Nelungaloo Pty Ltd v Commonwealth

Nelungaloo Pty Ltd v Commonwealth - [1947] HCA 58 - HCA 1947 case summary — Zoe

[5]

The Commonwealth purported to acquire the wheat pursuant to an order published on 16th November 1939 made by the then Minister of State for Commerce under the authority of reg. 14 of the Wheat Acquisition Regulations. The order, the full text of which appears in the statement of claim, related to wheat which had already been harvested and wheat to be harvested in the future. In this action I am only concerned with par. (b) of the order by which, with certain immaterial exceptions, the Commonwealth purported to acquire all wheat which is harvested in Australia on or after the date of the publication of the order in the Gazette . The plaintiff claims that the taking of its wheat of the 1945-1946 crop was tortious, because this paragraph of the order was not authorized by reg. 14. The plaintiff commenced its action on 24th July 1946. The statement of claim was filed on 9th September 1946. The Wheat Acquisition Regulations were made under the authority of the National Security Act 1939. The National Security Act 1946 provided for the termination of the principal Act on 31st December 1946, so that, apart from further legislation, the Wheat Acquisition Regulations would have expired on that date. But by the Defence (Transitional Provisions) Act 1946, these regulations were continued in force until 31 December 1947. Further, the Wheat Industry Stabilization Act 1946, assented to on 9th August 1946 (as amended by the Wheat Industry Stabilization Act (No. 2) 1946, assented to on 14th December 1946) provides in s. 11 that, subject to this Act, the National Security (Wheat Acquisition) Regulations shall, by force of this Act, insofar as they relate to wheat harvested in any season up to and inclusive of the 1946-1947 season, continue in force until such date as is fixed by proclamation, and shall, during such continuance, have the force of law. But s. 2 of the principal Act provides that the several sections of the Act shall commence on such dates as are respectively fixed by proclamation and I was not referred to any proclamation of this section. Section 2 however, of the amending Act provides that it shall come into operation on the day on which it receives the Royal Assent, and s. 11 of this Act provides that: - "The order made by the Minister of State for Commerce under regulation fourteen of the National Security (Wheat Acquisition) Regulations and published in the Gazette on the sixteenth day of November, One thousand nine hundred and thirty-nine, shall be deemed to be, and at all times to have been, fully authorized by that regulation, and shall have, and be deemed to have had, full force and effect according to its tenor in respect of wheat harvested in any wheat season up to and including the 1946-1947 season."

[12]

It was also contended that the operation of s. 11 is to divest a wheat grower of a vested right of action in tort against the Commonwealth, and that the section is not a valid exercise of the defence power because legislation passed at the end of the year 1946 for the protection of the Commonwealth against rights of action which had already accrued could have no connection with the defence of the Commonwealth. But it was decided in Werrin v. The Commonwealth [3] that the Commonwealth Parliament can exercise legislative control over such causes of action. The only difference between Werrin's Case [3] and the present case is that the Commonwealth Parliament was there legislating under the taxation power, which is a power with a constant ambit, whereas the ambit of the defence power fluctuates between a very wide ambit during hostilities, and a comparatively narrow ambit in peacetime. Section 11 was enacted on 14th December 1946. In several recent judgments of this Court it has been pointed out that the contraction of the ambit of the defence power after hostilities is a gradual process. One of the most serious consequences of the recent hostilities is an acute shortage of food in many parts of the world. Wheat is the most important ingredient in bread, which is one of the staple foods, so that the ambit of the defence power in relation to the acquisition of wheat was still very wide at the end of 1946. But in any event, I think that the Commonwealth Parliament is authorized under the defence power at any future time to legislate retrospectively with respect to past occurrences where the ambit of the power would have been wide enough at the time of such occurrences to enable similar legislation to have been then passed having a prospective operation. Otherwise the Commonwealth Parliament, after the cessation of hostilities, could not pass an ordinary Indemnity Act indemnifying its subjects against the consequences of bona-fide acts unlawfully done in the prosecution of the war.

[14]

For these reasons I am of opinion that the acquisition of the plaintiff's wheat by the Commonwealth was lawful, and its only cause of action is a claim for compensation under the Wheat Acquisition Regulations. Regulation 14 provides that the property of the plaintiff in its wheat is converted into a claim for compensation. Regulation 19 provides a method of determining the amount of compensation. Regulations 14 and 19 give similar rights to compensation to those conferred by regs. 12 and 17 of the National Security (Apple and Pear Acquisition) Regulations which were construed by this Court in Andrews v. Howell [1] and Australian Apple and Pear Marketing Board v. Tonking [2] . It was held in the latter case that regs. 12 and 17 provided two alternative means of assessing the compensation, the one by action in the courts under reg. 12, and the other by the administrative means provided by reg. 17. My own opinion of the legal effect of these regulations appears in the register [3] . The present action is to enforce a right of compensation conferred upon the plaintiff by reg. 14 similar to the right of action conferred upon the plaintiff in Tonking's Case [2] by reg. 12. The Commonwealth is a defendant to the action so that this Court has original jurisdiction under s. 75 (iii.) of the Constitution. Section 51 (xxxi.) of the Constitution provides that the Commonwealth Parliament may make laws with respect to the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws. This placitum does not of itself give a right of action for compensation. But it requires that when a law of the Commonwealth provides for the acquisition of property it must also provide for just compensation, otherwise the acquisition will be unlawful. The provisions of each law must be judged on their merits. The placitum does not mean that these provisions must necessarily comply in every respect with the principles of the common law relating to the assessment of compensation for the compulsory acquisition of property. But reg. 14 of the Wheat Acquisition Regulations simply converts the interest of the grower in the wheat into a claim for compensation. It does not seek to alter the common law principles in any respect. These principles are therefore applicable to the present action.

[16]

The right to compensation arises at the moment of acquisition. If the property acquired is an ordinary commodity which is being bought and sold in the market: "The value of any such article at any particular time can readily be ascertained by the prices being obtained for similar articles in the market" (Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapatam [1] ). Australian wheat is an ordinary commodity of trade and commerce which before the outbreak of war was being bought and sold in the market for local use and for export. The price obtainable was usually the same whether the wheat was bought for local use or for export, except where the export market was firm and rising, in which case the local merchants often had to pay up to a penny a bushel more than the export price. Since the outbreak of war the Commonwealth has acquired all the Australian wheat under the provisions of the Wheat Acquisition Regulations, and disposed of the whole crop through the Australian Wheat Board. The policy of the Board has been to sell locally that portion of each crop (usually about half) required for home consumption and to sell the balance for export through its London agents. In November and December 1945 and January 1946, therefore, when the plaintiff's wheat of the 1945-1946 season was acquired, there was no ordinary Australian market for the sale of wheat either for local use or for export. Certain records were produced on subpoena duces tecum from the New South Wales Department of Agriculture which purported to give the prices quoted on the English market at the selling centre in London for Australian wheat f.o.b. Australian ports for the period commencing on 2nd January 1942 and ending on 31st December 1946. The first and fifth columns of these records were admitted by agreement of the parties, subject to relevance, as evidence of their contents. At first I was under the impression that these were quotations of buyers in London of the prices at which they were prepared to purchase Australian wheat. But the Australian Wheat Board were the only sellers of Australian wheat for export during this period, and it later appeared that these figures were simply quotations of the prices at which the Board from time to time entered into contracts for the sale of Australian wheat. If they had been quotations of ordinary buyers, the question would have arisen whether they were evidence of the market value of Australian wheat.

[20]

The plaintiff admits that the prices at which the Board sold the wheat of the 1945-1946 crop for export were the best prices that could be obtained, so that, in estimating this sum, the prices which the Board was obtaining at the relevant period f.o.b. Australian ports for the wheat which it was selling for export are evidence of what the value of Australian wheat would have been under the ordinary law of supply and demand in a free market at that period. These prices indicate that, if there had been such a market at the date of acquisition, the plaintiff would have been able to sell its wheat at from 9s. 3d. to 9s. 9d. for bulk wheat and from 9s. 6d. to 10s. for bagged wheat. But I think that it is quite impossible to assume that if each harvest had not been acquired by the Commonwealth, the Commonwealth would have allowed the price of wheat for local use to rise to such an extent that the price of bread would have been affected or that the Commonwealth would have allowed any wheat to be sold for export except such wheat as was in excess of local requirements. As I have already said, about half the wheat of each crop was required for this purpose. I agree with Mr. Barwick that the amount of compensation should be the same whether the hypothetical purchaser should be considered to include all the possible purchasers who would have existed if there had been an ordinary market, or whether the circumstances were such that the Australian Wheat Board should be considered to be the only possible purchaser. I think that the proper approach to the problem is to assume that the Board, which was in possession of all the facilities for handling the wheat, was the only possible purchaser, but that the growers as reasonably willing vendors could only be expected voluntarily to sell their wheat to the Board at the same price as they would have obtained if there had been an ordinary market (Vyricherla's Case [1] ; Geita Sebea v. Territory of Papua [2] ). But in estimating the price which the growers could reasonably expect to receive in such a market, all the probable circumstances must be taken into account.

[24]

To meet the case when the value of wheat f.o.r. Australian ports rose above 5s. 2d. per bushel, provision was made by the Wheat Tax Act 1938 for a tax upon wheat grown in Australia, and, on and after a date to be fixed by proclamation, sold to a wheat merchant; and by the Flour Tax (Imports and Exports) Act 1938, s. 4 (b) for a tax upon all wheat exported from Australia, on or after a date to be fixed by proclamation, not being wheat upon which tax was imposed by the Wheat Tax Act 1938. The formula for these taxes was as follows: - "The rate of tax, not in any case exceeding one shilling per bushel of wheat shall be at such rate per bushel of wheat as the Minister, from time to time, and in accordance with a recommendation by the Committee, declares, by notice published in the Gazette, to be the amount which bears the same proportion to the excess of the price of a bushel of wheat free on rails at Williamstown in the State of Victoria, at the time of the recommendation by the Committee over five shillings and twopence as the quantity of wheat which, in the opinion of the Committee, will be consumed in Australia (whether as wheat or as products derived from wheat) during the twelve months following the preceding first day of October bears to the total crop which, in the opinion of the Committee, will be harvested during that period." The Act relating to the imposition assessment and collection of all these taxes was the Flour Tax (Wheat Industry Assistance) Assessment Act 1938. Section 12 (2) of this Act provided that the tax upon wheat exported from Australia on and after a date to be fixed by proclamation should be paid by the exporter of the wheat. Section 13 (2) provided that the tax imposed by the Wheat Tax Act 1938 should be paid by the wheat merchant to whom the wheat was sold. The Wheat Industry Assistance Act 1938 provided for the destination of the proceeds of these taxes. Section 5 provided for the opening of a fund to be known as the Wheat Industry Stabilization Fund, into which there should be paid all moneys from time to time collected under the Flour Tax (Wheat Industry Assistance) Assessment Act 1938. Section 6 (1) provided that, subject to this Act, the moneys standing to the credit of the fund should be applied in making payments to the States as grants of financial assistance. Section 6 (3) provided that there should be kept in the fund an account to be known as the Wheat Industry Special Account to which there should be credited out of the receipts of the fund in the first year the sum of £500,000, and in the following four years such amounts not exceeding this sum as the Minister determined. Section 6 (4) provided that there should be kept in the fund an account to be known as the Wheat Tax Account, to which should be credited out of the receipts of the fund all moneys collected under the Flour Tax (Wheat Industry Assistance) Assessment Act 1938 as a tax upon wheat exported from Australia or upon wheat produced and sold in Australia. Section 7 provided for the allocation from the Wheat Industry Special Account between the States of New South Wales, Victoria, South Australia and Western Australia. The amounts paid in the first year were to be applied in the provision of relief to distressed wheat growers and in the subsequent years towards meeting the cost of transferring wheat farmers from land unsuitable for the economic production of wheat, or to arranging for such land to be used for other purposes. Section 8 provided for payments from the Wheat Tax Account to the States by way of financial assistance upon condition that these amounts were distributed to the flour millers in these States in accordance with such methods of distribution as was decided by the Minister after advice from the State Minister. Section 10 provided that where the Governor-General was satisfied, inter alia, that (b) a State had not taken steps adequately to protect consumers of flour and other wheat products against excessive prices in respect of those commodities, the Governor-General might, by notice in the Gazette , suspend payments to that State under the Act during such periods as, in his opinion, (d) those consumers were not protected against such excessive prices. At the same time as this Commonwealth legislation, the States passed legislation for the purpose of fixing the minimum and maximum prices of flour and the prices of bread. This legislation took the form of authorizing the Governors of the States to make proclamations for this purpose. Pursuant to this authority a number of proclamations were made in the various States.

[26]

On 21st October 1940 a declaration was made under the Flour Tax Act 1938 and the Flour Tax (Imports and Exports) Act 1938 by the Minister that the amount by which the price per ton of flour based upon the price of wheat per bushel free on rails at Williamstown in the State of Victoria on that date was less than what, in the opinion of the Committee, the price of flour would be if the price of wheat were five shillings and twopence, was two pounds eight shillings and tenpence. It is common ground that the price per bushel of bulk wheat is threepence less than the price per bushel of bagged wheat. As I understand the evidence, the declaration was made on the basis that the export value of wheat f.o.r. Australian ports was three shillings and elevenpence farthing per bushel for bulk wheat. No subsequent declaration was made under these Acts although there was a gradual rise in the export value of wheat. This was because all wheat was being delivered to and sold by the Australian Wheat Board in accordance with the Wheat Acquisition Regulations, and the Board adopted the policy of keeping the price of wheat sold for flour for local consumption pegged at the arbitrary price of three and elevenpence farthing on a bulk basis so that the flour tax would remain constant at £2 8s. 10d. per ton, despite the fact that during and after the first half of 1944, the export value of Australian wheat rose above 4s. 11d. per bushel f.o.r. Australian ports for bulk wheat. In consequence no proclamations were made bringing the Wheat Tax Act 1938 or the Flour Tax (Imports and Exports) Act, s. 4 (b), into operation. But provision was made by the Wheat Industry (War-time Control) Act 1939, as amended, to divert to the Board the payments of flour tax which would otherwise have been made to the States for distribution among the wheat growers, so that these moneys could be added to the funds available for the payment of compensation to the growers under reg. 19 of the Wheat Acquisition Regulations.

[33]

I was referred by Mr. Mason to certain matters which occurred in 1946 after the date of acquisition: (1) On 22nd May 1946 regulations were made under the Customs Act 1901-1936 prohibiting the export of flour and wheat until the intending exporter produced to the Collector of Customs a covering approval issued by the Department of Commerce and Agriculture. (2) The Wheat Export Charge Act came into operation on 9th August 1946. This Act was amended by the Wheat Export Charge Act (No. 2) 1946 which was assented to on 14th December 1946 but was deemed by s. 2 to have come into operation on 9th August 1946. Section 4 (1) (aa) provides that a charge should be imposed and levied and paid on all wheat harvested on or after 1st October 1945 and before 1st October 1947 and exported from the Commonwealth by any person other than the Australian Wheat Board on or after 1st December 1945. Section 4 (2) provides that subject to a lower rate being prescribed by the regulations the rate of the charge per bushel of wheat exported by any person other than the Board should be fifty per cent of the amount by which the price per bushel, at the date of export, for export of fair average quality bagged wheat free on rail at the port of export, as declared by the Board, or such lower rate as is prescribed exceeds 5s. 2d. (3) The Wheat Tax Act 1946 was assented to on 14th December 1946, but s. 2 provides that the Act should be deemed to have come into operation on 9th August 1946. Section 3 defines wheat to mean wheat harvested on or after 1st October 1945 and before 1st October 1947. Section 4 provides that a tax should be imposed and levied and paid in respect of all wheat which has been acquired or is acquired by the Commonwealth, and that the tax shall be payable by the grower of the wheat. Section 5 (2) provides that the total amount of the tax to be levied in respect of wheat of a season shall be ascertained by multiplying an amount equal to fifty per cent or such lower percentage as is prescribed, of the amount by which the average price per bushel f.o.r. at the ports of export for f.a.q. bagged wheat of all the wheat of that season exported by the Board, or such lower price as is prescribed, exceeds 5s. 2d. by the total of the number of bushels of wheat of that season, and of the wheat equivalent of wheat products manufactured from wheat of that season, exported by the Board or sold by the Board for export or for manufacture into wheat products for export. Section 5 (3) provides that the rate of the tax in respect of wheat of a season shall be an amount per bushel of wheat arrived at by dividing the total amount of tax to be levied in respect of wheat of that season by the total number of bushels of wheat of that season in respect of which the tax is imposed. Section 5 (5) provides for the Minister notifying in the Gazette a provisional rate of tax. Section 6 (1) provides that the Commonwealth or the Board may deduct any amount of tax payable by any grower from any moneys payable by the Commonwealth or the Board to that grower on any account whatsoever, and any amount so deducted shall be applied in payment, or part payment, of the tax so payable. By notification published in the Commonwealth of Australia Gazette on 17th January 1947, the Minister notified that the provisional rate of tax in respect of wheat of the season commencing on 1st October 1945 was one shilling one and one-eighth pence per bushel. (4) Section 18 of the Wheat Industry Stabilization Act 1946 which contemplates that a price of 5s. 2d. f.o.r. Australian ports for bagged wheat is a fair return to the wheat grower.

[36]

The addition of the sums which the plaintiff has already been paid and will receive under reg. 19, apart from taxation, is £4,925 4s. From this sum the Board proposes to deduct £805 18s. 2d. for tax at the source under the Wheat Tax Act 1946 leaving a balance of £4,119 5s. 11d. Strictly speaking the question whether the Board is lawfully entitled to deduct this tax at the source, or whether, even if the tax cannot lawfully be deducted at the source, the plaintiff is nevertheless liable for the tax, does not affect its quantum (Jordan v. Limmer & Trinidad Lake Asphalt Co. Ltd. [1] ). But I was asked by Mr. Mason to deal with the only contention raised against its validity, that is that the Wheat Tax Act 1946 is invalid because it infringes s. 55 of the Constitution. This section provides, so far as material, that laws imposing taxation shall deal only with the imposition of taxation, and that any provision therein dealing with any other matter shall be of no effect. It also provides that laws imposing taxation shall deal with one subject of taxation only. The Wheat Tax Act is a law imposing taxation, but it is in my opinion an Act which deals only with the imposition of one subject of taxation and with provisions incidental and ancillary to the assessment of the tax. It has recently been held by this Court in Cadbury-Fry-Pascall Pty. Ltd. v. Federal Commissioner of Taxation [2] that such provisions do not infringe s. 55. In my opinion the whole of the Act is valid. Even if the incidental provisions infringe s. 55, this would not invalidate the taxing provisions. But the Wheat Tax Act 1946 and the Wheat Export Charge Act 1946 provide for taxation in the two alternatives of a tax on wheat acquired and on wheat not acquired by the Commonwealth, in each case for export, so that in estimating the amount of compensation to which the plaintiff would be entitled under reg. 14 and comparing this amount with that which it will receive under reg. 19, I think that all questions of tax should perhaps be left out of account, and a comparison made between the two sums of £4,740 and £4,925. This comparison shows that the plaintiff will receive under reg. 19 a slightly larger sum than that to which it would be entitled upon an assessment under reg. 14, so that the action fails.

[43]

The Wheat Acquisition Regulations, made under the National Security Act 1939, and continued in operation under the Defence (Transitional Provisions) Act 1946, came into operation after the adoption of a wheat industry stabilization scheme in 1938. The Wheat Industry Assistance Act 1938, No. 53, provided for financial assistance to the wheat industry by the Commonwealth through the States. It provided for the payment of moneys to the States (s. 6) to be applied by the States in financial assistance of wheat growers (ss. 6 and 7). The moneys were to be raised by taxes on flour and wheat under Acts Nos. 48, 49, 50, 51 and52 of 1938. The rates of tax depended upon the price of wheat. It was a condition of the scheme, which depended upon State as well as Federal legislation, that consumers of wheat products, e.g. bread, should be protected against excessive prices (Act No. 53, s. 10). The object of this legislation was to provide a payable price for wheat. The price of 5s 2d. per bushel (for bagged wheat) and 4s. 11d. (for bulk wheat) free on rails at the port of Williamstown, Victoria, was adopted by the legislation as a payable price and the rates and incidence of the taxes were to be adjusted accordingly. As long as the export price of bagged wheat was less than 5s. 2d. f.o.r. Williamstown the flour tax would have been in force: Acts Nos. 49, 50. If the price exceeded 5s. 2d. the Flour Tax (Imports and Exports) Act 1938, No. 51 would have been brought into operation by proclamation and a tax would then have been payable upon wheat exported from Australia. The proceeds of the tax would have been available to keep down the cost of wheat used locally. The effect of this legislation is stated in Deputy Federal Commissioner of Taxation (N.S.W.) v. W. R. Moran Pty. Ltd. [1] . Williams J. in the present case summarized the legislation in the following words: - "It is clear from this legislation that in 1938 the Governments of the Commonwealth and the States took the broad view that, while the export value of wheat was below 5s. 2d. per bushel f.o.r. Australian ports, the Australian public as consumers of bread should be taxed indirectly to provide a subsidy for wheat growers, but that, if and when the export value of wheat exceeded 5s. 2d., the price which the wheat growers would otherwise have received for their wheat should be reduced by the wheat merchant or exporter having to pay a tax not exceeding 1s. per bushel on the wheat which he purchased, and that the proceeds of this tax should be used as a subsidy to keep down the local price of flour." [1]

[48]

The regulations, as they applied to the 1945-1946 crop, included the following provisions: - "14. For securing the public safety and the defence of the Commonwealth and the Territories of the Commonwealth, for the efficient prosecution of the war, and for maintaining supplies and services essential to the life of the community, the Minister may, from time to time, by order published in the Gazette, make provision for the acquisition by the Commonwealth of any wheat described in the order, and that wheat shall, by force of and in accordance with the provisions of the order become the absolute property of the Commonwealth, freed from all mortgages, charges, liens, pledges, interests and trusts affecting that wheat, and the rights and interests of every person in that wheat (including any rights or interests arising in respect of any moneys advanced in respect of that wheat) are hereby converted into claims for compensation." "19. (1) Upon delivery or consignment of any wheat in accordance with regulation 16 of these Regulations (or, in the case of wheat acquired by the Commonwealth to which sub-regulation (2) of regulation 16 of these Regulations applies, after the date of the commencement of that sub-regulation), every person having any right or interest in that wheat may forward to the Board a claim for compensation in accordance with Form B in the Schedule to these Regulations and shall be entitled to be paid such amount of compensation as the Minister, on the recommendation of the Board, determines. (2) It shall not be necessary for the Minister to make a determination in pursuance of sub-regulation (1) of this regulation until, in his opinion, a sufficient quantity of any wheat acquired by the Commonwealth has been disposed of to enable the Board to make a just recommendation, but the Minister may, in his absolute discretion, make any payment on account of any claim notwithstanding that no determination in respect of that claim has been made. (2a.) The basis of the compensation to be recommended by the Board shall be the rate or rates per bushel arrived at by reference to the surplus proceeds from the disposal of wheat, but from the compensation determined by the Minister the Board may make deductions on account of any or all of the following: - (a) the price or value of corn sacks (including freight thereon) supplied to the wheat grower or which, in the opinion of the Board, form a proper charge against the proceeds of the wheat; (b) transport charges to the terminal port from the place at which the wheat is delivered to a licensed receiver; and (c) dockages or deductions as fixed by the Board on account of the quality or condition of the wheat or corn sacks (2b.) If the Board is satisfied that, because of the special quality of any particular parcel or parcels of wheat, an addition should be made to the relevant rate as determined by the Minister for f.a.q. wheat, the Board may, subject to any direction of the Minister, add such amount by way of premium as it thinks fit."

[49]

Regulation 14 provides that compensation shall be paid. Regulation 19 provides a particular method of assessing compensation. For reasons which I state hereafter, it does not appear to me to be important in this case to decide whether reg. 19 was, on the true construction of all the regulations, intended to be the only method of assessing compensation, or whether it was intended to provide only for an optional non-litigious means of assessing compensation, of which owners of wheat could (but need not) take advantage if they chose. In Andrews v. Howell [1] the validity of reg. 12 of the National Security (Apple and Pear Acquisition) Regulations was upheld by the Court. The regulation was in terms substantially the same as those of reg. 14 of the Wheat Acquisition Regulations. All the members of the Court held that reg. 12 was not invalid as not providing just terms of acquisition. A regulation (reg. 17) providing for the determination of compensation by the Minister after recommendation by a Board, but not in terms requiring the whole of the net proceeds to be distributed by way of compensation, was held by Starke J. [2] not to be an exclusive method of enforcing the right to compensation. In Australian Apple and Pear Marketing Board v. Tonking [3] , this view was adopted and applied by Williams J. [4] , Rich J. [5] , and myself [6] . Since the decision in Tonking's Case [3] the Apple and Pear and Wheat Acquisition Regulations have been re-enacted by Parliament itself in the Defence (Transitional Provisions) Act 1946. No amendments were made for the purpose of altering the law as declared in Tonking's Case [3] . When the legislature uses words which have received judicial interpretation, then, in the absence of any indications to the contrary, it should be assumed that the words are used in the sense in which they have been judicially interpreted (Jay v. Johnstone [1] ; Avery v. Wood [2] ). Andrews v. Howell [3] and Tonking's Case [4] were not challenged or questioned by either plaintiff or defendants. But, as I have already said, there are, in my opinion, reasons (which I state hereafter) which make it unnecessary to decide in this case whether reg. 19 is intended to be the only method of obtaining compensation.

[78]

If compensation is payable upon a basis which disregards the pool, it should be determined by inquiring what could have been obtained by the plaintiff company for its wheat if the wheat had not been compulsorily acquired. Plaintiff's counsel expressed this principle by saying that it should be assumed that there was "a free market" for wheat at the time when the wheat was acquired and argued that this meant an hypothesis not only that no powers of compulsorily acquiring the plaintiff's wheat had been created, but also that there were no powers of compulsorily acquiring any wheat from any other persons. I agree with the former proposition but, upon the view which I take of the effect of the evidence, it is unnecessary for me to express an opinion upon the latter proposition, which cannot be said to be as clearly established as the former proposition. Reference was made to Cedars Rapids Manufacturing & Power Co. v. Lacoste [1] and Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapatam [2] , which were land compensation cases. In the former case the claimant sought to have the value of his land assessed upon the basis that it would form a valuable part of the enterprise to be established by the acquiring authority. It was held, however, that the price which was payable as compensation was to be tested by "the imaginary market which would have ruled had the land been exposed for sale before any undertakers had secured the powers" (of compulsory acquisition) [3] . Accordingly, the question to be investigated was for what the land would have been sold if "put up to auction without the appellant company (the acquiring authority) being in existence with its acquired powers, but with the possibility of that or any other company coming into existence and obtaining powers." Similarly, in the Vyricherla Case [4] it was said that the compensation for land compulsorily acquired must be determined by reference to "the price which a willing vendor might reasonably expect to obtain from a willing purchaser Neither must be considered as acting under compulsion." It was said that: "The valuation must always be made as though no such powers" (that is, of acquisition) "had been acquired, and the only use that can be made of the scheme" (that is, the enterprise for which the property acquired was to be used) "is as evidence that the acquiring authority can properly be regarded as possible purchasers" [5] .

[85]

In my opinion it is mere gratuitous assumption to say that in the circumstances stated there would have been export prices of 9s. 6d. and 9s. 9d. Those prices existed because the Australian Wheat Board existed, and because the disposition of wheat had been organized by the Board in co-operation with overseas authorities. The Board had obtained bags and, indeed, owned all the wheat bags in Australia at a time when it was very difficult to buy bags. It had the services of all the skilled wheat merchants. The evidence shows, and it is common knowledge, that trade, and especially export trade, in all commodities was gravely upset and disturbed by the war. It is impossible to say whether, if there had been no system of national control of disposition of wheat, including the provision of bags and shipping to take away exported wheat, it would have been possible to dispose of wheat at any particular price. Only 59,000,000 bushels or thereabouts out of the 123,000,000 bushel crop were required for home consumption. In the absence of some form of control, and particularly of governmental assistance for the purpose of obtaining shipping, it is quite probable that there would have been a glut of wheat in Australia with very low prices, or no prices at all, and that it would have been impossible to sell wheat for export. If in the disturbed conditions of 1945-1946 the wheat industry had been left to itself without any control it can only be a matter of speculation as to what the position of the wheat market in Australia would have been. A condition of complete chaos would have been as likely a result as any other. The plaintiff has received or is entitled to receive 6s. 11d. per bushel for its wheat if compensation is determined under reg. 19. The onus is on the plaintiff to show that the amount is not in all the circumstances fair compensation. The plaintiff has not in my opinion shown that, upon the hypothesis mentioned, it would have been possible to obtain as much as 6s. 11d. a bushel for the wheat. On this basis the claim of the plaintiff fails because it is not shown that the plaintiff has not already received adequate compensation.

[121]

The respondents submitted that reg. 19 prescribes the method of ascertaining the compensation payable under the regulations. That contention is contrary, it is contended, to the decisions of this Court in Andrews v. Howell [3] and Tonking's Case [4] . But I do not think that those cases control the construction of the National Security (Wheat Acquisition) Regulations. The National Security (Apple and Pear Acquisition) Regulations under which those cases were determined gave the parties whose apples and pears were acquired an absolute right to compensation the amount of which might be recommended to the Minister by the Apple and Pear Marketing Board. Such a provision it was held did not oust the jurisdiction of competent courts to determine the amount of the compensation but merely provided, if valid, another procedure for determining the amount of that compensation. In the case, however, of the National Security (Wheat Acquisition) Regulations, though the claims of the persons whose wheat is acquired are converted into claims for compensation and the amount of compensation is that which the Minister on the recommendation of the Australian Wheat Board determines, still reg. 19 (2A) provides that the basis of the compensation recommended by the Board shall be the rate or rates per bushel arrived at by reference to the surplus proceeds from the disposal of wheat subject to various deductions mentioned in the regulation. This regulation unlike the National Security (Apple and Pear Acquisition) Regulations envisages pooling the wheat acquired and distributing the proceeds amongst the persons from whom the wheat was acquired. I do not call in question the power of the Commonwealth to provide "just terms" of compensation by means of a pool. But the validity of the provision in the National Security (Wheat Acquisition) Regulations depends upon the character of the pool provided. By those regulations (reg. 26) authority is conferred upon the Board, on behalf of the Commonwealth, to sell or dispose of any wheat acquired by the Commonwealth. In each season the Board pooled the proceeds of sale, e.g., it constituted pools numbered 5, 6, 7, 8 and 9. Substantially, that numbered 9 was for the season 1945-1946 and is the pool relevant to this case. And reg. 19 prescribes, as already mentioned, that the basis of compensation to wheat owners shall be arrived at by reference to the surplus proceeds from the disposal of wheat recommended by the Board to the Minister. Even then the compensation payable depends upon the determination of the Minister and the recommendation of the Board.

[199]

As reg. 19 was originally drawn the indications that a commodity pool was intended were faint indeed. But very soon the process, apparently inseparable from legislation by regulation, of amendment, addition and agglutination began, and in the form in which we now have the regulations, particularly reg. 19, the intention to create a pool and treat the distributive share of the grower in the net proceeds of the wheat as his compensation appears clearly. Moreover, that intention has statutory recognition. Sub-regulation (1) of reg. 19 provides that after delivery of any wheat in accordance with the preceding regulations every person having any right or interest in that wheat may forward to the Board a claim for compensation in a form provided in the schedule. The sub-regulation proceeds to say that he shall be entitled to be paid such amount of compensation as the Minister, on the recommendation of the Board, determines. This form of words appears to me to make it necessary that any determination of the Minister should accord with the recommendation of the Board. Independently of the language of the sub-regulation, the probability that it was so intended is increased by other sub-regulations. But there is nothing in the language to compel the Minister to accept any given recommendation of the Board. If there is an adequate reason he may reject the Board's recommendation and so make for the time being no determination. But, if he makes a determination, it must conform with the Board's recommendation. Sub-regulation (2) is expressed apparently on the assumption that a duty rests on the Minister of making a determination, and that in the absence of some other provision it would be a duty to make a determination at once. On this footing the sub-regulation expressly provides that it shall not be necessary for the Minister to make a determination until in his opinion a sufficient quantity of any wheat acquired by the Commonwealth has been disposed of to enable the Board to make a just recommendation. With the background of governmental commodity pools in Australia and of the wheat pools of the war of 1914-1918 it is easy to see in this statement an assumption that the compensation will be arrived at by pooling. The same sub-regulation goes on to empower the Minister in his absolute discretion to make any payment on account of any claim, notwithstanding that no determination in respect of the claim has been made. The so-called advances are payments made under this power. Sub-regulation (2A), however, provides in terms that the basis of the compensation to be recommended shall be the rate or rates per bushel arrived at by reference to the surplus proceeds from the disposal of wheat.

[202]

All the foregoing considerations point, and in my opinion point unmistakably, to the conclusion that the regulations were designed to give effect to a plan for the establishment of wheat pools and the distribution of the surplus moneys produced by the wheat (amplified perhaps by subventions from the Treasury) among the wheat growers by way of "compensation." During the course of the war the Legislature more than once had occasion to deal with the wheat industry, and in the statutes passed there are several provisions which not only recognize the system of pooling, but also proceed upon the view that only through the pools did the moneys forming a return for his wheat reach the farmer. To begin with, by s. 6 of the Wheat Industry (War-time Control) Act 1939, which was assented to on 15th December 1939, the proceeds of the flour tax were diverted to the Board's bank account in repayment of advances made pursuant to reg. 28. Now the flour tax forms part of the plan adopted in 1938 for equalizing the price of wheat by imposing a levy upon flour when wheat is below the legislative standard price and distributing it through the States to the growers by way of bounty upon the quantities of wheat the growers have respectively sold or delivered during the year. Contingently upon wheat rising above the appointed standard, a corresponding bounty to the miller upon his flour is to be raised by a wheat tax, but that is beside the point in hand. It seems to be clear enough that to divert the bounty upon wheat to the Board's account could mean only that by adding the total of the bounty to the distributable surplus of the proceeds of the wheat you ensured that the wheat grower obtained his share of what before had been distributed through the States to the wheat growers in proportion to the quantity of wheat sold or delivered for sale by each wheat grower during the year in respect of which the payment was made. I shall not here describe the rather complicated provisions which produce this result. It is enough to say that it will be found to be the effect of Acts No. 53 of 1938, s. 6 (1), (5), (6) and (7); No. 48 of 1938, ss. 10, 13; No. 49 of 1938, ss. 4, 5; Act No. 52 of 1938, ss. 4, 5; and Act No. 84 of 1939, ss. 4, 5, 6, and of s. 7 as amended by s. 6 of No. 70 of 1940. Again, in the course of legislating for a wheat price stabilizing plan adopted in 1940 but never put into effect, the Parliament used language of some significance with reference to the compensation payable under the Wheat Acquisition Regulations. The provision in which the expressions occur was concerned with the application of a fund to be established for the purpose of subsidizing wheat when the return was less than a specified standard. Section 7A of the Wheat Industry (War-time Control) Act 1939-1940, since repealed by No. 19 of 1944, is the provision in question. The material words are these: "The moneys standing to the credit of the stabilization Fund shall be applied for the purpose of enabling the Commonwealth to pay to any person from whom it acquires wheat in pursuance of the Wheat Acquisition Regulations the amount by which the minimum amount of compensation payable in accordance with those Regulations exceeds the amount which the Minister, having regard to the market value of wheat at the time when it is delivered to the Commonwealth, determines would have been a just amount of compensation if no minimum amount had been prescribed." The last words read as if some regulation prescribing an amount were in contemplation, and this is said in fact to have been the case. But none was in fact made and I doubt if authority to make one existed or was ever conferred. What is important, however, is that a contrast is drawn between the market value of the wheat and the amount of compensation. I take the minimum amount contemplated to be a distributable rate per bushel without premium or other addition. The Wheat Subsidy Act 1944, s. 5 (1), uses the expression "to ensure to each wheat grower a standard minimum aggregate return." Again, in this Act the payments of the subsidy go through the Board, s. 6. The assumption underlying this enactment pretty plainly is that compensation for wheat is the result of distribution from a pool.

[230]

On the other hand there are measures which have not already taken form, whether as statute, regulation or statutory order, but which might be considered appropriate to the situation which would exist had there been no compulsory acquisition of wheat under the Wheat Acquisition Regulations and no control by that means. That is another case. It depends on the adoption of a policy, a substitute for the policy embodied in the Wheat Acquisition Regulations, and on the carrying of it into effect by legal means. It is illustrated by the assumption, that if the Board as owners of the wheat, had not been in a position to sell for home consumption at the lower domestic prices the board fixed the Government would have taken some other measure to see that the wheat was sold for domestic consumption at some such price level. This question ought not perhaps to be dealt with in the abstract, but the facts which may be thought to affect it should be stated. Whether wheat was bought for export or for home consumption had never been a matter to affect the price for which the grower sold it, nor his return from a pool, if he delivered it to a pool, either during the war of 1914-1918 or subsequently. Except in times of drought, the exportable surplus of Australian wheat is very large. It cannot be expressed as a proportion of the average crop because the production of wheat varies so immensely from season to season. Relatively there are not very great variations in the annual domestic consumption of wheat in the form of flour and of breakfast foods and food for poultry and stock and (what in effect was not covered by the order of acquisition) for seed wheat. What remains of the crop is the exportable surplus and its proportionate relation to domestic consumption depends on the season's production. In the decade of the nineteen twenties until towards its close, the prices of wheat, though of course by no means constant, stood at an average considerably exceeding 5s. 2d. Then a collapse in prices occurred from which the recovery was slow and unsteady. In 1937, however, the price was about 5s., when another decline set in. By the end of November in that year the price was about half a crown. It was in these circumstances that Parliament passed the Wheat Industry Assistance legislation, the assent to which was given on 2nd December 1938. Its purpose and effect is well summarized as follows in the Commonwealth Year Book for 1938 (No. 31, p. 966): - "This legislation supplements legislation of a uniform type passed by all the State Parliaments and is designed to enable the operation of a home consumption price scheme for the wheat industry on a Commonwealth basis. The legislation is based on a home consumption price of 5s. 2d. a bushel, free on rail, Williamstown, equivalent to 4s. 8d. at country sidings. When the price of wheat falls below that level the returns of growers will be supplemented by payments from a fund established from the proceeds of a flour tax which varies inversely with the price of wheat. When the export price rises above that level provision is made for a tax on wheat sold, the proceeds of which are to be applied to ensure that the cost of wheat gristed for home consumption shall not exceed 5s. 2d. per bushel. Out of the general fund a sum not exceeding £500,000 per year will be reserved for special purposes including the transfer of producers growing wheat on marginal lands to other areas where they will be able to engage in mixed farming or to enable them to increase the size of their holdings to make wheat growing worth while. A Wheat Stabilization Advisory Committee has been established to determine the appropriate times for a variation in the rate of tax which will be fixed on the basis of a rigid formula. The State legislation undertakes to ensure that prices charged to consumers are reasonable and the Commonwealth legislation contains provision that no State shall be entitled to receive payments where that undertaking is not carried out."

[239]

The Commonwealth, however, suggests reasons, in part of fact and in part of law, independently altogether of the foregoing considerations for saying that the plaintiffs' wheat could not have been sold at a parity with export prices, if there had been no expropriation of the plaintiffs. First, it is said that by the well-known Prices Regulation Order No. 1015 of 13th April 1943, the validity of which was sustained by this Court in Fraser Henleins Pty. Ltd. v. Cody [1] , wheat is included in the general restriction of prices to prices which the seller charged on or last prior to 12th April 1943 for substantially identical goods sold on substantially identical terms and conditions or, if he had not before sold substantially identical goods, then to the cost of the goods to him. Accordingly, so it was argued, the prices could not have gone beyond the price of wheat sold by the plaintiffs before 12th April 1943, or beyond the cost of production, as the case might be. I think that this order was never intended to include wheat and does not do so. For commercial purposes f.a.q. wheat of one season has not been considered the same thing as f.a.q. wheat of another season. "Cost of the goods to the seller" would be ridiculous as a definition of maximum price if applied to the agricultural production of wheat delivered to the siding. At the time when the order was made the sale of wheat was a government function carried on by the Board, except seed wheat, and that was not beyond the control of the Board. It is evident that the order did not contemplate the commodity. Moreover, the exclusion of perishable products is in itself enough to put wheat outside its operation. Perishable product is not an exact expression, but I notice that the Oxford English Dictionary gives the word "perishable" as meaning especially, naturally subject to speedy decay, as organic substances, minerals which rapidly weaken or become decomposed, and the like. Unprotected wheat would qualify under this definition. It is noteworthy that some authorities give as the reason why at common law wheat was not liable to distress that it is of a perishable nature, although others put it on the ground that like money wheat is not identifiable. The latter reason, however, could not apply to a sack of corn, just as it did not apply to a bag of money.

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Judgment (291 paragraphs)

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