Commonwealth v Bogle

Commonwealth v Bogle - [1953] HCA 10 - HCA 1953 case summary — Zoe

[16]

I do not propose to give reasons at length for reaching these conclusions. There are two plaintiffs, the Commonwealth of Australia and Commonwealth Hostels Ltd. The company was incorporated on 13th September 1951 under the provisions of the Companies Act 1938 Vict.. It is a company not for profit limited by guarantee having seven members all of whom are civil servants of the Commonwealth and all of whom undertake to contribute to the assets of the company in the event of it being wound up &c. such amounts not exceeding £1 as may be required for payment of the debts and liabilities of the company &c. Its principal object is to provide, acquire, take over, establish, equip, maintain, conduct, control, manage or supervise hostels in Australia for the accommodation of migrants; members of the defence forces of the Commonwealth and their dependants; persons in the service of the Commonwealth of Australia or any authority under the Commonwealth and their dependants; persons engaged upon work for the Commonwealth of Australia or any authority under the Commonwealth or their dependants for whom the Minister of State for Labour and National Service requests the company to provide accommodation. Clause 6 of the memorandum of association provides that if upon the winding up or the dissolution of the company there remains after the satisfaction of all its debts and liabilities any property whatsoever, the sum shall not be paid to or distributed amongst the members of the company, but shall be paid or transferred to the Minister of State for Labour and National Service and shall be applied in such manner as he may direct. The articles of association of the company provide that its directors shall be appointed by the Minister and that the office of director shall be vacated if the director is required by the Minister to resign. Article 59 provides that the company shall take steps to wind up its affairs as soon as practicable after receiving a written notice from the Minister that in his opinion such a course is in the circumstances necessary or desirable.

[20]

The extent to which the Crown in right of the Commonwealth can be bound by State legislation is a subject upon which there has been a difference of opinion in this Court: In re Richard Foreman & Sons Pty. Ltd.; Uther v. Federal Commissioner of Taxation [3] . In Minister for Works (W.A.) v. Gulson [4] there was also a difference of opinion whether the immunity under discussion only applies, in the case of Commonwealth legislation, to the Crown as sovereign head of the Commonwealth, and in the case of State legislation to the Crown as sovereign head of the State. For the reasons given in Gulson's Case [4] I am of opinion that whenever it is intended that Her Majesty shall be bound in respect of her prerogative, rights or property, whether as the sovereign head of the United Kingdom or any part of the British Commonwealth, or of the Commonwealth of Australia, or any State it is necessary that she shall be expressly named or that a necessary implication to that effect shall appear from the purpose and provisions of the statute. Accordingly, since the company is an agent of the Commonwealth, it cannot be subject to the provisions of the various State Acts relied upon unless these Acts bind the Crown expressly or by necessary implication. The Acts in question are the Landlord and Tenant Acts passed in New South Wales, Victoria and South Australia in 1948 and the Prices Regulation Acts of those States passed in the same year. In the end, the defendants did not, if I understood the argument correctly, claim that they were tenants and entitled to rely on the Landlord and Tenant Acts. If they had attempted to do so the attempt must have failed because these Acts expressly exempt the Crown in right of the Commonwealth. But the defendants did claim that they were being provided with board and lodging by the company and entitled to rely on the Prices Regulation Acts and particularly the provisions of those Acts relating to declared services. The New South Wales and Victorian Acts do not bind the Crown expressly and there is nothing to be gathered from their purpose or provisions to raise a necessary implication. The South Australian Act provides that service means the supply for reward of water, electricity, gas, transport, or other rights, privileges or services (not being services rendered by a servant to a master) by any person (including the Crown and any statutory authority) engaged in an industrial, commercial, business, profit-making or remunerative undertaking, or enterprise. This definition refers to the Crown but, when it is read as a whole, it would seem that the Crown is intended to mean the Crown in right of the State of South Australia, a meaning which accords with that placed upon the Crown in Essendon Corporation v. Criterion Theatres Ltd. [1] .

[36]

In the view which I have ultimately taken of this case it is not necessary to decide whether the Commonwealth is bound by the Prices Regulation Act Vict.. I think I should say, however, that, in my opinion, the Commonwealth is not bound by that Act, and, if I had thought that the Commonwealth, as the party with whom the defendant contracted, was the proper plaintiff in this action, I should have held that the defence to which I have referred failed. To say that a State can enact legislation which is binding upon the Commonwealth in the same sense in which it is binding upon a subject of the State appears to me to give effect to a fundamental misconception. The question whether a particular State Act binds the Crown in right of a State is a pure question of construction. The Crown in right of the State has assented to the statute, and no constitutional question arises. If we ask whether the same statute binds the Crown in right of the Commonwealth, a question of construction may arise on the threshold. In considering that question we are, or should be, assisted by a presumption that references to the Crown are references to the Crown in right of the State only. If the answer to the question of construction be that the statute in question does purport to bind the Crown in right of the Commonwealth, then a constitutional question arises. The Crown in right of the State has assented to the statute, but the Crown in right of the Commonwealth has not, and the constitutional question, to my mind, is susceptible of only one answer, and that is that the State Parliament has no power over the Commonwealth. The Commonwealth - or the Crown in right of the Commonwealth, or whatever you choose to call it - is, to all intents and purposes, a juristic person, but it is not a juristic person which is subjected either by any State Constitution or by the Commonwealth Constitution to the legislative power of any State Parliament. If, for instance, the Commonwealth Parliament had never enacted s. 56 of the Judiciary Act 1903-1950, it is surely unthinkable that the Victorian Parliament could have made a law rendering the Commonwealth liable for torts committed in Victoria. The Commonwealth may, of course, become affected by State laws. If, for example, it makes a contract in Victoria, the terms and effect of that contract may have to be sought in the Goods Act 1928 Vict. (see Federal Commissioner of Taxation v. Official Liquidator of E. O. Farley Ltd. (In Liquidation) [1] and In re Richard Foreman & Sons Pty. Ltd.; Uther v. Federal Commissioner of Taxation [2] ). But I should think it impossible to hold that the Parliament of Victoria could lawfully prescribe the uses which might be made by the Commonwealth of its own property, the terms upon which that property might be let to tenants, or the terms upon which the Commonwealth might provide accommodation for immigrants introduced into Australia.

[40]

The lease of the Brooklyn Hostel was never assigned by the Commonwealth to the company, nor was any sub-lease to the company executed, nor was any property of the Commonwealth ever transferred to the company. But on 20th November 1951 a contract in writing was made between the Commonwealth and the company, the terms of which are of great importance. The instrument recited that it was intended that the company should "assume responsibility for managing and conducting the hostels now being managed and conducted by the Commonwealth through the Department of Labour & National Service" and also those in course of completion which would on completion have been managed and conducted by the Commonwealth through the Department. It then provided (by cl. 1) that the company should undertake the management and control of such of the hostels as should from time to time be specified by the Minister and should maintain standards of accommodation and service not inferior to those existing at the time of the specification. Clause 2 provided that the Commonwealth should make available to the company by way of loan such funds as should be appropriated by Parliament for the purpose. Clause 3 provided for the employment by the company of officers and employees "now engaged by the Department in the administration management and control of the hostels". Clause 5 provided that the company should, when requested, undertake on behalf of the Department the work of locating sites for and equipping hostels the management and control of which would on completion be undertaken by the company. Clause 6 provided that the company would, on being informed of any accommodation required, ensure that satisfactory arrangements were made for such accommodation. Clause 7 provided that the company would comply with any directions of the Minister as to "the policy to be adopted by the company in carrying out its undertaking as to the management and control of the hostels". By cl. 8 the company, inter alia, undertook (a) to maintain the hostels and the property of the Commonwealth comprised therein in good repair and condition, (b) to furnish information required by the Minister, (c) to permit the Minister or any person nominated by him to inspect "any of the premises under the management or control of the company," (g) not to alter the scales of charges from time to time approved by the Minister for accommodation and facilities provided in the hostels, (h) to supervise, when requested, the erection and equipping "of hostels the management and control of which will on completion be transferred to the company", (i) to close down any hostel "under its management or control" on being requested in writing by the Minister so to do. Clause 9 provided that nothing contained in the instrument should be deemed to confer on the company any right title or interest in any of the real and personal property of the Commonwealth comprised in the hostels. Clause 10 provided that, upon the company undertaking the management and control of hostels specified by the Minister, the benefit of all contracts entered into by the Commonwealth and then existing for the supply of goods and services and the conduct of facilities in connection with the hostels should by force of the agreement thereupon be assigned to the company, which would discharge all obligations and liabilities of the Commonwealth in connection with all such contracts.

[46]

The general effect of the contract of November 1951 is, I think, that in relation to the hostels "taken over" the company is to be substituted for the Department of Labour and National Service - in other words, for the Commonwealth - in relation to hostel accommodation and in relation to persons accommodated in hostels. It was argued that the essence of the agreement was that the company was to "manage" the hostels and that as "manager" it became a mere "servant" or "agent" of the Commonwealth. The argument is not without force, but a little reflection, I think, reveals it as savouring of unreality. It is not difficult to conceive purposes which might be served by the substitution of a new corporate entity for the Commonwealth as the person responsible for the conduct of the hostels, but it seems impossible to conceive any rational purpose that could be served by the interposition of a corporate "manager" between the Commonwealth and the individual managers and servants who must of necessity be employed. There is no reality about the conception of the new corporation as a fellow servant of the Commonwealth with the individual servants employed. In any case the agreement expressly provides (cl. 3) that employees hitherto employed by the Department are to become employees of the company. It is clearly contemplated that the staffs required for running the hostels shall be engaged and paid by the company. The company covenants with the Commonwealth to maintain the hostels and the property of the Commonwealth therein, and to make any necessary replacements (cl. 8 (a)). In respect of funds provided by the Commonwealth for the company the relation of the Commonwealth and the company is to be that of borrower and lender (cll. 2, 8 (d)). It is to provide accommodation when required (cl. 7) and to maintain existing standards of accommodation (cl. 1). The provision in cl. 8 (g) that scales of charges are not to be altered without the approval of the Minister clearly contemplates that, in the absence of such a provision, the company could make such charges as it thought fit. Clause 10 expressly provides for the transfer from the Commonwealth to the company of relevant contracts. It may be that, on its true construction, this clause does not in terms include the benefit of existing contracts by residents to pay for their accommodation. But that it was intended that the benefit of such contracts should be included is made plain by the fact that, after the date of the "taking over", payments for accommodation were made by residents to the company, which gave receipts in its own name stamped in accordance with the Stamps Act of the State.

[53]

I do not think it necessary to discuss at any length the question raised by the company's contention, because it seems to me impossible to say that the company is the Commonwealth, or is entitled, by reason of any relation which it has with the Commonwealth, to claim immunity from the provisions of the Victorian Act. In such cases as Grain Elevators Board (Vict.) v. Dunmunkle Corporation [1] ; Victorian Railways Commissioners v. Herbert [2] and Rural Bank of New South Wales v. Hayes [3] a statutory corporation is involved, and the question must turn partly on the effect of the incorporating statute and partly on the construction of the statute from which exemption is claimed, though other matters may also be material. In such cases as Marks v. Forests Commission [4] we have a statutory corporation claiming to share the immunity of the Crown at common law from liability in tort. I must say that, with the greatest respect to the learned judge who decided it, I cannot think that that case was rightly decided. But, however this may be, in the present case we have no incorporating statute in which implications may be found. Here we have simply a company formed in the ordinary way under the Companies Act of the State, and functioning as such within the legal system of the State. On its face the Prices Regulation Act obviously applies to every such company which supplies board and lodging for reward, and there is no other statute to construe. It sues in its own right as a party to a contract a person who has contracted with it. The contract alleged is one which is made illegal by the State Act. What reason can there be for saying that the statute is inapplicable? The company is not the Crown in right of the Commonwealth. It has no right to sue on behalf of the Crown in right of the Commonwealth. It seems to me sufficient to paraphrase what I said in Rural Bank of New South Wales v. Hayes [5] , and to say that the Act does not affect rights of the Commonwealth, but the rights asserted by the company in these proceedings are simply not rights of the Commonwealth. It is said that the company was formed at the instance of the Commonwealth, that the Commonwealth through the Minister is in a position under the articles to control the company, and that the ultimate financial interest is that of the Commonwealth. But none of these things can affect the legal character of the company as a person suing in the courts. If the company were a company limited by shares, it could make no difference that the Commonwealth held ninety-nine per cent of the shares. It is said (with perhaps more force) that the company is in possession and control of property of the Commonwealth, and that its activities are activities in which the Commonwealth, in the course of the exercise of the immigration power, is vitally interested. But again I am unable to regard these matters as affecting in any way the legal nature of the company. Having been incorporated under the Companies Acts of the State, it seems to me that it must be subject to the Companies Acts and all other State legislation which in terms applies to such companies. It may be that the Commonwealth Parliament could, under s. 51 (xxvii.) and (xxxix.) of the Constitution, enact legislation conferring immunities on the company and prevailing over State legislation by virtue of s. 109. But no such question need be considered, because no such legislation has been enacted.

[102]

In spite of the statement contained in the case that the defendant "did not verbally or in writing agree to pay the increased charge for accommodation", I have no doubt that the defendant did, by his conduct, agree to make such payments. It is perhaps unnecessary to say that contracts may arise not only from express words, but also from the conduct of parties, and in this case the defendant's conduct must be taken unequivocally to indicate his agreement to pay the increased charges. He received notice on 18th April 1952 that the charges would be increased as from 27th April; he and his family remained in the hostel after the latter date and continued to do so during the period in respect of which the claim is made and for an initial period of three weeks he made payments at the increased rate. It is true that these payments were made under protest, as previously mentioned, and with this aspect of the matter I shall deal presently, but apart from this circumstance the defendant's actions could lead to no conclusion other than that he was agreeable to the new terms. What then was the effect of making the payments under protest? Is it open to a person in the circumstances in which the plaintiff found himself to say "I shall remain in occupation and I shall pay the increased charges but I shall pay them under protest and that will indicate that I am not agreeing to make these increased payments?" In my opinion, he is not. The words "under protest" have no precise legal significance, except where they are given some special meaning by statute or by agreement and, in the circumstances of this case, could mean no more than that the defendant, though agreeing to pay the increased charges, did not wish to be taken as abandoning any existing material right. No doubt the defendant had in mind the provisions of the Landlord and Tenant (Amendment) Act 1948-1951 N.S.W. and the Prices Regulation Act 1948-1949 N.S.W.. His conduct cannot, in my opinion, give rise to the inference that he was not, otherwise, assenting to a variation of the charges, for it would be a strange thing if a lodger whilst agreeing after reasonable notice to pay at an increased rate and though doing so under protest, could reserve the right to claim at some later or even remote stage that he had never so agreed. Perhaps the point may be more clearly stated by saying that where one or two parties of a contract enters into it, "under protest", he nevertheless makes a binding contract. The case of Smith v. William Charlick Ltd. [1] is clear authority for the proposition that a payment of money made under protest cannot be said to be an involuntary payment, except in special circumstances which are not present in this case. No doubt the defendant made the increased payments during the first three weeks of the relevant period in order that he might be allowed to remain in occupation of his quarters. The payments were not involuntary in any legal sense and, in my opinion, the only effect of paying under protest was to indicate an intention not to abandon any rights, extraneous to the contract, which might afford him protection against, or some relief from, his newly assumed obligation.

[107]

As I have already said, there are no indications in the Prices Regulation Act that it was the intention of the legislature to bind the Crown; on the contrary, its provisions tend to the opposite conclusion. But this conclusion cannot assist in the solution of the present case unless it should also be held that the company in a strict legal sense, represents the Crown and is therefore entitled to the same privileges and immunities as the Crown itself. Its relationship to the Executive Government is substantially determined by the agreement of 21st November 1951 and it is, I think, material to indicate the general purport and effect of that agreement. Before doing so, however, it is desirable to make some reference to the memorandum and articles of association of the company. Whilst its objects specify that the company was established to provide, acquire, take over, establish, equip, maintain, conduct, control, manage or supervise hostels housing and other forms of accommodation in Australia for the accommodation of migrants, members of the Defence Forces of the Commonwealth and their dependants, persons in the service of the Commonwealth and persons engaged upon work for the Commonwealth for whom the Minister of State for Labour and National Service requests the company to provide accommodation, the company is authorized to engage in many other activities. Clause 5 of the memorandum contains a provision prohibiting the payment of any part of its income or property by way of dividend, bonus or otherwise howsoever by way of profit to the members of the company, and cl. 6 provides that if upon the winding up or dissolution of the company there remains after the satisfaction of all its debts and liabilities any property whatsoever, the same shall not be paid to or distributed amongst the members of the company but shall be paid or transferred to the Minister and shall be applied in such a manner as he may direct. Article 31 gives to the Minister the right to appoint the directors of the company and, pursuant to arts. 33 and 39 (e), the power to remove directors summarily is also vested in the Minister. Article 55 provides that the accounts of the company shall be audited by the Commonwealth Auditor-General. The agreement recites the registration of the company with the object of providing in Australia hostels housing and other forms of accommodation in Australia for the accommodation of the classes of persons specified in the object to which I have referred and also recites that the memorandum of the company has been so framed as to preclude the company from paying or transferring any portion of its income or property directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit to members of the company. After reciting the intention of the parties that the company shall assume responsibility for managing and conducting the hostels, housing and other forms of accommodation and ancillary services then being managed and conducted by the Commonwealth through the Department of Labour and National Service, the agreement proceeds to specify the terms upon which this is to be done.

[109]

In Grain Elevators Board (Vict.) v. Dunmunkle Corporation [1] Latham C.J., after discussing the tests which had been proposed and applied from time to time for the purpose of determining whether a person or a body is entitled to the privileges and immunities of the Crown went on to say: "But if a board is a body independent of the Government with discretionary powers of its own, so that it is not a mere agent of the Government, then such a body does not represent the Crown. This was the criterion which was applied in Fox v. Government of Newfoundland [2] and by this Court in Repatriation Commission v. Kirkland [3] . See also Ex parte Graham; Re Forestry Commission [4] . The question was put in the following form in Roper v. Public Works Commissioners [5] - whether the persons in question were acting as servants of the Crown or merely as a statutory body invested with public rights, duties and liabilities like the trustees of a public dock or public park. Were they Government servants doing the work of the Government? In Metropolitan Meat Industry Board v. Sheedy [6] , their Lordships of the Privy Council described the Board there under consideration as "a body with discretionary powers of their own. Even if a Minister of the Crown has power to interfere with them, there is nothing in the statute which makes the acts of administration his as distinguished from theirs" " [7] . Repatriation Commission v. Kirkland [3] was a case which presented special features and it was held that the Repatriation Commission represented the Crown in the strict legal sense. This conclusion was based on the ultimate view that it was "a corporation to which is handed over the administration of what is really a Government department" (per Knox C.J. and Starke J. [1] ); that "the functions of the Repatriation Commission have been expressly made functions of the Executive Government in the strict sense" (per Higgins J. [2] ) and that Parliament had "simply created a very special department for a very special purpose, and for convenience has "vested" the property in that department" (per Rich J. [3] ). But none of these observations could have any application to the facts of the present case. It is true that the company's functions were for a time performed by a department of the Executive Government, but this does not constitute those functions when performed by the company functions of the Government, nor does the existence in the Minister of a power to control and direct the company's activities, or the fact that it may, to a considerable extent be dependent upon loans from public revenue, make such a conclusion possible. The plain fact is that it is a body with an independent existence and that it has a substantial measure of independent discretion in the performance of its functions and those functions are not characteristically functions of Government. I have no doubt that the company does not represent the Crown in any legal sense and that it is not entitled to the privileges and immunities of the Crown.

[111]

Since the company is, therefore, bound by the provisions of the Prices Regulation Act 1948-1949 N.S.W. the rights to which the defendant was entitled under his agreement for accommodation constituted "a service" within the meaning of that Act and it was a "declared service" unless it was a service supplied by a "State or semi-governmental or local governing body". The expression "semi-governmental" body has caused me considerable difficulty. It is not a technical term and it is impossible to give any precise meaning to it. It was argued, however, that its application is limited to bodies having an association only with one or more of the States and that it has no application to bodies, having only an association with the Commonwealth. There is real difficulty in determining what is meant by the expression "semi-governmental". No doubt, it is possible to say that a body which represents the Crown in the strict sense is not semi-governmental; it is governmental. This proposition may lead to the very general conclusion that a semi-governmental body is a body which, whilst not legally representative of the Crown, has some definite and substantial connection with it in the performance of its functions. But not every such body could be said to be a semi-governmental body, because the characterisation of the body as such would, to some extent, be dependent upon the nature of the functions performed by it, and the mere existence of some contractual relation between such a body and the government would not be sufficient to invest it with this character. However, it is, I think, unnecessary to attempt to give any precise meaning to the term because it is clear that the defendant's first submission on this point is correct. The expression appears to have originated in some of the legislation passed in 1942 to refer from the States to the Parliament of the Commonwealth power to make laws with respect to certain subject matters. In New South Wales the relevant Act referred to the Parliament of the Commonwealth, inter alia, "profiteering and prices (but not including prices or rates charged by State or semi-governmental or local governing bodies for goods or services)". It is of interest to note that although power was referred to the Commonwealth Parliament in this limited form the National Security (Prices) Regulations continued to operate in their original form. But by subsequent declarations under those regulations there was omitted from the declaration of services, those services "supplied or carried on by State or semi-governmental or local governing bodies". The form of one of the earlier declarations made under the National Security (Prices) Regulations appears in the report of the Victorian Chamber of Manufactures v. Commonwealth [1] , and it is notable that the first of these declarations excepted services supplied or carried on "by any State of the Commonwealth or any authority constituted by or under any State Act" and also those "supplied or carried on by any Local Government Authority established for any locality by or under any State Act relating to any local government". The exception in Prices Declaration No. 82 (N.S.W.) of services supplied or carried on by any "State or semi-governmental or local governing body" must, I think, in the circumstances be taken to refer to bodies which, though not in the strict sense representative of the Crown, have some real and substantial relationship to the Government of New South Wales.

[112]

The question then arises whether the relevant prices regulation orders in New South Wales operated to fix a lower rate for "board and lodging" than that which the company seeks to charge with respect to the relevant period. So far as I can see the only point which arises on this matter arises under cl. 4 of Prices Regulation Order No. 190 N.S.W.. This paragraph purports to fix and declare the maximum rate at which any person may supply any board and/or lodging which is not of substantially the same kind as board and/or lodging supplied by that person on the prescribed date, to be such rate as, after application by that person, is fixed by the commissioner by notice in writing to such person, or, until such rate has been fixed by such notice as aforesaid, the rates in the order thereinafter specified. "Prescribed date" means in relation to the supply by any person of any kind of board and/or lodging 1st March 1949, or if substantially the same kind of board and/or lodging was not supplied by that person on that date, the last preceding date upon which substantially the same kind of board and/or lodging was supplied by that person. Clause 4 appears to be the relevant provision in this case and if this paragraph does not operate to fix a rate for the service supplied to the defendant, then the company would be entitled to charge at the increased rate. Counsel for the company argued that this clause did not so operate because its operation was confined to those cases where a person had supplied board and/or lodging of some kind on the prescribed date, but of a character which was not substantially the same as that supplied at the date of the promulgation of the order. In my view, cl. 4 is not limited in its operation to persons who supplied board and lodging on the prescribed date. It applies to any person supplying board and lodging which corresponds with the description "not substantially the same kind as board and/or lodging supplied by that person on the prescribed date". I understand the clause to fix a maximum rate with respect to any board and lodging which is not substantially the same kind as any board or lodging supplied by that person on the prescribed date. In the result, therefore, I am of the opinion that cl. 4 did operate to fix a maximum rate for the board and lodging supplied to the plaintiff and that the company was not entitled to charge at a rate in excess of that prescribed.

At a glance

Court

Decision date

Before

Source

Judgment (113 paragraphs)

Parties