another partner who died in 1951. She is in a position similar to that of Mrs. Schottlander. I can make no order under s. 13D(2) in her favour. (at p171)

8. Whether Mrs. Schottlander or Mrs. Schmidt can satisfy the Controller, as an administrative officer, that any amount ought to be paid out to her under reg. 18 of the National Security (Enemy Property) Regulations is another question, and one upon which it is not within my province to express an opinion. (at p171)

9. There are two other respondents, Klaus Gustav Adolf Weissflog and Eva Maria Weissflog, who are the executor and executrix to whom probate has been granted in New South Wales of the will of their late father, one Gustav Adolf Weissflog. The testator, who died in 1954, was employed by Dohnert Muller Schmidt & Co. at the outbreak of the war as a woolbuyer and manager of its business in Australia. He received a salary of 1,956 pounds per annum. In addition, in October of each year he received what was called a bonus. He was at all material times a naturalized British subject, and before he died he made an affidavit in these proceedings in which he said: "As manager of the said firm I was entitled to receive a bonus calculated at the rate of 3 1/4 per centum of the net profit for each wool season. I am informed by the said firm that my bonus for the wool season 1938/1939 amounted to the sum of 1,346 pounds". He added that he did not receive that amount or any part of it. It is common ground that he had done all the work in respect of which the bonus would have been paid if the war had not led to the impounding of the firm's assets, and that if the bonus was payable to him as of legal right, and not merely as a gratuity, it was a just claim within the meaning of s. 13D(2)(a). The only issue is whether he had a legal right to the bonus. (at p172)

10. His statement that he was "entitled" to it affords no evidence of any facts from which I can make a finding that will support the claim. It is only an assertion of a right. There is one point to be noticed about the assertion, namely the mention of a bonus of 3 1/4 per centum of the net profit, which suggests that in the firm of Dohnert Muller Schmidt & Co. bonuses were not a matter of haphazard generosity but were governed by a carefully worked out scale as a feature of the firm's system of employment. The suggestion is to some extent reinforced by the oral evidence. Mr. Weissflog's daughter gave evidence which I accept as showing that over a long period he expected to receive in the latter half of each year a bonus of a percentage of the firm's profits of the year ended the previous 30th June, and that until 1939 his expectation was always fulfilled. His widow also has sworn that he received a bonus annually from 1922 to 1938. A daughter of Mr. Schmidt, a member of the firm and the manager of its Australian business, gave corroborative evidence. She had been an employee of the firm herself before her marriage in 1938, and she remembered that every employee received an annual bonus based on a percentage of the firm's profits. In particular she remembered her father saying that bonuses were paid to Mr. Weissflog. As the books of the firm have apparently been lost there is no written record to assist me. The difficulty is that the annual payments made to Mr. Weissflog are described by everyone, including himself, as bonuses; and although the word "bonus" is sometimes used as the designation of a payment received as additional remuneration paid under a contract of employment at the end of a year as distinguished from the regular payments of wages or salary paid during the year, it is probably more generally used to designate a gratuitous addition to contractual remuneration. No doubt in a business employing a staff over a period of years it can happen that what has begun as a gratuitous payment may come to be regarded by both employer and employee, being repeated year after year, as one of the incidents of the employment; and if employment (including promotion) is accepted on the footing that it will be continued at a fixed rate or on a fixed scale a binding term of the employment to that effect may be inferred. (at p173)

11. Is there enough in the evidence to lead to such an inference in this case? I do not think there is. Even if I were able to find that the payment of a bonus of 3 1/4 per cent on the firm's profits was a term of Mr. Weissflog's employment, I could not find that in respect of the year ended 30th June 1939 he was entitled to 1,346 pounds or any other ascertained sum, for there is no evidence before me as to the amount of the profits of that year. But, in any case, there is no foothold in the evidence for a finding that the payment of the bonus to Mr. Weissflog was obligatory upon the employers. I must therefore hold that the claim is not judicially sustainable. If the amount claimed is to be met out of the fund, the Controller must be satisfied under reg. 18 of the National Security (Enemy Property) Regulations that it ought to be paid. In considering whether he is satisfied he will not be bound by the rules of evidence which a court must observe. (at p173)

12. I think it right to order that the costs of all parties be paid out of the moneys and investments referred to in the notice of motion of 16th October 1953, and subject to that I make the first and second of the orders sought by that notice of motion. (at p173)

ORDER

Costs of all parties to be paid out of moneys and investments referred to in Notice of Motion of 16th October 1953. Subject as aforesaid orders as sought in pars (1) and (2) of the said Notice of Motion.