Leon Fink Holdings Pty Ltd v Australian Film Commission

High Court of Australia|1979-07-01|Before: Aickin JJ, Mason J

High Court of Australia Barwick C.J. Mason and Aickin JJ. Leon Fink Holdings Pty Ltd v Australian Film Commission [1979] HCA 26

ORDER Order that the questions referred by the case stated be answered as follows: Question:

(c) Were the agreements set out in the Second and Third Schedules effective to create obligations on the part of Leon Fink Holdings Pty. Ltd., Margaret Fink Productions Pty. Ltd. and Leon Fink in the stated events and at the stated times to pay to the Corporation the sums respectively mentioned in those agreements?

(d) Does the Australian Film Commission Act 1975 vest in the Commission the rights previously held by the Corporation?

Answer: (On the assumption that the Australian Film Development Corporation Act 1970 Cth and the Australian Film Commission Act 1975 Cth are valid laws of the Commonwealth Parliament),

During my consideration of this stated case, I have had the advantage of reading the reasons for judgment prepared by my brother Mason.

I am content to answer the questions as proposed, for the reasons expressed by my brother with which I substantially agree.

However, I would not desire my concurrence in this reasoning to be considered as an indication that, had it been concluded that the lending of or the agreement to lend the money to the borrower was ultra vires the Australian Film Commission whether upon statutory or constitutional grounds, the promises to repay contained in the deeds on which the Commission claimed would for that reason necessarily have been unenforceable. That question, though adverted to in argument, was not fully explored. In re Coltman; Coltman v. Coltman [1] and In re K. L. Tractors Ltd. (In liq.) [2] contain relevant discussions. The question should be dealt with in the next phase of these proceedings when the constitutional validity of the lending or agreement to lend by the Commission is considered.

(1881) 19 Ch. D. 64. 2. (1961) 106 C.L.R. 318. Mason J.

We have heard argument on two questions asked in a case stated by the Chief Justice pursuant to s. 18 of the Judiciary Act 1903, as amended. They relate to two agreements entered into by the Australian Film Development Corporation ("the Corporation") which was established as a body corporate pursuant to s. 5 of the Australian Film Development Corporation Act 1970 ("the Corporation Act"). This Act was repealed by Pt VI of the Australian Film Commission Act 1975 ("the Commission Act"). Part VI came into operation on 8th July 1975. The Australian Film Commission ("the Commission") is a body corporate established pursuant to s. 4 (1) of the Commission Act. Rights previously held by the Corporation are vested in the Commission by virtue of s. 39 of the Commission Act.

The first agreement was a deed dated 7th June 1974 between the Corporation of the first part, Leon Fink Holdings Pty. Ltd. ("Fink Holdings"), the borrower, of the second part and Margaret Fink Productions Pty. Ltd. ("Fink Productions") and Leon Fink, the guarantors, of the third part. The deed recited that the Corporation had, at the request of the guarantors, agreed to lend to the borrower $120,000 and that the borrower had agreed to lend that sum to Fink Productions "to assist in the production of a film entitled "The Removalist" ". The borrower acknowledged receipt of the money which had been lent that day, 7th June 1974 (cl. 1), and agreed to repay it two years from the date of the agreement or twelve months after the release of the film, whichever was the earlier, and in the meantime to make certain payments in reduction of the debt, the amount of those payments to be calculated by reference to the net proceeds received by Fink Productions from distributors and/or exhibitors of the film (cl. 2). The borrower agreed to pay interest at the rate of 7 per cent p.a. on so much of the loan as remained unpaid (cl. 3).

The second agreement, also embodied in a deed, was dated 13th May 1975 between the Corporation of the first part, Fink Holdings, the borrower, of the second part, Fink Productions of the third part and Leon Fink, the guarantor, of the fourth part. By this deed it was recited that the production of the film had been completed and that the Corporation had agreed to furnish $40,000 "to assist in the promotion of the film". It was provided that the Corporation should pay the loan to the borrower on the execution of the agreement (cl. 1.1), that the borrower would expend the loan in accordance with the promotion budget prepared by Fink Productions (cl. 1.2), that the loan should bear interest at the rate of 7 per cent p.a. (cl. 2), and that the repayment of the money should be secured by a first floating charge given by Fink Productions under cl. 6.1 of the principal deed (cl. 3). By cl. 4.4 the borrower and Fink Productions covenanted with each other and the Corporation that the loan and all interest thereon should be repaid to the Corporation in full on or before 13th May 1976. By cl. 5.1 the guarantor guaranteed to the Corporation the payment by Fink Productions and/or the borrower of the principal sum and interest. The sum of $40,000 was lent by the Corporation to the borrower on 14th May 1975.

On 26th September 1977 the Commission sued Leon Fink in the Common Law Division of the Supreme Court of New South Wales to recover the sum of $197,851.29. By its statement of claim the Commission alleged that the Corporation's rights under the two agreements had vested in it, that the borrower had made no payment to the Corporation or to the Commission in reduction of the moneys lent under the two agreements or any payment of interest, and that the sum sued for was due and owing under the agreements. On 14th June 1978 the Commission issued two separate letters of demand pursuant to s. 315 of the Companies Act, 1961 N.S.W., as amended, to the borrower and Fink Productions. On 30th June 1978 the borrower and Fink Productions commenced proceedings in the Equity Division of the Supreme Court of New South Wales for injunctions to restrain the Commission from presenting or advertising the presentation to that Court of petitions to wind up the borrower and Fink Productions. These proceedings were removed into this Court by an order made on 26th September 1978 on the ground that the proceedings raised issues as to the validity of the Corporation Act and the Commission Act and therefore involved the interpretation of the Constitution.

Neither the borrower nor Leon Fink was a producer of Australian films. "The Removalist", of which Fink Productions was the producer, was an Australian film.

(a) Is the Australian Film Development Corporation Act 1970 a valid law of the Commonwealth Parliament?

(b) Is the Australian Film Commission Act 1975 a valid law of the Commonwealth Parliament?

(d) Does the Australian Film Commission Act 1975 vest in the Commission the rights previously held by the Corporation?

Argument was directed to questions (c) and (d) only.

The case for the borrower was that, quite apart from the issues of constitutional validity raised by questions (a) and (b), the Corporation, in making the two agreements, exceeded its statutory powers and that, as a consequence of the doctrine of ultra vires, the agreements, being void ab initio, were ineffective to impose upon the borrower and the guarantors any obligation to pay the sums mentioned. The first question for decision, then, is whether the agreements exceeded the powers of the Corporation. Only in the event that this question is answered in the affirmative is it necessary to decide whether the agreements are void ab initio in consequence of the doctrine of ultra vires.

The functions and powers of the Corporation are set out in ss. 20 and 21 of the Corporation Act. These sections, so far as material, are in these terms:

(1) The functions of the Corporation are to encourage the making of Australian films and to encourage the distribution of Australian films both within and outside Australia.

(1) The Corporation has power to do all things necessary or convenient to be done for or in connexion with the performance of its functions and, without limiting the generality of the foregoing, has power -

(a) to make loans on such terms and conditions, including conditions as to repayment of principal and payment of interest, as the Corporation thinks fit, to producers of Australian films;

(c) to provide financial assistance to producers of Australian films under arrangements that entitle the Corporation to receive a share of the proceeds derived from the sale, hire or exhibition of the films or the inclusion of the films in television programmes but do not render the Corporation liable for any debts incurred by those producers;

But for the presence of par. (a) in s. 21 (1), I should have had little difficulty in concluding that the Corporation had power to lend money to a person who was not the producer of Australian films so long as the purpose of the lending was to encourage the making or the distribution of Australian films. The lending of money for the purpose of assisting the production of an Australian film is a means of encouraging the making of that film, just as it was held in Kathleen Investments (Australia) Ltd. v. Australian Atomic Energy Commission [3] that the subscription for shares for cash in the capital of a company engaged in exploration for and mining of uranium was a means of encouraging exploration for and mining of uranium. The lending of money for the purpose of encouraging the making or distribution of Australian films would then constitute the doing of something convenient, if not necessary, to be done for the performance by the Corporation of its functions.

However, it is necessary to take account of the presence of par. (a) of s. 21 (1). It is accepted that when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power. In Anthony Hordern and Sons Ltd. v. Amalgamated Clothing and Allied Trades Union of Australia [4] Gavan Duffy C.J. and Dixon J. said:

Extensive and unfettered as the authority of the Court of Conciliation and Arbitration to award preference in settlement of a dispute might have been in virtue of its general power, yet, when s. 40 expressly gives a special power, subject to limitations and qualifications, surely it must be understood to mean that the Court shall not exercise an unqualified power to do the same thing. When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power. See also R. v. Wallis; Ex parte Employers Association of Wool Selling Brokers [5] . 1. (1932) 47 C.L.R. 1, at p. 7. 2. (1949) 78 C.L.R. 529, at pp. 550-551.

The legislation then under consideration takes a rather different form from the statute now in question. We have here, not two distinct powers, the one general and the other special, but one power in general terms followed by specific powers which may be no more than particular expressions or exemplifications of what may be done in the exercise of the general power. This circumstance in itself would not make inapplicable the principle of construction which was adopted in the two cases to which I have referred. However, the presence of the words "without limiting the generality of the foregoing" is an important distinguishing feature of s. 21. The critical question is whether there is any implied restriction upon the general power to be derived from the presence of par. (a), when there is a clause which is designed to preserve the generality of the unqualified power according to its terms.

The specific power to lend which is given by par. (a) is confined to loans to producers of Australian films, just as par. (c) confines the specific power to provide financial assistance to producers of such films. Is this enough to justify the implication that the Corporation was otherwise without any power to lend money in the performance of the functions entrusted to it by the statute? To arrive at this conclusion would be to deprive the Corporation of power to lend moneys surplus to its immediate requirements by depositing them at call with a bank or other financial institution, a result that could scarcely have been intended by the Parliament.

The courts will as a general rule strive "to adopt that [construction] which would give some effect to the words rather than that which would give none" (Cargo ex "Argos"; Gaudet v. Brown [6] ) and will endeavour to avoid an interpretation of a statute which renders its words redundant or tautologous (East London Railway Co. v. Whitechurch [7] ). However, it is recognized that Parliament is sometimes guilty of surplusage or even tautology (Commissioners for Special Purposes of Income Tax v. Pemsel [8] ). As Jessel M.R. said in Yorkshire Fire and Life Insurance Co. v. Clayton [9] , " it may not always be possible to give a meaning to every word used in an Act of Parliament". From time to time provisions will be inserted for more abundant caution to guard against the possibility that the general might be read as not including the particular.

(1873) L.R. 5 P.C. 134, at p. 153. 2. (1874) L.R. 7 H.L. 81, at pp. 89, 93. 3. [1891] A.C. 531, at p. 589. 4. (1881) 8 Q.B.D. 421, at p. 424.

There are strong grounds for thinking that the specific power given by par. (a) of s. 21 was conferred in order to dispel any doubt that might be entertained as to the extent of the general power and to ensure the existence of a power to lend to producers of Australian films. In this case the words "without limiting the generality of the foregoing" evince an intention that the general power should be given a construction that accords with the width of the language in which it is expressed and that this construction is not to be restricted by reference to the more specific character of that which follows. The clause therefore operates to negative the restrictive implication which might otherwise have been derived from the presence of the specific power to lend contained in par. (a).

I do not wish to be taken as suggesting that a clause of this kind will always be effective to prevent the making of a restrictive implication derived from the presence of a specific power which is expressed to be subject to limitations, qualifications, restrictions or conditions. In every case it will depend on the precise character of the relevant provisions and on the context in which they are found. Here it is only the limitation on the specific power to lend which confines it to the making of loans to producers of Australian films that is relied upon to restrict the general power, or to inhibit resort to it, as authority for lending to others. To my mind this is not a sufficiently solid basis for restricting the general power or denying its availability, when it is followed by a clause whose purpose is to ensure that the presence of the particular powers does not erode the generality of the initial grant of power.

Accordingly, in my opinion, on the assumption that the statutes are valid, the Corporation had power to enter into the deeds.

On that assumption I would answer questions (c) and (d) in the affirmative.

I have had the advantage of reading the reasons for judgment prepared by my brother Mason in relation to questions (c) and (d) in the case stated by the Chief Justice, the other questions having been deferred for separate consideration. I am in agreement with those reasons and conclusions. There are some short observations which I wish to add.

The formula "without limiting the generality of the foregoing" has been extensively used in Commonwealth legislation and regulations, but so far as appears it has not previously been the subject of judicial consideration in Australia. At first sight it would appear to indicate a parliamentary intention that the general words which precede the expression should be construed as if the more particular words which follow were not there. That however is too wide a proposition for in every case it must depend on the whole of the context. In some cases the particular words which follow may be such as necessarily to indicate an intention to restrict the operation of the preceding general words. In each case it will be a matter requiring examination of the actual words used, both general and particular, as well as the context as a whole.

An equivalent phrase in a deed of settlement was the subject of some observations in Walsh v. Trevanion [10] . In that case the deed was expressed to grant to trustees on specific trusts "all and singular the messuages, lands, tenements and other hereditaments" of the settlors situated in several named parishes "and which are intended to be specified and described in the schedule hereunder written but which schedule is not intended to abridge or affect the generality of the description hereinbefore expressed and contained". The settlors held some land in those parishes which was not specified in the schedule. The question of what lands were comprised in the settlement came before the Court of Queen's Bench which held that the deed as a whole, including the recitals, disclosed a clear intention that only the scheduled lands should pass by it. In the course of argument Coleridge J. [11] observed " "Generality" is different from "comprehensiveness". The schedule is not to restrict the generality of the operative part, but the recital may still control its comprehensiveness". That distinction is not without its own difficulties but the decision demonstrates that in every case the relevant instrument, whether a deed or an Act of Parliament, must be read as a whole in order to ascertain the operation of phrases such as that in issue in the present appeal.

(1850) 19 L.J. (Q.B.) 458. 2. (1850) 19 L.J. (Q.B.), at p. 461.

In the present case it appears to me that the particular power to make loans to producers of Australian films cannot in its context exclude powers to make all other loans of money. The example given by Mason J. of the deposit of surplus funds with a bank, which is a loan of money, is sufficient to indicate that the provision cannot have been intended to have that operation. The present loan falls clearly enough within the scope of the general words "to do all things necessary or convenient to be done for or in connexion with the performance of its functions ". A loan the terms of which require the borrower to re-lend the same amount to a producer of Australian films "to assist in the production of a film", which further loan is guaranteed by that producer and secured in the manner provided, is one which is plainly something "necessary or convenient to be done for or in connexion with the performance of its functions", i.e. "to encourage the making of Australian films".

Accordingly I agree with the answers proposed by my brother Mason.

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