Marine Board of Launceston v Minister of State for the Navy [1945] HCA 42

Marine Board of Launceston v Minister of State for the Navy [1945] HCA 42 - HCA 1945 case summary — Zoe

[37]

It has been decided by the House of Lords that under a provision requiring the payment of compensation for the compulsory acquisi- tion of chattels interest cannot be allowed from a date anterior to the award of compensation (Swift & Co. v. Board of Trade (1)). Viscount Cave L.C. (2) referred to the established equitable rule that on a contract for the sale of land a purchaser is required to pay interest on the purchase price from the date when he took, or might safely have taken, possession of the land. The reason for the rule was said to be that the act of taking possession was an implied agreement to pay interest. There is no room for such an implied agreement where property is taken under the Regulations now under consideration. The obligations of the parties depend upon the terms of the Regulations, properly interpreted, and not upon any agreement express or implied. But in Swift's Case (1) the Lord Chancellor also referred to the fact that the equitable rule had been extended by judicial decision to cases of compulsory purchase of land, because they were treated in equity as creating the relation of vendor and purchaser. The question there was whether the rule judicially developed in the Court of Chancery in relation to compensation for the compulsory taking of land should be applied also to the compulsory taking of chattels. The decision was that it should not be so applied. The Lord Chancellor said - "There is no authority in English law for applying" (the rule) "to a requisition of goods by the State," and he added: "To hold otherwise is to give compensation, not for the goods themselves, but for the time occupied in ascertaining their value in accordance with the law." So also Lord Sumner said that the regulations required compensation to be ascertained by arbitration, which involved delay and caused a claimant " to be out of his compensation for a substantial time," postponing the date at which his compensa- tion can be fixed and become payable; and "to give interest is

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my opinion, the delay in payment, though causing loss, is not some- thing which is itself the subject matter of compensation for the taking; If an employer was bound to pay fair wages to an employee, he would be bound only to pay the amount assessed as fair wages, and not to pay as part of the wages an additional sum because he had delayed in the payment of the amount representing fair wages. The position appears to me to be exactly the same in the case of fair compensation, It was pointed out by Rich J. in The Commonwealth v. Huon Trans- port Pty. Ltd. (1) that, where there is delay in payment, the expro- priation of the dispossessed owner involves him in further loss "because he is deprived both of the opportunity of obtaining revenue from the property that once was his and of earning income or getting benefits by the use of the money to which he has become entitled in place of the property." His Honour drew the inference that just terms, therefore, involve as a matter of elementary fairness the payment of interest on the money to which the owner was entitled for the time during which it was withheld from him. But, in my opinion, this statement of principle (which is plainly a just prin- ciple) shows that interest in such a case ought, as a matter of justice, to be paid, not in respect of the loss caused by the expropriation, but in respect of the loss caused by failure to pay promptly for the expropriation. The proposition of which justice may be said to require the acceptance is a proposition that, when money is owing, on whatever ground, by one person to another, and there is a delay in payment, the person who is under liability to pay should pay interest to the other person as compensation for any wrongful delay in payment. This, however, is a general proposition relating to the requirements of justice as affecting the payment of money owing on whatever account. It is a proposition relating not to the subject of liability to pay on just terms for property taken, but to the indemnifi- cation of the owner of the property against loss arising from delay in payment. I agree that it may not be just that the Commonwealth should at the same time have both the use of the vessel and the use of the money which should have been paid to the owner of the vessel. The delay may be the fault of the Commonwealth or it may be the fault of the claimant. But in either case the damage caused by the delay and measured by the assessment of interest is due to the delay and not to the acquisition.

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interest necessarily arose, but, because of the circumstances of the case, the payment of interest was not contested. Here the matter is directly raised. For the compensation must include or represent the capital value of the vessel, not hire or charter moneys. In Rae's Case (1) and Huon Transport Company's Case (2), I suggested that, when the full property in a ship is compulsorily acquired, the equitable principle applies under which interest is given upon the compensation or purchase money payable in respect of the compulsory acquisition of property of such a nature that, if it were the subject of a contract of sale, a court of equity would decree specific performance. A ship is property of that character. I shall not repeat what I said in those two cases nor refer to the authorities there cited. It is enough to say that I desire the passages relating to the matter to be considered as here incorporated by reference. Apart from any limitation upon the Court's authority arising from the Regulations, it follows that I should regard the purchase money or compensation payable in respect of a ship of which the Government had taken possession as carrying interest from the date of possession taken until payment. All I need add to the authorities to which I referred in the two cases cited is a passage from the judgment of Jessell M.R. in In re Pigott and Great Western Railway Co. (3). The purpose is to show that the equitable right to interest does not depend on the bringing of a suit for specific performance, but on the fact that the transaction, whether a sale by contract or compulsory purchase, falls within the cognizance of a court of equity as proper for the application of the remedy of specific performance. The passage is as follows : - " It has always been said that if you have the right to compel a thing to be done by action, the right can never depend on the mere bringing of the action. The action does not create the right ; it only enforces the right previously existing ; and if, therefore, a vendor is entitled to maintain an action for specific performance against a railway company under the ordinary rules as to specific performance, he is entitled, independently of bringing an action to enforce it, to the benefit of those rules which govern specific performance, including the rule as to payment of interest on unpaid purchase-money."

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temporary possession of two ships. Section 67 refers to " recom- pense ", whereas reg. 60c refers to "just compensation." But there is no difference in substance between the expressions, each of which must have been intended to embody "just terms" within the meaning of s. 51 (xxxi.) of the Constitution. Nothing has been said during the present argument which has caused me to alter the opinion expressed in the Huon Case (1). In accordance with that opinion, I consider that the applicant should be paid interest on the balance of compensation for the tug because the payment of interest is required to make the compensation full and adequate, or in other words "just," and the words " just compensation " in the regulation are sufficient to authorize the Court to award interest. I also consider that the applicant should be paid interest even if the word "just" in the expression " just compensation " should, for some obscure reason, be discarded as mere surplusage, and the word '' compensation " be construed, as it was construed in the regulations before the House of Lords in Swift & Co. v. Board of Trade (2), as not in itself sufficient to authorize the award of interest, because interest should still be allowed in accordance with the equitable practice referred to by the Privy Council in Toronto City Corporation v. Toronto Railway Cor- poration (3), Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission (4), Raja Vyricherla Narayana Gaja- patiraju v. The Revenue Divisional Officer, Vizagapatam (5), and International Railway Co. v. Niagara Parks Commission (6). In the Toronto Case (3), Viscount Cave said that " the general rule under which a purchaser who takes possession is charged with interest on. his purchase money from that time until it is paid is well established, and has on many occasions been applied to compulsory purchases." This statement is couched in slightly different terms to that of Lord Warrington of Clyffe in Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission (7) that " the right to receive interest takes the place of the right to retain possession and is within the rule." The former statement refers to the interest as interest on the compensation, whereas the latter statement includes the interest in the compensation. But the two statements are alike in all substantial respects. The former is perhaps more appropriate to the form of the present question than the latter. Both state- ments make it clear that, if there is a compulsory purchase of property of such a nature that, if it had been purchased under a contract, the court of equity could have ordered specific performance,

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Judgment (121 paragraphs)