Kidman v Commonwealth [1925] HCA 55

of 1902), sec, 14 - Naval Defence Act 1910-1918 (No. 30 of 1910 - No. 45 of Nov, 13, 16, 1918), sec, 41 - Defence Act 1903-1918 (No. 20 of 1903 - No. 47 of 1918), sec. 63. 17; Dee. 18.

'The appellants brought an action in the High Court against the Common- fe insted wealth to recover a certain sum as money due under two contracts for the Bre 4 building of certain ships by the appellants, and alternatively as damages for their

breach, Notice had been previously served on the appellants of certain

claims against them by the Commonwealth. While the action was pending

the Attorney-General of the Commonwealth agreed with the appellants to

submit to arbitration under the Arbitration Act 1902 (N.S.W.) the matters in

dispute between the parties. This agreement recited the making of the two

contracts. The questions submitted were whether the Commonwealth was

_ entitled to refuse to accept delivery of certain vessels, and what sums of money

(if any) were due by either of the parties to the other in respect of the contracts.

The arbitrator having made his award in favour of the Commonwealth for a

'certain sum of money, the appellants moved the Supreme Court of New South

Wales to set aside the award or to remit it to the arbitrator on certain grounds,

none of which related to the validity of either of the contracts. That motion

was dismissed. On an application by the Commonwealth to the Supreme

Court for leave to enforce the award in the same manner as a judgment of

Held, that, in the circumstances, the appellants were not entitled to challenge the validity of the two contracts or the authority of the Attorney-General io make the agreement for arbitration on behalf of the Commonwealth,

Court of New South Wales (Full Court): Comme . (N.S.

On 6th July 1918 an agreement was entered into between Honourable William Alexander Watt, the Acting Prime Minister of the Commonwealth. purporting to act for and on behalf of the Commonwealth, of the one part, and Sidney Kidman, Joseph May and Arthur Mayoh, trading as Kidman & Mayoh (hereinafter called "the contractors'), of the other part, whereby the contractors agreed to build six ships for the Commonwealth. On 4th August 1919 a further contract was made between the same parties whereby it 0 provided that the number of ships to be built should be two inste of six. On 2nd April 1922, by notice served on the contractors the Commonwealth purported to cancel the two contracts of 6th July 1918 and 4th August 1919, on the grounds that the time for deli of the first of the vessels had long since expired. time being of the essence of the contract; that the construction of that vessel had

been in accordance with the terms of the contracts, and that it wa then considered impossible for the contractors to carry out contracts. By the notice the Commonwealth also claimed repay: of the sum of £114,320 7s. 9d., being the moneys which had bet paid to the contractors by the Commonwealth under the contracts

claiming £88,000 as money due by the Commonwealth to contractors for work and labour done and material for the provided, and alternatively for £88,000 as damages for breach of the two contracts of 6th July 1918 and 4th August 1919. On 12th June 1922 an agreement in writing was entered into, purporting 10 be between the Commonwealth and the contractors and reciting the matters above set out, whereby it was agreed that all proceedin in the action should be stayed pending the determination of matters to be submitted to arbitration pursuant to the agreement; that the matters in dispute between the parties should he referred

to the award and final determination of Sir Mark Sheldon; that H.C. oF A-

the matters in dispute were (a) whether the Commonwealth was entitled to refuse to accept delivery of the Braeside and the Burnside, and (b) what sums of money (if any) were due by either of the parties to the other in respect of the two contracts of 6th July 1918 and 4th August 1919 whether. by way of damages for breach or non-performance of the said contracts or return of money paid thereunder or otherwise; that the Arbitration Act 1902 (N.S.W.) should apply to proceedings in the arbitration, but that either party should be at liberty to apply to the High Court in accordance with the provisions of sec. 33a of the Judiciary Act 1903-1920 for an order directing that the award should be a rule of that Court ; that the arbitrator should have power (a) to admit such evidence as he should deem fit without having regard to the rules of evidence, and (b) to inform his mind in any way in which in his absolute discretion he might deem it most advisable so to do; and that the arbitrator should not be bound to state a case for the opinion of the Court at the request of the parties thereto. On 30th June 1920 the arbitrator made his award, by which he awarded and determined that the Commonwealth was entitled to refuse to accept delivery of the Braeside and the Burnside, and that the sum of £75,665 was due by the contractors to the Commonwealth ; and he directed that the contractors should pay such sum to the Commonwealth. He also awarded that the contractors should pay the costs of the award. On 3st May 1923 the contractors moved before the Full Court of the Supreme Court of New South Wales that the award be set aside or in the alternative that the award be remitted to the arbitrator, on a number of grounds, none of which related to the validity of either of the contracts of 6th July 1918 and 4th August 1919_or of the agreement for submission to arbitration. On Ist June 1923 the Full Court dismissed the application with costs: Kidman v. Common- wealth (1). On 8th June 1923 the Commonwealth applied on summons to the Supreme Court for leave under sec. 14 of the Arbitration Act 1902 (N.S.W.) to enforce the award in the same manner as a judgment of the Supreme Court to the same effect. The summons coming on for hearing before Ralston A.J. was by (1) (1923) 23 S.R. (N.S.W.) 329,

H.C. or A. him referred to the Full Court, which made an order granting

leave asked with costs: Commonwealth v. Kidman (1). From that decision the contractors now appealed to the Court.

Maughan K.C. (with him Betts), for the appellants. The contra of 6th July 1918 and 4th August 1919 were both invalid, for dl Commonwealth had no power under the Constitution to enter j them without authority being given by Federal legislation, and th was no such legislation. Those contracts being invalid, the awar which is founded on them is a nullity.

(Srarke J. referred to sec. 41 of the Naval Defence Act 1910-1918

Neither that section nor sec. 63 of the Defence Act 1903-19) gives the Commonwealth power to build cargo ships. The prese proceeding is quite independent of that to set aside the award, on the motion to set aside the award the validity of the contrac could not have been raised (Doe d. Turnbull v. Brown (2); In Arbitration between Stone and Hastie (3) ). The appellants, there 0 may now challenge their validity. The fact that money has b appropriated by Parliament to the building of the ships is no sufficient in itself to validate the contracts, since the Commonwe: had no power to make them (Commonwealth v. Colonial Combin Spinning and Weaving Co. (4): Commonwealth v. Colonial Ammuni tion Co. (5) ). The discretion given by sec. 14 of the Arbitration 4 1902 (N.S.W.) to allow the award to be enforced should not b exercised, but the Commonwealth should be left to its remedy b action so that the question of the validity of the contracts may b raised (In re Boks & Co. and Peters, Rushton & Co. (6) ). The fa that the appellants applied to set aside the award does not raise au

estoppel against their now contending that the contracts are invali (Duff Development Co. v. Government of Kelantan (7); Bradshaw M'Mullan(8) ). [Counsel also referred to Great North-West Ce Railway Co. v. Charlebois (9).|

(5) (1923-24) 34 CLLR. 198. (6) (1919) 1 K.B. 491. (7) (1924) A.C, 797, at p. 810. (8) (1920) 2 LR. 412, at p. 415. (9) (1899) A.C. 114.

or the respondent. On an application to enforce an award, only objections which are apparent on the face of the award can be (Attorney-General for Manitoba vy. Kelly (1): In re Butler Masters (2); Grech v. Board of Trade (3) ).

Itis for the appellants to show that the matter is doubtful, and it ; too late for them to raise objections which might have been raised the arbitrator or at some other time (In re Arbitration between and Hastie (5) ).

'sacs J. referred to Champsey Bhara & Co. v. Jivraj Balloo nning and Weaving Co. (6).

arbitration was not under the terms of the agreement of y 1918, but was validly entered into on behalf of the Common- h by the Attorney-General. It was entered into in the ordinary se of the administration of his department and did not need specific authority from Parliament (Faviell v. Eastern Counties ay Co. (8) ). At least the Attorney-General could have been

Id not be allowed to attack the validity of the contracts for the time before the Supreme Court on the hearing of the application v. Taylor (9); The Tasmania (10); George Hudson Ltd. v. tralian Timber Workers' Union (11); John Edwards & Co. v. Motor on Insurance Co. (12) ). There is nothing in any of the public

(1) (1922) 1 A.C. 268. (7) (1889) 15 V.L.R. 3703 1 ALT. 25.

Bash 13 (8) (1848) 2 Ex. 344. (9) (1915) 2 K.B, 593, at p. 603.

issenden K.C. and EB. M. Mitchell K.C. (with them Badham), 4- ©: oF A.

Knox C.J. This is an appeal from an order of the Supreme Co mf giving leave to the respondent to enforce as a judgment of the Court an award made on a submission to arbitration between th parties.

The relevant facts are as follows : - In July 1918 the appel

for and on behalf of the Commonwealth, to build six ships.

August 1919 a further agreement in writing was signed by the pa varying the former agreement. Disputes having arisen bet the appellants and the Commonwealth, a notice signed by Minister in charge of the Ship Construction Branch was, in the month of April 1921, served on the appellants. This notice was to th effect that the Commonwealth had decided to treat the contract referred to above as having been discharged by breaches committ by the appellants, and that the Commonwealth claimed as dam for the failure of the appellants to perform the contracts the sum of £114,320 7s. 9d. alleged to have been paid to the appellants by th Commonwealth under the contracts. In November 1921 fh appellants brought an action in the High Court against the Common wealth to recover £88,000 as money due under the contracts, ant alternatively as damages for their breach. In June 1922, whill that action was pending, the Attorney-General of the Commonwealt! acting for and on behalf of the Commonwealth, entered into agreement with the appellants for the submission of the matter dispute to arbitration under the New South Wales Arbitratiol Act 1902. On 30th June 1922 the arbitrator made his awar favour of the Commonwealth for £75,665 and certain costs. May 1923 the appellants moved the Supreme Court to set aside tht

none of which related to the validity of either agreement. | June 1923 this application was dismissed. In November 1923, ( the application of the respondent, the Supreme Court gave leave | enforce the award in the same manner as a judgment of the Suprem! Court; and it is from this order that the present appeal is broug

The question for consideration is not whether on the evidi before this Court an action could be maintained on both or ei

of the agreements of July 1918 and August 1919, but whether the H.C. or A.

award of the arbitrator made on the submission of the parties binding on them and ought to be enforced. For the appellants it was said that the agreements were invalid and unenforceable for two reasons, namely, (a) that no authority to make them had been given by Parliament and (b) that, even if parliamentary authority had been given, it was not shown that the Governor-General in Council had authorized the Acting Prime Minister to make the 'agreements on behalf of the Commonwealth. It was said further

that, if the agreements were invalid for either reason, the award could have no effect.

It is clear that a bona fide dispute existed between the parties to hose agreements as to the rights and liabilities under them and that, while legal proceedings were pending for the determination of "such disputes, the parties entered into an independent agreement by way of compromise of their legal rights to abide by the decision of the arbitrator on the matters in dispute. Neither of the original 'agreements was illegal in the sense of being prohibited by law. "Under the Naval Defence Act the Governor-General has power to contract for the building of ships for naval defence or for services auxiliary thereto. The question whether these ships were ordered any of those purposes was a question of fact to be decided on evidence. The further question whether the Acting Prime Minister s authorized by Order in Council to enter into the contracts was so a question to be decided on evidence. No question was raised to the validity of either agreement until the application was nade for leave to enforce the award. It is clear beyond doubt it the parties to the agreements believed them to be valid and ing and acted on that belief in doing work, in paying large sums 4 money and in instituting and defending legal proceedings. There 'not and cannot be any suggestion that the submission to arbitration sa collusive arrangement or a device to enable agreements which d not be enforced in a Court of law to be treated as creating gal rights and obligations. The submission to arbitration was greed to by the Attorney-General for the Commonwealth on its I entertain no doubt that the Attorney-General has full uthority to represent the Commonwealth and to act on its behalf

H.C. or A. in all legal proceedings to which the Commonwealth is a party,

virtue of his office he is the legal adviser of the Crown in xj the Commonwealth and the proper person to conduct or d legal proceedings on behalf of the Crown in that right, and, from the powers inherent in the office, he is, by Order in G made on 18th July 1918, entrusted with the administrat among other matters, " causes '"" - an expression which includes ey proceeding competently brought before and litigated in a ( (per Lord Selborne L.C. in Green v. Lord Penzance (1) ). It folk from what I have said that in this case the Attorney-Genera full power to make a binding agreement on behalf of the Comn wealth to submit the disputes which existed between the appells and the Commonwealth to arbitration. The effect of that submis was to constitute the arbitrator the judge of law and of fact. 1 facts necessary to establish the validity in law of the agre might, and for aught that appears may, have been proved bi the arbitrator, and in these circumstances there is no gro} refusing to enforce his award.

Isaacs J. This is an appeal against an order of the Full Cow of New South Wales made on 23rd November 1923, under see of the State Act of 1902, whereby leave was given to the Comm wealth to enforce an award made by an arbitrator against appellants for £75,665. The appellants contended that the award a nullity, because the submission to arbitration was made in resp of agreements between the parties which were entered into on beh of the Commonwealth without legal authority. The defects ré on were that the agreements purported to bind the Commonwe to the expenditure of public moneys for shipbuilding, whereas 2 parliamentary authorization existed for making such contracts for the expenditure of necessary moneys, and that the ne executive authority to the then Prime Minister to enter into contract had not been proved. Without entering into details, th can be no moral doubt that the contracts were for the p aiding the naval defence of Australia. If there were any eviden

st that sec. 41 of the Naval Defence Act 1910 and sec, 63 of the Defence Act amply covered the power of the Governor-General - that is, the Crown - to make the contract. Moral certainty, however, not synonymous with legal evidence ; and in some circumstances e want of formal proof might have had to be remedied.

Similarly as to the Order in Council empowering the Prime Minister to act for the Commonwealth in relation to the matter. wned counsel for the Commonwealth offered to supply both, and, if it had been necessary to do so, some opportunity would have given. But it is not necessary, for reasons which have import- As has been'stated, there was no lack of legislative authority 'to the Commonwealth to make such contracts, provided the ships e for defence purposes. And there was no lack of authority in e Governor-General acting through a designated channel in the recognized constitutional manner to make the formal bargain. her, there is, and at the date of the submission there was, the necessary parliamentary appropriation by Act No. 29 of 1920, "which appropriated £3,000,000 for construction of ships to be paid the Trust Fund for Commonwealth Government Ships Account nd placed under the control of the Treasury Department. So far, herefore, as parliamentary sanction is concerned, the authority is

hip Construction Branch, to the appellants, claiming from them s and also a return of £114,320 7s. 9d. paid to them under

e contracts. On 29th November 1921 the appellants commenced n action in this Court against the Commonwealth, claiming £88,000 under the contracts. There were thus claims on both sides in respect

of the contracts, both sides treating the agreements as valid, binding VOL. XXXVIT. 16

that was the actual purpose of the Government, no doubt could H- ©. or A.

H.C. oF A. and enforceable. On 12th June 1922 the Attorney-General of the

Commonwealth, acting in this regard for the Commonwealth and in - its name, entered into an agreement with the appellants for the submission of the matters in dispute to "the award and final determination" of Sir Mark Sheldon. The agreement recited the making of the agreements now challenged, the notice of 2nd April 1921 and the institution of the action. It stipulated for the stay of the action and the submission to arbitration. It stated the two matters in dispute, the second of which was " what sums of money (if any) are due by either of the parties to the other in respect o the said original and further contracts whether by way of dama, for breach or non-performance of the said contracts or return money paid thereunder or otherwise." Obviously that involve both facts and law. It went on to apply the Arbitration Act 1902 of New South Wales. Par. 5 said: "The arbitrator shall hay power - (a) to admit such evidence as he deems fit without hay regard to the rules of evidence ; (b) to inform his mind in any way in which in his absolute discretion he deems it most advisable so to do." Par. 6 declared: " The arbitrator shall not be bound to state a case for the opinion of the Court at the request of the pai thereto." Consequently it is clear that (1) the submission was in the course of an action already instituted ; (2) cross-claims were made between the parties; (3) the submission was new, voluntary, and independent of any prior agreement to arbitrate; (4) the questions submitted involved the law as well as the facts of the case; (5) the decision was to be absolutely final and conclusive and without even intermediate interference by the Court. Finally, the submission was made by the Commonwealth through the Attorney-General. No misconduct of the arbitrator is suggested nor any reason for disputing his award except those already stated. The argument for the appellants rested on the want of any enforce- able obligation arising out of the two agreements of 1918 and 1919, and on the inability of any person to preclude the Court from holding those contracts invalid. It is unquestionably true that where upon facts properly before the Court a transaction is in law invalid or void or without legal effect, the Court cannot declare it lawful or treat it as binding or effective in any way. To my mind,

_ that is so whatever attitude is taken by the parties themselves: H.C. or A.

otherwise the Court would be declaring the law as the parties choose to make it, and not as the State wills it.

The case of Great North-West Central Railway Co. v. Charlebois (1) is only one of several instances where the Court has so declared and Yorkshire Insurance Co. v. Craine (2) shows that in the opinion of the Privy Council a Court is bound to act on that principle even at the last moment, where the facts fully appear. As specially applicable to such a case as the present, that principle is centuries old. The Attorney-General's confession and judgment thereon does not bind the King as to matter of law, but as to matter of fact it does (see Attorney-General v. Bagg (3); Wall v. Pennington (4), and

_ the earlier cases there cited). Where, as here, there is a binding contract on the hypothesis of necessary facts, there is no reason why parties, including the Crown, cannot be held to the facts as acted upon or as found by competent authority. The starting- point for this purpose is the agreement of submission. The Common- wealth, that is, the King in right of the Commonwealth, was the defendant to the appellants' action to enforce the contract. By making the Commonwealth a party the appellants asserted that all facts necessary to bind the Crown had occurred. The King himself is supposed to be present in Court (see R. v. Gregory (5) and Bradlaugh v. Clarke (6) ), but he cannot constitutionally plead his own cause before his Judges. For that purpose the Attorney-General represents him, notwithstanding the King is fictionally present. This function of the Attorney-General is quite distinct from his political functions (see R. v. Austen (7); Attorney-General v. Brown (8) ). Mr. Leach in his argument states the position very clearly (9), and Lord Eldon in effect adopts it, and as to part quite literally (10). Mr. Leach says ; "In civil Courts, the rights of the Crown are under his protection." It is part of the common law of England and is not altered in Australia. What is to prevent the Attorney-General, as representing the King, from agreeing to submit the disputed

(1) (1899) A.C, 114. (6) (1883) 8 App. Cas. 354, at p. 375.

(2) (1922) 2.A.C. 541; 31 CLR. 27. (7) (1821) 9 Price 1

(5) (1672) 2 Lev. 82. (9) (1818) 1 Swans., at p. 290. (10) (1818) 1 Swans., at p. 294.

claims to arbitration in the way described ? There is no confession of law. Arbitration is a well-known method of settling disputed claims. Its ordinary meaning is established. Lord Halsbury in Stewart v. Williamson (1) said: "I think it means something which is submitted to the arbitrament - to the adjudication of private persons - agreed upon by the parties, as distinguished from the ordinary Courts of law." It is no objection that the arbitrator has to determine questions of law including, it may be, the validity o the agreements. Lord Hobhouse in Charlebois' Case (2) said: "If the legality of the act is one of the points substantially in dispute that may be a fair subject of compromise in Court like any other disputed matter." If so, it follows that the reference itself, not being a surrender, but a contest in which the tribunal only is chosen and given unfettered powers of decision, is perfectly lawful. When pursued to the end, as if in Court, as a genuinely hostile confli then, there being no inherent illegality, no misconduct of the arbitrator, and no error in law appearing on the face of the award the arbitrator's decision is final and binding. Lord Dunedin, for the Judicial Committee, in Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. (3) said : - The law on the subject has never been more clearly stated than by Williams J. in the case of Hodgkinson v. Fernie (4): - 'The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or layman, he is constituted the sole and final judge of all questions both of law and of fact. . . . The only exceptions to that rule are, cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think, firmly established, namely, where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of the award. Though the propriety of this latte may very well be doubted, I think it may be considered as established. This view has been adhered to in many subsequent cases, and in particular in the House of Lords in British Westinghouse Co. v- Underground Electric Railways Co. (5)." The two elements of fact

(1) (1910) A.C. 455, at p. 462. (3) (1923) A.C., at_p. 486, (2) (1899) A.C., at p. 124. (4) (1857) 3 CB. (N.S.) 189, at p. 202, (5) (1912) A.C. 673.

adverted to are therefore covered in two ways: - First, by the tacit 4- os a. admissions in the recitals of the agreement for submission to arbitra- ims

tion, because the recitals are that the "Commonwealth" made the Kran v agreements and that the appellants assert its responsibility in the Tue

contracts. Next, and perhaps more decis was empowered to decide and did decide all necessary questions of

fact as well as of law. The appeal therefore fails.

Hieerns J. This was an application in Chambers by the Common- wealth for enforcement of an award. The award was made in an action brought by the appellants against the Commonwealth in respect

of two alleged contracts as to the building of ships - merchant vessels

• for the Commonwealth. The application is made under sec. 14 of the New South Wales Arbitration Act 1902. I need not repeat at much length the facts which have been already stated. The contract of 7th July 1918 was made, during the Great War, for the building of six cargo barquentines: and the further contract of 4th August 1919, made after the War, reduced the number to two. Both the original and the further contract were expressed as made between the contractors and the acting Prime Minister of the Commonwealth (Mr. Watt), for and on behalf of the said Commonwealth and not so as to incur any personal liability. By the second contract, in consideration of the variation of the first, the Commonwealth purported to agree to pay to the contractors (the appellants) the sum of £52,000 in respect of cach of the four barquentines " not now required by the Commonwealth." On 29th November 1921 the contractors instituted an action in this Court against the Common- wealth, claiming £88,000 as for work and labour done and materials provided and as for breaches of the contracts; but by agreement purporting to be made between the Commonwealth and the contractors, signed by the Attorney-General and dated 12th June 1922, it was agreed that all proceedings in the action be stayed pending the determination of the matters in dispute by award. The matters were "(a) whether the Commonwealth is entitled to refuse to accept delivery of the Braeside and Burnside" (the two barquentines), and "(b) what sums of money (if any) are due by

either of the parties to the other in respect of the said original a further contracts whether by way of damages for breach * non-performance of the said contracts or return of money paid thereunder or otherwise." The arbitrator on 30th June 1922 awarded (a) that the Commonwealth is entitled to refuse to accept delivery of the two vessels, and (b) that the sum of £75,665 is due by the contractors to the Commonwealth; and the contracto were ordered to pay that sum. On 6th June 1923 a motion w made by the contractors to the Full Supreme Court of New South Wales to set aside the award or to have it remitted to the arbitrator on many grounds ; but all the grounds stated assumed the validity of the two contracts and of the agreement for arbitration.

Full Supreme Court dismissed the motion with costs. When

came before Ralston A.J. in Chambers, 8th June 1923, it was refe to the Supreme Court for determination ; and the application wa granted on 23rd November 1923. This is an appeal from an order of the Supreme Court. ;

Until the argument before the Supreme Court on this application to enforce the award, it was not suggested by the contractors tha the contracts were not valid and binding on the Commonwealth and the contractors; and the question of validity was not ra before the arbitrator, although it could have been raised under th two matters referred to him. Nor was any question raised as to the validity of the agreement for arbitration. But the contra urged before the Supreme Court on this application that the contracts were void and that the agreement for arbitration and the awa are void. They contended that the contracts were invalid as being made without legislative sanction, and because they dealt wit expenditure of moneys of the Commonwealth without the authority of the Commonwealth Parliament. Notwithstanding this contention, the Supreme Court (Gordon, Ferguson and Campbell JJ.) made order for enforcement. In my opinion, the order was right.

It was held in this Court, in the recent case of Commonwealth Colonial Combing. Spinning and Weaving Co. (1), that the Feder Government has no general power of binding the Commonwealt

by agreements made without the authority of Parliament; and 4. ©. or A.

even if a contract is binding on the Commonwealth there is no way "of getting payment from the Commonwealth unless under an appropriation by Parliament (Churchward v. The Queen (1): "Attorney-General v. Great Southern and Western Railway Co. (2) ) I shall also assume, as found by the Full Supreme Court, that the walidity would extend to an agreement to submit the claims

der the contracts to arbitration (Mackay v. Attorney-General for itish Columbia (3) ). But it does not follow that such a defence is wailable to the contractors under the circumstances of this case. ie alleged faults of these contracts are, in substance, (1) that the rnment had no authority to make a contract for these ships, and (2) that, even if the Government had authority, these contracts were d, not by the Governor-General, but by an acting Prime Minister. But, as was pointed out by my brother Starke early in the argument,

• neither sec. 41 of the Naval Defence Act 1910 nor sec. 63 of the ~ Defence Act 1903-1918 was referred to by the Full Court. Under sec. 41 of the former Act, ''(1) in addition to any powers contained in section sixty-three of the Defence Act, the Governor-General may - (a) acquire or build and maintain ships, vessels, or boats, for Naval

_ Defence, or for services auxiliary to Naval Defence." The guaranteed speed of these barquentines, each 2,600 tons -dead-weight capacity. was only seven miles per hour; and I see no eason for saying that they could be treated as auxiliary ships within the meaning of sec. 41. No doubt naval training ships would be auxiliary ; and probably tenders bringing coal, food, ammunition, cc., to the ships of war. The interpretation section (sec. 3) shows by the words it uses that auxiliary ships are such as would come "naval establishment." But the authority given by the 'aval Delores Act, sec. 41, is merely " in addition to " any authority given by the earlier Act (the Defence Act 1903-1919); and, under sec. 63 of the Defence Act the Governor-General may construct and ntain forts, defence works, &c., &c., and also (f) "subject to the provisions of this Act do all matters and things deemed by him to be necessary or desirable for the efficient defence and protection

(1) (1865) LR. 1 Q.B. 173. (2) (1925) 41 T.L.R. 576. (3) (1922) L A.C, 457.

of the Commonwealth." I cannot find any limit to this authority other than the practical difficulty due to the fact that the Governor. General cannot get the money to do what he deems necessary desirable unless Parliament appropriate money for the purpose. The contract would be valid, but it would be conditioned practically on Parliament finding the money.

But then it is contended that these barquentines were not fo defence at all; and that the Governor-General did not contr but a Minister purporting to contract on behalf of the Common. wealth (see Commercial Cable Co. v. Government of Newfoundland (1)). The obvious answer is that these contentions, if raised at an appro- priate time, might possibly have been cured by evidence; but that the contractors by their conduct throughout the action and the arbitration

• in treating the contracts as valid and binding on the Commonwealth and themselves, in getting large payments from time to time on account, in procuring the provision of the second contract for payment of more than £200.000 in consideration of the variation of the principal contract - are precluded from objecting that Commonwealth has failed to show that the contracts were valid, and executed by an authorized person. It is sufficient to say that

might have thought during the War that it was necessary a desirable for defence to build the barquentines, in order that trade from and to Australia might be continued, and that th resources of Australia for defence might be preserved and increa That the defence power has a very wide scope, and may be applied to very commonplace subjects if Parliament, or the Governor General acting under an Act of Parliament, decide that defe may be aided by legislation (direct or indirect), is shown by Farey v. Burvett (2). In that case it was held by this Court, where Parliament had passed an Act purporting to enable the Governo General in Council (inter alia) to fix the price of bread in districts of the Commonwealth for the purpose of efficient defence of the Commonwealth, that a regulation made under the Act was effectiv in law. All I need say is that the contracts in this case may have been for defence or some other legitimate object, and that by their

conduct throughout the contractors have relieved the Common- wealth of the necessity of proving the object of the contracts. or establishing their validity. The same principle applies to the fact that the contracts were signed by the Acting Prime Minister. and not by the Governor-General. No authority has been produced for such a signature; there is no evidence that the Governor-General even knew of the contract; but the contractors cannot at this stage take advantage of the deficiency in proof of facts which may justify the contracts including the signatures. They cannot take all the advantages of the contracts, and then say that the contracts are not shown by the evidence to be valid. They cannot both blow hot and blow cold. There is no principle more firmly established than that parties must take the consequences of their conduct of proceedings in litigation. The principle is well stated in The Tasmania (1). Tt was a case of collision; and at the trial it was found that one vessel was to blame; but on the appeal, for the first time, it was contended that the other vessel was also to blame _ - that she did not take early enough the step of putting her helm down and so coming to the wind. Lord Herschell said : - ' My Lords, I think that a point such as this, not taken at the trial, and presented for the first time in the Court of Appeal, ought to be most jealously scrutinized. The conduct of a cause at the trial is _ governed by, and the questions asked of the witnesses are directed 'to, the points then suggested. And it is obvious that no care is exercised in the elucidation of facts not material to them. It appears

• to me that under these circumstances a Court of Appeal ought only _ to decide in favour of an appellant on a ground there put forward for the first time, if it be satisfied beyond doubt. first, that it has before it all the facts bear as would have been the case if the controversy had arisen at the trial; and next, that no satisfactory explanation could have been offered by those whose conduct is impugned if an opportunity for explanation had been afforded them when in the witness-box." Now, to apply these words to the case before us, we are not satisfied

_ that we have before us all the facts bearing on this new contention, We are assured by counsel for the Commonwealth that an order of (1) (1890) 15 App. Cas., at p.

H.C. or A. the Governor-General in Council has been found that authorizes the

original contract, at least. But even if there were no such assurance, I am of opinion that it is not open to the contractors at this stage, in view of their conduct of this case. and the advantages which they have gained on the basis of treating these contracts as valid, to contest now their validity ; "it does not lie in their mouths to say so" (see John Edwards & Co. v. Motor Union Insurance Co. (1); R. v. Taylor (2); Geo. Hudson Ltd. v. Australian Timber Workers' Union (3) ).

The case of Duff Development Co. v. Government of Kelantan (4) been cited as showing that the contractors can now rely on the want of proof that the contracts were authorized by Parliament. Bi that was not a case of estoppel by conduct at all. or of anything

alike nature. It was merely a decision that a sovereign independent

arbitration, or even by applying to the Court to set aside the award The case of In re Boks & Co. and Peters, Rushton & Co. (5) has been cited as showing that the order to enforce the award ought not to be affirmed by this Commonwealth to proceed by action on the award. because validity of the award is a matter of doubt. But the doubt ther was that under the Defence of the Realm Regulations the contract on which the award was founded was illegal, in the strict sense - a thing prohibited by law; and the Courts will do nothing

aid that which is illegal (see Gedge v. Royal Exchange Assurance Corporation (6): Auckland Harbour Board v. The King (7) ). the present case, there is no such illegality. There is, at most, a deficiency of proof of facts which the contractors admitted. and on the basis of which the contractors derived advantages from the Commonwealth; and the Commonwealth cannot, at this stage, be called on to prove matters which were not in issue between the parties to the contracts. It would be illegal to draw money from the Commonwealth public account unless the mone (4) (1924) A.C. (5) (1919) 1

. 426, (6) (1900) 2 Q/B. 214, at p. 219. (7) (1924) A.C. 318, at p. 326.

be legally available by appropriation of Parliament, and the draft 4. C. or 4.

or a cheque be approved by the Governor-General and counter- signed, and on the prescribed warrant (Audit Act 1901, secs. 21, 31, 32, 33 (7), 69). But to make a contract that can be enforced if there was authority to make it, is not an illegality in this sense.

As for the signature of the Attorney-General to the agreement for arbitration, the Attorney-General has, as a Minister, to take charge of suits in which the Commonwealth is concerned; and it may be that he has a right to refer matters in dispute to arbitration. But this point it is unnecessary to decide; as he may have been authorized by the Governor-General to sign, and the contractors are estopped from denying that he was authorized.

It ought to be observed, also, that the contentions as to the invalidity of the contract could have been raised by the contractors in the arbitration. Such a contention would have been relevant to both the matters referred to the arbitrator; but it was not even suggested by the contractors. It may be that, as the issue could have been raised, the finding of the arbitrator estops. in itself, the contractors from raising the point of invalidity on these proceedings. It may be that the refusal of the Court to set aside the award should be treated as supporting an estoppel on the ground of res judicata (see cases cited in Hoysted v. Federal Commissioner of Taxation (1) ). But I need not express an opinion on these difficult points, as counsel for the Commonwealth has not argued on this basis; and I do not like to come to a conclusion on such a subject except after full debate.

In my opinion, the appeal should be dismissed with costs.

Ricu J. I agree that the appeal should be dismissed. The contract in question was within the constitutional powers of the Commonwealth, although, if a direct action had been brought on the contract, proof might have been necessary to show that the

subject matter of the contract was within the Defence Act and that .

the Prime Minister was authorized to enter into it. But this is not

a direct action on the contract. Independently of any provision in

the contract, the parties competently submitted all their disputes

including matters of law to arbitration. The arbitration itself was (1) (1921) 29 CLR. 587.

H.C. or A. yegular and both parties are concluded by the award as to both

piel facts and law; and that ends the matter. Kipman Tun Srarke J. The appeal, I agree, must be dismissed. Common- WEALTH. apa Appeal dismissed with costs. Solicitors for the appellants, A. J. McLachlan & Co. fm Solicitor for the respondent, Gordon H. Castle, Crown Solicitor for Marieke the Commonwealth. Board 'sei ieL

THE METROPOLITAN MEAT INDUSTRY ) BOARD . j : e ? F i) Derenvant,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Disposal of offal - Taking portions of slaughtered animals without paymer Meat Industry Act 1915 (N.S.W.) (No. 69 of 1915), secs. 6, 7, 11, 13, 4,21, 30.

By the Meat Industry Act 1915 (N.S,W.) a board was created to manage at maintain certain abattoirs and to do all things that might be expedient am

Isaacs, Higeins, accordance with the Act to prevent diseased or unwholesome meat f ee passing into consumption (sec. 13). By sub-sec. 1 of sec. 30 power was giv

to make by-laws providing (inter alia) for the management and control of