New South Wales v Bardolph [1934] HCA 74 | Case summary

New South Wales v Bardolph [1934] HCA 74 | Case summary | Zoe

[117]

RICH J. This is an appeal by the State of New South Wales from a decision of Evatt J. given in an action brought in the original jurisdiction of this Court by a resident of South Australia. The plaintiff is the proprietor of a newspaper called Labor Weekly. He sues to recover moneys payable under a contract for advertising. In 1931 the plaintiff obtained from the Government of New South Wales a contract for a given amount of space in his newspaper for the purpose of advertisements of the Government Tourist Bureau. The period of this contract was twelve months. At the end of this period of twelve months the full amount of space had not been used. The plaintiff apparently desired a contract for a further period of twelve months and he also wished to arrange for the use of the balance of the space available under the previous contract during the succeeding twelve months. The Tourist Bureau of New South Wales is an ordinary sub-department carrying on a recognized governmental activity. It is an industrial undertaking under the Special Deposits (Industrial Undertakings) Act 1912, New South Wales. Naturally the work it does involves a great deal of advertising. But many other departments of Government find it necessary in these days to make use of the advertising columns of the press and other means of publicity. To deal with all such matters it seems to have been found desirable to appoint a central officer through whom all advertisements may be arranged. He is given the title of "Editor of Publications and Superintendent of Advertising." His office is under the Premier, who in New South Wales administers a separate department of Government known as the Premier's Department. The Tourist Bureau is under the Chief Secretary. The plaintiff interviewed the Superintendent of Advertising for the purpose of arranging his further contract. That officer received instructions from the permanent head of the Premier's Department to treat any directions he might receive through the Premier's private secretary as commands of the Premier. Through the Premier's private secretary he had been told that it was a matter of Government policy to advertise in the plaintiff's journal and he accordingly made a contract reserving space for twelve months from 1st April 1932. As I understand the facts found by Evatt J. and disclosed by the evidence, the actual contract which he made had the personal authority of the Premier authenticated by the instructions of the Premier's private secretary. Not many weeks after the making of the contract a change of Government took place. The new Government informed the plaintiff that no further advertisements would be inserted in his paper. The plaintiff refused to treat this as the termination of his contract, which he held open by continuing the advertisements with which he had been supplied. At the end of twelve months he sued for the total sum of the advertising rates specified in his contract. The defence of the Government did not depend upon the form in which he sued nor upon any attack upon the bona fides of the transaction either on his part or on that of the former administration. It consisted of a denial of the Crown's liability upon such a contract in the absence of any statutory power or authority to make it and any statutory adoption or ratification and any specific appropriation of funds to meet the expenditure involved. At the trial before Evatt J. no independent contention seems to have been advanced that the evidence did not establish that the Premier gave his personal assent to the contract, or, that if it did, his legal authority was insufficient to make it a transaction of the Crown's. But upon this appeal these points were also discussed, subject, however, to the protestations of the plaintiff's counsel that they were not open. Open or not, they ought, in my opinion, to fail. A proper officer of the Premier's department receives from his permanent head, whom he is bound to obey, instructions to carry into effect such orders as he receives from the Premier's secretary as on the Premier's behalf. When he acts on an order so given through what is thus established to be a regular channel of communication it must be assumed until the contrary is shown that he acted with the Premier's actual authority. In the next place, the Premier's position is such that a transaction otherwise within the competence of the Crown which he carries through and which is not disowned by his administration, particularly when it pertains to his own department, must be treated as the transaction of the Crown. The conduct of Government business would otherwise be impossible.

[118]

The question whether the transaction was within the competence of the Crown cannot be answered simply by considering the statutory authority for it. Apart from the question whether parliamentary appropriation of moneys is a prerequisite of the Crown's liability to pay under a contract made by it, the Crown has a power independent of statute to make such contracts for the public service as are incidental to the ordinary and well-recognized functions of Government. When the administration of particular functions of Government is regulated by statute and the regulation expressly or impliedly touches the power of contracting, all statutory conditions must be observed and the power no doubt is no wider than the statute contemplates. But that is not the present case. The Tourist Bureau is recognized under statute as a function of Government and for many years in New South Wales it has been recognized, both in Parliament and out, as part of the established service of the Crown. The Special Deposits (Industrial Undertakings) Act is in no way concerned with the administration of the department. It relates to accounting and the segregation of funds. In my opinion it was an ordinary incident of this particular function of Government to make a contract for advertising. It is another question whether the contract can take effect against the Crown without an appropriation of funds to answer it. Evatt J. made a close examination of the relevant heads of the Supply and Appropriation Acts and came to the conclusion that sufficient money had been voted during the period of the contract for the purpose with which the contract dealt to answer the liability sued upon, and in this conclusion I agree. But the Crown contends that this is not enough to give validity to the contract. The appropriation is specific in purpose and not general, and such expenditure as would in fact satisfy the contract is within that purpose. But of course expenditure upon this particular contract as a specific obligation was not referred to in any of the items or heads. Accordingly it is contended on behalf of the Crown that there is no sufficient parliamentary appropriation of funds. In my opinion this contention is founded upon a misunderstanding of the principle invoked. Such a misunderstanding arises from too literal an application of some of the expressions used in judicial pronouncements which state with much force the necessity of parliamentary control of public moneys. The occasion for such pronouncements could not arise in the days when the Crown was exposed to no statutory liability to suit for money claims. The procedural difficulties which attend the common law petition of right made that remedy inconvenient to the subject. As Sir William Holdsworth points out (History of English Law, vol. IX., p. 39) one reason for the revival of that remedy in the nineteenth century lay in the manifold activities of the modern State which necessitated some remedy against the Crown for breach of contract. The Petitions of Right Act 1860 then made it a more generally available remedy. But under the better procedure no apprehension could be felt that a judgment would give the suppliant any greater right to obtain without the consent of Parliament a payment from the Crown than he had before. The Petitions of Right Act 1860 in remodelling the remedy observed the principle of parliamentary control. Under sec. 14 of that Act the judgment cannot be executed by process and the Commissioners are required to pay only out of the moneys legally applicable for the purpose. Dominion and Colonial legislation giving remedies against the Crown takes various forms and in some jurisdictions the judgment authorized imposes an absolute liability to pay. But we are concerned only with the effect of the Judiciary Act 1903-1933, Part IX. This provision does not impose an absolute liability. The only judgment to which the Crown is liable is one which requires the Treasurer of the Commonwealth or State, upon it being certified to him, to satisfy it out of moneys legally available (secs, 64, 65). The object of such a provision is to enable the subject to establish his claim that he is a person who would be entitled to a contractual right to payment out of moneys available for that purpose. It leaves completely in the hands of Parliament the question whether moneys shall be made available for the purpose. But it recognizes that, in a jurisdiction over matters between a State and a resident of another State, between two States, between State and Commonwealth and between Commonwealth and subject it is necessary to enable the Court to pronounce upon all legal questions arising in contract or in tort up to the point at which the authority of Parliament to grant or withhold funds emerges. The establishment of the subject's right in other respects must logically come before, not after, the consideration by Parliament of the question whether he should be paid if his situation be one to be specially dealt with by Parliament. My brother Dixon has dealt with the difficulties created by judicial utterances on this matter and I do not desire to repeat a discussion of the course of authority. But I think these difficulties have largely disappeared as the result of the three most recent formulations of the doctrine. The statement of Viscount Haldane in Attorney-General v. Great Southern and Western Railway Co. of Ireland [60], at p. 771 makes it clear that he regarded absence of appropriation as no answer to a petition of right because he speaks of paying the judgment out of the funds thereafter voted by Parliament for the purpose. His Lordship's statement during the argument of Kidman v. The Commonwealth [61] explicitly denies that failure to appropriate made a contract of the Crown null and ultra vires, and clearly stated that the doctrine meant that the presumption was that the contract bound only funds appropriated to answer the liability under the contract. Finally, Isaacs C.J. in Australian Railways Union v. Victorian Railways Commissioners [62] explains that it is no more than a condition implied in the contract that before payment is made Parliament must appropriate the necessary money, but that a contract otherwise within the authority of Government is binding subject to that condition. The Judiciary Act is designed to give effect to the condition.

[120]

STARKE J. The State of New South Wales has an advertising branch, which forms part of the Department of the Premier, an office recognized by the Constitution of New South Wales. (See Constitution Act 1902-1930 (N.S.W.), and Schedule. Incorporated Acts, vol. VIII., p. 33.) It has also a Government Tourist Bureau, which is an industrial undertaking subject to the provisions of the Special Deposits (Industrial Undertakings) Act 1912, No. 22. The Bureau forms part of the Department of the Chief Secretary. In 1931 Mr. Lang, the then Premier of New South Wales, gave instructions, through his private secretary, to the Superintendent of Advertising, that an advertising contract should be given to the proprietors of the Labor Weekly, "as a matter of Government policy." Bardolph, the respondent, was the proprietor of this newspaper. The Superintendent of Advertising was an officer in the service of the Crown in New South Wales, properly appointed, as is admitted. In April 1931, the Superintendent of Advertising, pursuant to this instruction, entered into an advertising contract with the proprietors of the Labor Weekly. It was in the following form: -- "The Labor Weekly. The circulation embraces the whole of the Trade Union Movement. Head Office: 11 Franklin Street, Adelaide. Sydney Office: Labor Council, Trades Hall, Goulburn Street, Sydney. Official Organ of the Labor Council of New South Wales, and the Australasian Council of Trade Unions, with which is associated the South Australian Worker, the official organ of the United Trades and Labor Council, the Port Adelaide District Trades and Labor Council and the Australasian Council of Trade Unions. Advertising contract entered into this first day of April 1931, between Premier's Department of New South Wales of the one part, and the proprietors of the Labor Weekly of the other part. Whereas it is hereby agreed by the said Premier's Department of New South Wales to utilise advertising space in the Labor Weekly on the following terms and conditions: Period of this contract 12 months. Total number inches contracted 5,000. Contract to commence from 2nd April 1931. All advertising space in this contract to be used by April 1932. Number of issues over above period, fifty-two. Minimum space to be used each issue, 75 inches. Price per single column inch 4s. Setting charges, nil. Total amount £1,000 (One thousand pounds). Page and position, best available. This contract is deemed to have been made in Adelaide. Casual displacement or omission of advertisements shall not invalidate this contract. All advertisements are accepted subject to the approval of the management of the Labor Weekly, who reserve the right to omit an advertisement at any time, whether part of a serial or not. Such action shall not invalidate this contract. All accounts to be paid monthly. Signed for and on behalf of the proprietors of the Labor Weekly -- per K. E. Bardolph. Signed for and on behalf of the said Premier's Department of New South Wales -- per E.F.H. Harpur, Superintendent of Advertising." There is no Order in Council or Executive minute sanctioning or approving any such contract. Save that 1,100 inches of space were not used, the contract was carried out, and payments were regularly made by the Government. In April of 1932, the then Premier, through his private secretary, again intervened and gave oral instructions that another contract should be given to the proprietors of the Labor Weekly. Again, however, there is no Order in Council or Executive minute sanctioning or approving such a contract. The Superintendent of Advertising, pursuant to those instructions, entered into another contract with the respondent. It was as follows: -- "Advertising Bureau, Premier's Department, Sydney, 12th April, 1932. Government Advertising. To the Proprietor of Labor Weekly. Be good enough to have advertisements re Government Tourist Bureau or other matter, 3,900 inches, to be taken over period from 1st April 1932, and ending 11th April 1933. Minimum space to be used per week 75 inches. Total amount at 5s. 6d. per inch, one thousand and seventy-two pounds 10s. (£1,072 10s.). E. F. H. Harpur, Editor of Publications and Superintendent of Advertising, (Sgd.) E. F. H. Harpur." The Superintendent also agreed orally that the 1,100 inches of space unused under the prior contract should be used at the rate of 45 inches per week, and at the price fixed by the former contract. Advertisements were inserted in the Labor Weekly pursuant to this agreement, and payments were made in respect of those published before the 20th May. The Lang Government fell about the middle of May 1932, and on 17th May 1932 the new Government -- the Stevens Government as it is called -- refused to utilize any further space in the Labor Weekly for Government advertising. The notice given to the respondent was as follows: -- "New South Wales. Premier's Department, Sydney, 17th May, 1932. The Manager, Labor Weekly, Box 3681, S.8. G.P.O. Dear Sir, -- I am directed by the Premier to inform you that it is not intended to utilize any further space in your paper for Government advertising. Please be good enough to note that the instructions which I have received will preclude the payment of any accounts rendered for advertising appearing in the _Labor Weekly_after the current week's issue. Yours faithfully, C. H. Hay, Under Secretary." The respondent went on publishing advertisements, despite this notice, and his claim is for £1,114 10s. in respect of such publication. No objection has been made to the form in which he has made his claim or the amount claimed, if he is otherwise entitled to succeed.

[122]

"The departments of Government enter necessarily into many and various relations with the King's subjects, and the officers of these departments, through whom these relations are established, represent the Executive -- that is, the Crown" (Anson, Law and Custom of the Constitution, 3rd ed. (1908), "The Crown," vol. II., Part II., p. 298). It is well established that an officer of the Crown is not personally liable under contracts made by him for and on behalf of the Crown (Gidley v. Lord Palmerston [63]; Palmer v. Hutchinson [64]; Dunn v. Macdonald [65]). On the other hand, it must be conceded, in English law, that whenever a valid contract has been made between the Crown and a subject, a petition of right will lie for damages resulting from a breach of that contract by the Crown (Windsor and Annapolis Railway Co. v. The Queen and The Western Counties Railway Co. [66], at p. 613, and Robertson, Civil Proceedings by and against the Crown (1908), pp. 337 et seq.). But it is argued that no contract with the Crown can possess legal validity unless Parliament has authorized it, either directly or under the provisions of a statute (Churchward v. The Queen [67]; Commercial Cable Co. v. Government of Newfoundland [68]; Mackay v. Attorney-General for British Columbia [69]; Auckland Harbour Board v. The King [70]; Attorney-General v. Great Southern and Western Railway Co. of Ireland [71]; The Commonwealth v. Colonial Combing, Spinning and Weaving Co. [72]; The Commonwealth v. Colonial Ammunition Co. [73]). It is doubtless true, in modern times, that no money can be withdrawn from the public funds without a distinct authorization of Parliament itself. The Crown is dependent upon the supply granted to it by Parliament, and there is an express or implied term in its contracts that payment shall be made out of moneys so provided. But the existence of the contract is not conditional upon Parliamentary authority, or upon provision of funds by Parliament for the performance of the contract. The view that it is so conditional is entirely contrary to English practice, and to a long line of cases, collected in Robertson, Civil Proceedings by and against the Crown (1908), p. 337. (See R. v. Doutre [74]; Rayner v. The King [75].) Moreover, it is in opposition to the statement of the Judicial Committee in R. v. Fisher [76]. Constitutional practice, as in the Commercial Cable Case [77], or statutory provisions, as in Churchward's Case [78] or Mackay's Case [79] , may prescribe conditions precedent to the making of contracts with the Crown, and so far as these conditions exist they must be observed. But otherwise contracts made on behalf of the Crown by its officers or servants in the established course of their authority and duty are Crown contracts, and as such bind the Crown. The nature and extent of the authority may be defined by constitutional practice or express instructions, or inferred from the nature of the office or the duties entrusted to the particular officer or servant. It is not every contract made or purporting to have been made by an officer or servant of the Crown on its behalf that will bind the Crown, but only such as are within the authority delegated to that officer or servant. The authority is a matter which ultimately falls for determination in the Courts of law (see Musgrave v. Pulido [80]). The fact that a Premier, or a responsible Minister of the Crown, has entered into a contract on the part of the Crown, or has directed a subordinate official so to do by no means established the necessary authority: such a rule, while it might not destroy Parliamentary control over the amount and manner of expenditure of public money, would seriously weaken that control. In each case, the character of the transaction, and also constitutional practice, must be considered. The question of authority, in the case of contracts providing for the carrying on of the ordinary activities or functions of government, presents, as a rule, but little difficulty; other contracts, however, must be considered each in relation to its own facts.

[129]

Each contract was made by the Superintendent of Advertising under instruction from the Premier's private secretary. Orders had been given by the permanent head of the Premier's department that instructions from the private secretary should be treated as coming from the Premier. The use of the newspaper for such advertisements was, it is said, a matter of Government policy. For this reason, perhaps, the Director of the Tourist Bureau was informed that the cost of the advertisement would not be debited against the Bureau, a statement which, no doubt, meant that it would be met out of the amount annually appropriated to the Premier's department for expenditure under the head "Government Advertising." Shortly after the making of the contract sued upon, a change of Government took place and the new administration refused to use or pay for any further advertising space in the Labor Weekly. The plaintiff, notwithstanding this refusal, held the advertising space at the disposal of the Government and actually filled it by repeating advertisements already supplied. At the end of the year he sued the State of New South Wales for the total unpaid amount of the agreed advertising rates. The point is not made that he should have claimed, not the liquidated amount, but unliquidated damages. Nor is it denied that de facto a contract was made under the authority of the Premier as a responsible Minister of the Crown. Moreover, the honesty of the transaction is not impugned. No case is made that the contract, although entered into ostensibly for the purposes of the Tourist Bureau, was actually designed to benefit the plaintiff, so that, to his knowledge, it did not rest upon a bona fide exercise of authority on the part of the Crown's servants. The contention upon which the defence to the action depends is that, for two reasons, the facts I have stated are not enough to impose upon the Crown in right of New South Wales a contractual liability which is actionable. The first reason given is that at common law no authority resided in any of the servants of the Crown who made and authorized the agreement, and none was reposed by statute, to make on behalf of the Crown a contract of the nature of that put in suit. The second reason given is that no contract for the payment of money can expose the Crown to legal proceedings unless and until moneys to answer the payment have been appropriated by Parliament or the contract has been sanctioned by legislative enactment, and that neither of these conditions has been satisfied.

[132]

In considering whether the Crown was affected with responsibility for the agreement made on its behalf by the Superintendent of Advertising, that is, whether, independently of parliamentary provision of funds, it became the contract of the Crown, it is a matter of primary importance that the subject matter of the contract, notwithstanding its commercial character, concerned a recognized and regular activity of Government in New South Wales. Not only has the conduct of a Tourist Bureau been long practised by the Executive. It has been recognized by Parliament in the appropriation of funds, and it has been proclaimed under statute as an industrial undertaking. Again, it is a matter of no small importance that the contract was made by an officer appointed for the regular discharge of duties which included the making of contracts in reference to advertisements of the Tourist Bureau. His independent authority would probably be enough to support the contract, but the intervention of the Premier, in my opinion, puts beyond question the authority of the contract as a transaction of the Crown. In New South Wales the Premier is a Minister of the Crown known to the law. The Premiership itself is an office mentioned in the Constitution Act (cf. secs. 27 and 29 and Second Schedule). In his capacity of Premier he administers a department. It appears that, in the division of work among various departments, the making of advertising contracts fell to an officer of his department, who, therefore, must act under his control and direction. But independently of this consideration, as head of the administration, he must be assumed to speak with the authority of the Government. It is not a tenable position that, because he did not act through the Chief Secretary as the Minister administering the Tourist Bureau, his instructions cannot in law amount to an authorization on behalf of the Crown. Nor is it possible to treat the communication to the Director of the Tourist Bureau, that the expenditure would not be debited to his account, as taking the contract out of the course of the authority residing in the Premier and his officer, the Superintendent of Advertising. The bona fides of the transaction not being in question, this can amount to no more than a proposal communicated by one servant of the Crown to another as to the fund which should provide for the burden, a matter which could not concern the plaintiff. No statutory power to make a contract in the ordinary course of administering a recognized part of the government of the State appears to me to be necessary in order that, if made by the appropriate servant of the Crown, it should become the contract of the Crown, and, subject to the provision of funds to answer it, binding upon the Crown. (See, per Blackburn J., Thomas v. The Queen [85], at p. 33, and, per Rowlatt J., Rederiaktiebolaget Amphitrite v. The King [86], at p. 503.) I think that the contract sued upon is a contract of the Crown.

[133]

It remains to deal with the contention that the contract is unenforceable because no sufficient appropriation of moneys has been made by Parliament to answer the contract. "The general doctrine is that all obligations to pay money undertaken by the Crown are subject to the implied condition that the funds necessary to satisfy the obligation shall be appropriated by Parliament" (New South Wales v. The Commonwealth [No. 1] [87]). But, in my opinion, that general doctrine does not mean that no contract exposes the Crown to a liability to suit under the provisions of secs. 58 to 66 of the Judiciary Act unless and until an appropriation of funds to answer the contract has been made by the Parliament concerned, or unless some statutory authorization or recognition of the contract can be found. The very object of such provisions is to enable the subject to establish against the Crown, which except by statute cannot be sued without its own consent, a contractual or delictual liability subject to the condition which is preserved by the nature of the judgment that moneys shall be legally available to satisfy the claim so established. The effect and operation of such enactments was early described by the Supreme Court of Victoria. "In many instances money has been so appropriated as to be applicable to the satisfaction of judgments against the Crown. In all cases the Act presents a simple and comparatively economical machinery for obtaining the decision of the Supreme Court of the country (which decision may be reviewed by the highest Court of appeal) on the questions whether a valid contract has been made between the suppliant and the Crown, and what damages should be awarded for the breach of such a contract. It is left to Parliament, if no money is applicable to the liquidation of those damages, to determine whether the judgment obtained on that decision should be satisfied or not" (Alcock v. Fergie [88], at pp. 320, 321). In this manner the principle that Parliament shall control the expenditure of public moneys is preserved, but the subject is given a means of establishing the existence and validity of his claim against the Executive Government. (See Rayner v. The King [89]). The principles of responsible government impose upon the administration a responsibility to Parliament, or rather to the House which deals with finance, for what the Administration has done. It is a function of the Executive, not of Parliament, to make contracts on behalf of the Crown. The Crown's advisers are answerable politically to Parliament for their acts in making contracts. Parliament is considered to retain the power of enforcing the responsibility of the Administration by means of its control over the expenditure of public moneys. But the principles of responsible government do not disable the Executive from acting without the prior approval of Parliament, nor from contracting for the expenditure of moneys conditionally upon appropriation by Parliament and doing so before funds to answer the expenditure have actually been made legally available. Some confusion has been occasioned by the terms in which the conditional nature of the contracts of the Crown from time to time has been described, terms chosen rather for the sake of emphasis than of technical accuracy. But, in my opinion, the manner in which the doctrine was enunciated by Isaacs C.J., when he last had occasion to state it, gives a correct as well as a clear exposition of it. In _Australian Railways Union v. Victorian Railways Commissione_rs [90], he said: "It is true that every contract with any responsible Government of His Majesty, whether it be one of a mercantile character or one of service, is subject to the condition that before payment is made out of the Public Consolidated Fund Parliament must appropriate the necessary sum. But subject to that condition, unless some competent statute properly construed makes the appropriation a condition precedent, a contract by the Government otherwise within its authority is binding." Notwithstanding expressions capable of a contrary interpretation which have occasionally been used, the prior provision of funds by Parliament is not a condition preliminary to the obligation of the contract. If it were so, performance on the part of the subject could not be exacted nor could he, if he did perform, establish a disputed claim to an amount of money under his contract until actual disbursement of the money in dispute was authorized by Parliament. It is true that in many cases the existence of a fund out of which it is lawful to pay for such purposes as the contract may be supposed to serve might suffice as an authority for the expenditure of money to satisfy the contract, but in many others, where the contract was of an exceptional nature, some specific appropriation would appear to be demanded. It would defeat the very object of such provisions as those contained in the Judiciary Act, if, before the Courts could pass upon the validity in other respects of the subject's claim against the Crown, it were necessary that Parliament should vote the moneys to satisfy it. Certainly no justification whatever for such a requirement can be found in the case of liability to suit for tort. It would be strange if liability to suit upon contract was dependent upon the antecedent fulfilment of the condition that moneys have been made available to satisfy the claim.

[134]

No case has been found before The Petitions of Right Act 1860 in which the existence has been asserted of an implied condition in contracts with the Crown that funds should be appropriated to answer the expenditure involved. But, in Macbeath v. Haldimand [91], at pp. 1038, 1039 Lord Mansfield did say that those who advance money for the public service trust to the faith of Parliament and that, if there were a recovery against the Crown by a suppliant by petition of right, application must be made to Parliament. The doctrine first finds expression in Churchward v. The Queen [92], in the judgment of Shee J. The contract there sued upon contained an express condition making it subject to parliamentary provision of funds which Shee J. described as a condition precedent, and, as a result of a public controversy about it, Parliament had specially excluded the transaction from the purposes to which funds were lawfully applicable. (Cf. Todd's Parliamentary Government in England (1867), vol. I., pp. 497-503.) The observations of Shee J. [93] were obiter, but they have been accepted as a statement of the rule of law that, in contracts for the payment of public moneys, it is implied that the liability of the Crown is conditional upon appropriation of funds. In R. v. Fisher [94], at p. 167, in answer to a claim by a servant of the Crown for the balance of salary erroneously withheld although due to him under the Public Service Acts, the defence was raised on behalf of the Crown, that in the annual Appropriation Acts the full salary had not been provided, and Churchward's Case [95] was relied upon. In the course of an elaborate judgment, in which he denied the validity of this contention on more than one ground, Madden C.J. expressed the opinion that the Victorian Crown Remedies and Liability Act ought not to receive the construction placed upon it in Alcock v. Fergie [96], according to which a judgment against the Crown could be satisfied, like a judgment under the Federal Act, only out of moneys otherwise made legally available for the purpose, but should be construed as itself amounting to a special appropriation of moneys to answer such judgments. But he proceeded to say that, whatever the provision meant, "the proceedings provided by it are to occur after judgment, and the Crown's argument now is that the non-provision of the money in the Appropriation Act is an answer to the maintenance of the action, so that, in such cases, judgment could never be reached at all" [97]. In dealing with the point that, as the Appropriation Act only provided the amount of salary already paid to the suppliant, nothing further could be recovered against the Crown, Sir Ford North, who delivered the judgment of the Privy Council, said: "This was very fully and exhaustively dealt with by the Chief Justice; and his reasoning on this point was not challenged at their Lordships' bar. But in any case their Lordships would not enter upon the consideration of that question, as they are satisfied that, the respondent having finally established the validity of his claim against the Crown for the sum for which he has recovered judgment, the provision necessary to satisfy that obligation will be readily and promptly made" [98]. (Cf., per Higgins J., Williamson v. The Commonwealth [99], at p. 4.) For some time afterwards the absence of appropriation does not appear to have been seriously relied on by the Crown as an answer to a claim ex contractu. But, in Commercial Cable Co. v. Government of Newfoundland [100], at p. 617, an observation upon the subject was made by Viscount Haldane in delivering the judgment of the Privy Council, and, perhaps, as a result, the defence has of late been raised not infrequently both by and against the Crown. In that case the contract upon which the Crown was sued was held to be invalid because it had not been approved by the House of Assembly of Newfoundland pursuant to a rule of that House, made under the authority of statute, requiring that in all contracts extending over a period of years and creating a public charge, actual or prospective, entered into by the Government, there should be inserted the condition that the contract should not be binding until it had been approved by resolution of the House. A new administration had repudiated the agreement and had sought no approval for it. Viscount Haldane in concluding the judgment remarked [101]: -- "What view the Legislature might have taken had it been properly submitted is a topic into which no Court of law can enter, and no damages can be recovered for breach of any implied promise so to submit it. For all grants of public money, either direct or by way of prospective remission of duties imposed by statute, must be in the discretion of the Legislature, and where the system is that of responsible government, there is no contract unless that discretion can be taken to have been exercised in some sufficient fashion." In Rayner v. The King [102], Adams J., speaking for the New Zealand Court of Appeal, pointed out that the words "there is no contract" meant "no contract to pay." But I think it is certain that His Lordship did not mean that no contract of the Crown was actionable under the Crown Remedies legislation of the Dominions and Colonies unless and until money was appropriated to answer it, and this indeed his subsequent utterances make clear. This is true also of the expressions used by Viscount Haldane in Mackay v. Attorney-General for British Columbia [103], where he speaks of the "legal validity" of the contract although he founds this proposition on Churchward's Case [104]. The decision of the Board simply was that a contract of a description which the Legislature had empowered the Lieutenant-Governor to make could not be supported unless made by him in such a manner as to comply with the statute. But in the Wool Tops Case [105], where the Court gave judgment against the Crown's claim upon a contract made by it with a subject, Isaacs J., as he then was, on the strength of these observations actually took, as an additional reason for concurring, the ground that the contract involved payment of money by the Crown and was therefore wholly void, so that it was unenforceable at the suit of the Crown as well as of the subject. The doctrine was again considered by Isaacs and Rich JJ. in Commonwealth v. Colonial Ammunition Co. [106], but in that case for the contract to be valid an Order in Council was required under sec. 63 of the _Defence Act_1903-1918, and all their Honors decided was that the provision by Parliament of funds for the service involved by the contract did not cure such a defect. In Kidman v. The Commonwealth [107] a contractor with the Crown, who incurred a liability which passed into an arbitration award, failed, on various grounds which do not call for particular examination, in a defence based upon the supposed invalidity of the contract because no funds appeared to have been voted to meet the expenditure involved. Higgins J. [108], however, simply stated the doctrine to be that "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." In the meantime, the House of Lords had decided Attorney-General v. Great Southern and Western Railway Co. of Ireland [109]. In the course of his opinion in that case, Viscount Haldane [110], after saying that he assumed that a contract had been established which still subsisted, proceeded: -- "But what is the nature of the remedy on this footing made available against the Crown? The Court of Appeal appear to me to have proceeded on the footing that the remedy in case of its breach was analogous to that on the ordinary contract of a private individual. Surely sec. 14 of the Petition of Right Act contains a warning that this is not to be assumed. Under that Act no personal judgment against the Sovereign can be rendered. All that the Act provides is, in a public matter, that the Treasury may be required to pay what has been found due out of any moneys in their hands legally applicable thereto, or which may be thereafter voted by Parliament for that purpose. This is not a provision which is to be expected otherwise than in the restricted form in which it is made." Then, after illustrating this statement by the Commercial Cable Co.'s Case [111], Auckland Harbour Board v. The King [112] and Churchward's Case [113], he continued [114]: -- "My Lords, I am of opinion that the judgments in these three cases illustrate a principle which is definitely recorded in our text books of constitutional law. However clear it may be that before the Revolution Settlement the Crown could be taken to contract personally, it is equally clear that since that Settlement its ordinary contracts only mean that it will pay out of funds which Parliament may or may not supply." This passage makes it clear, in my opinion, that Viscount Haldane regarded the provision of funds by Parliament simply as a contractual condition and as a condition which must be fulfilled before actual payment by the Crown, but not as a matter going to the formation, legality, or validity of the contract, and not as a condition precedent to suit, at any rate, under enactments which authorize a judgment giving no right to the subject except to payment out of moneys made legally available by Parliament. This is clearly shown by the second alternative in the statement of the terms of sec. 14 of the Petition of Right Act in the sentence, "All that the Act provides is, in a public matter, that the Treasury may be required to pay what has been found due out of any moneys in their hands legally applicable thereto, or which may be thereafter voted by Parliament for that purpose" [115]. This alternative necessarily implies that judgment against the Crown may be given on a petition of right to enforce a contract notwithstanding that up till that time moneys have not been appropriated or provided by Parliament out of which the liability may be lawfully discharged. Indeed the judgments of all the noble Lords proceed upon the tacit assumption that, unless the liability had been transferred to the Irish Treasury, the petitioners may succeed notwithstanding that the British Parliament had made no money provision for it. Subsequently, in the same matter as was dealt with by this Court in Kidman's Case [116], the subject applied to the Privy Council for special leave to appeal from a decision of the Supreme Court of New South Wales [117] giving liberty to enforce the award. In the course of the argument, which is reported [118], upon the Commercial Cable Co.'s Case [119] being referred to, Viscount Haldane said [120] : "In that case we distinctly laid it down (in a judgment which I think I delivered) that the Governor-General, as representing the Crown, could enter into contracts as much as he liked, and even, if he made the words clear, to bind himself personally. But he was presumed only to bind the funds which might or might not be appropriated by Parliament to answer the contract, and if they were not, that did not make the contract null and ultra vires; it made it not enforceable because there was no resagainst which to enforce it. The Lord Chancellor" (Lord Cave). "Like Churchward v. The King [121]? Viscount Haldane. Yes, but the contract stood just as was said in Churchward v. The King [122]." His Lordship also said: -- "We have had all these things dealt with quite recently in an Irish case in the House of Lords (Attorney-General v. Great Southern and Western Railway Co. of Ireland [123]). How can you say that, under the Federal Act, this was null? Just look at the section which gives the executive power: `The executive power of the Commonwealth is vested in the King and is exercisable by the Governor-General as the King's representative.' That goes beyond the Constitution of Canada, and it enables him, the Prime Minister of the Commonwealth, to enter into contracts; whether they are enforceable depends upon whether there was an appropriation to answer them, but that is another thing."

[138]

MCTIERNAN J. The executive functions which are exercised by the Government of New South Wales include the provision of accommodation and other facilities for tourists. These services are managed by the Government Tourist Bureau, which, having the character of an industrial undertaking, was proclaimed as such by the Governor in Council for the purpose of the Special Deposits (Industrial Undertakings) Act 1912-1930. It is a trading or business enterprise and any profits derived from carrying it on are liable to income tax (Special Deposits (Industrial Undertakings) Amendment Act 1930, sec. 2). The undertaking was at all material times administered by the Chief Secretary, who is a Minister of the Crown, and a member of the Cabinet. The contract sued upon was made on the instructions of the Premier communicated directly by him through his private secretary to the Editor of Publications and Superintendent of Advertising, who is an officer of the Premier's Department, and has the duty of attending to Government advertising. There can be no doubt that the Premier entered into the alleged agreement through this officer as his instrument. Moreover, the evidence shows that the alleged contract whereby the respondent undertook to publish "advertisements" re the Government Tourist Bureau and other matters in his newspaper was a matter of Government policy. The advertisements which were published pursuant to the arrangement, and for which the respondent claims payment, related to the Government Tourist Bureau. This undertaking is not incorporated by statute nor is there any legislative definition of its powers and duties. But it is made apparent that the Government Tourist Bureau is in fact an industrial undertaking of the Government. The carrying on of this enterprise is within the executive capacity of the Crown acting through the medium of its advisers. The making of a contract for advertising the services managed by this undertaking is within the scope of this function of the Crown. The contract now in suit is within the prerogative powers exercised by the Crown in carrying on the undertaking, and if the Premier was the competent ministerial authority or constitutional agent to bind the Crown it will become necessary to consider what is the effect on the contract of the Executive's dependence on Parliament to supply the funds to meet the financial obligation which the Executive assumed to undertake.

[139]

Constitutional rules would prevent the Governor as head of the Government from making the contract without ministerial advice. The contract might have been formally signed and approved by the Governor on ministerial advice after its terms had been determined by Cabinet or a responsible Minister. If the Premier had authority to make the contract, the absence of this formal execution of the contract by the Governor in Council would not prevent it binding the Crown. The agreement was of a commercial character and the making of it was incidental to the carrying on of one of the Crown's industrial undertakings (cf. South of Ireland Colliery Co. v. Waddle [126]). In my opinion the Premier was a competent ministerial authority and a constitutional agent to make this agreement for the Crown (cf. Attorney-General v. Lindegren [1], at p. 818). In Rederiaktiebolaget Amphitrite v. The King [127], at p. 503, Rowlatt J. said: "No doubt the Government can bind itself through its officers by a commercial contract, and if it does so it must perform it like anybody else or pay damages for the breach." Bankes L.J. said in Public Works Commissioners v. Pontypridd Masonic Hall Co. [128], at pp. 234, 235: "Two cases have been referred to, Graham v. Public Works Commissioners [129] and Roper v. Public Works Commissioners [130], both of which make it clear that if a body, whether incorporated or not, is in fact acting in any particular matter as agents of the Crown, they are to be treated in law as such." In his judgment in Mackenzie-Kennedy v. Air Council [131], at pp. 522, 523, the same learned Lord Justice approved of the observations of Day and Wills JJ. in Gilbert v. Corporation of Trinity House [132], as to the authority of Ministers of State. These observations correctly define the relationship between responsible Ministers in New South Wales to the Crown in right of that State. "All the great officers of State are, if I may say so, emanations from the Crown. They are delegations by the Crown of its own authority to particular individuals" (per Day J. [133]). "I am clear that at common law there is no instance of any person or body having two distinct capacities -- in one of which there is no liability to be sued because the person or body is the direct representative of the Crown, and in the other there is a liability to be sued because the capacity is that of a private corporation or person" (per Wills J. [134]). The Premier acted in his official and representative capacity and no action on the contract would lie against him in that capacity (Gidley v. Lord Palmerston [135]; Hosier Bros v. Earl of Derby [136]; Attorney-General v. Great Southern and Western Railway Co. of Ireland [137], at p. 775, per Lord Dunedin). Such an action could not be maintained because the Crown would be the real entity pursued (Graham v. Public Works Commissioners [138], at p. 790, per Phillimore J.; cf. Dixon v. Farrer [139], at p. 51; Bainbridge v. Postmaster-General [140]). The Government Tourist Bureau was, in the assignment of departments to Ministers, placed under the control of the Chief Secretary, who is a responsible Minister and a member of the Cabinet. But, in my opinion, the Premier nevertheless had authority to make the contract now in question. The responsibility for the administration of the Government Tourist Bureau was not confined to the Chief Secretary by statute. The Premier did not, in my opinion, make any unlawful assumption of the authority of the Chief Secretary as the medium through which the Crown administered this undertaking. It was competent for the Cabinet to check, if necessary, or determine the policy to be pursued by the Chief Secretary with respect to his department. It is to be taken that as a matter of Government policy the making of this contract had the collective assent of ministers; it is not suggested that the Chief Secretary dissented. Moreover there was no legal disqualification of any Minister acting for and representing the Crown in the making of this contract. The administration of the Tourist Bureau by the Chief Secretary was a matter of ministerial arrangement and not of legal necessity. "Except in so far as statute gives powers to one or other of the five secretaries of State, each is capable of performing any one of the functions of the various departments which I have briefly described. The secretaries are in this respect like the Judges of the High Court of Justice, each individually possess and may exercise the powers of any one of the others, but as its special business is assigned to each of the divisions of the High Court, so is a special department of government assigned to each of the members of the secretariat. Each and all are primarily the means by which the royal pleasure is communicated; the work of each department is the work of the Crown, acting on the advice of responsible ministers, and for such action and advice each of these ministers must answer to Parliament" (Anson, Law and Custom of the Constitution, 3rd ed. (1907), vol. II., The Crown, Part I., p. 168).

[140]

Secs. 36, 37 and 38 of the Constitution Act 1902 of New South Wales do not lead to the result that the agreement was devoid of legal effect because it was made by the Premier and not by the Chief Secretary. These sections are in the following terms: -- Sec. 36: "The Governor may authorise any Executive Councillor to exercise the powers and perform the official duties and be responsible for the obligations appertaining or annexed to any other Executive Councillor in respect to the administration of any department of the Public Service, whether such powers, duties, or obligations were created by virtue of the terms (express or implied) of any Act or are sanctioned by official or other custom: Provided that no such authority shall be granted under this section in respect of the powers, duties, and obligations by law annexed or incident to the office of the Attorney-General." Sec. 37: "Every such authority shall be in such terms and subject to such conditions as the Governor thinks fit and shall be duly recorded by the officer in charge of the records of the Executive Council." Sec. 38: "Subject to the proviso of section thirty-six, any official document, minute, instrument, or paper, of what kind soever, which, according to official custom or to the requirements of any Act, requires or appears to require the signature of any particular Executive Councillor, shall, in the absence or disability of such Executive Councillor, be valid and effectual to all intents and purposes if signed by any other Executive Councillor." These sections provide for overcoming the rigidity of restrictions on ministerial authority resulting from statute or custom. The administration of the Government Tourist Bureau was not annexed to the office of the Executive Councillor discharging the duties of Chief Secretary, by statute, or so far as appears, by official or other custom. We were informed that it was upon its creation part of the responsibility of the Attorney-General and Minister of Justice. Furthermore, it was the collective will of the Ministers that the costs of the advertisements that were ordered by the Premier to be inserted "re Government Tourist Bureau or other matters" was to be borne by the Premier's Department. The making of the agreement was not, therefore, in fact an intrusion into the responsibilities of the Chief Secretary but the performance of an administrative act incidental to the lawful exercise by the Government of one of its functions which, although assigned to the Chief Secretary, was within the collective responsibility of the Cabinet. I agree with Evatt J. that the Premier had authority to bind the Crown by this agreement, assuming that the constitutional rules which make the Executive dependent on Parliament for supply do not operate to prevent any liability from attaching.

[143]

In Auckland Harbour Board v. The King [147], the second of the cases referred to by Viscount Haldane, as illustrating the effect on the Government's contractual promises of its dependence on Parliament for money to honour them, his Lordship speaking for the Judicial Committee, concluded with this characteristic statement: -- "For it has been a principle of the British Constitution now for more than two centuries, a principle which their Lordships understand to have been inherited in the Constitution of New Zealand with the same stringency, that no money can be taken out of the consolidated fund into which the revenues of the State have been paid, excepting under a distinct authorization from Parliament itself. The days are long gone by in which the Crown, or its servants, apart from Parliament, could give such an authorization or ratify an improper payment. Any payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can, as here, be traced" [148]. The agreement under which the Government paid public moneys to the appellants was invalid, as appears from the judgment, for the following reasons: -- "It was said, and it appears to have been the fact, that the Controller and Auditor-General subsequently passed the sum handed over as having been payable out of public moneys appropriated in general terms for railway services by the New Zealand Parliament in 1914. But this is not a sufficient answer to the contention that the payment was not authorized. Sec. 7 of the Act of 1912 provides that the sum which was agreed on at £7,500 was to be payable to the appellants only on a condition -- namely, on the granting of the lease, which was to be the consideration. The provision which Parliament thus made was to be in itself a sufficient appropriation, but only operative if the condition was actually satisfied. Their Lordships have not been referred to any appropriation or other Act which altered these terms. If, as must therefore be taken to be the case, it remained operative, the authority given by Parliament is merely the conditional appropriation provided in sec. 7, for a condition which was not fulfilled. The payment was accordingly an illegal one, which no merely executive ratification, even with the concurrence of the Controller and Auditor-General, could divest of its illegal character" [149].

[144]

While these two judgments illustrate, as Viscount Haldane says, that principle of parliamentary control on the expenditure of public funds, the judgments do not assert, as I understand them, that the Crown or its constitutional agent, in exercising its lawful executive functions, is incapable of imposing on the Crown any obligation ex contractu to pay money unless Parliament has provided money specifically for the contract or approves of its terms; otherwise the judgments could not have become the basis of the observations in Attorney-General v. Great Southern and Western Railway Co. of Ireland [150], in which the learned Lord described the restricted nature of the liability imposed on the Crown by a contract involving pecuniary liabilities for which no parliamentary appropriation has been made. His Lordship's observations were as follows: -- "In the present case Parliament transferred the duty of producing the fund out of which the liability in question, when it accrued, should be met to the Irish Parliament. It thereby declared its intention not itself to provide the money required out of its own consolidated fund. It does not matter whether the liability was in terms transferred to the Irish Government. By its very character it would cease when it became operative to be a liability of the British Consolidated Fund and become one of the Irish Legislature Central Fund, if they chose to so provide. I think that this appeal ought, therefore, to succeed. It is important that we should lay down clearly the restricted nature of the liability in modern times of the Crown under its contracts. It seems to me that what I believe to be the true character of this liability makes beside the point the bulk of the reasoning in the judgments under appeal in this case. For the true view of any liability there was I take to be that it was a liability in rem which ceased to be operative when the res was transferred" [151]. Indeed the assumption on which the judgment proceeds is that there was a contractual bond between the Crown and the respondent. The problem was to ascertain the nature of the liability arising under it. The assumption made was expressed thus: -- "My Lords, the case of the respondents is that the Board of Trade and the Ministry of Transport under authority from the Crown established a contract between the Crown itself and the respondents which still subsists, the creation of the Irish Government notwithstanding. I will assume for the purposes of my observations that this was so. But what is the nature of the remedy on this footing made available against the Crown?" [152].

[146]

Churchward v. The Queen [155] is the last of the judgments referred to by Viscount Haldane as illustrating the principles which he proceeded to state in Attorney-General v. Great Southern and Western Railway Co. of Ireland [156]. It may be observed that the same authority was also approved by the Judicial Committee in Mackay v. Attorney-General for British Columbia [157] in which the judgment was also delivered by Lord Haldane. It contains this statement: -- "The character of any constitution which follows, as that of British Columbia does, the type of responsible government in the British Empire, requires that the Sovereign or his representative should act on the advice of Ministers responsible to the Parliament, that is to say, should not act individually, but constitutionally. A contract which involves the provision of funds by Parliament requires, if it is to possess legal validity, that Parliament should have authorized it, either directly, or under the provisions of a statute. It follows that in the present case, no such contract would have been made, unless sec. 3 authorized it. If authority be wanted for this proposition it will be found in Churchward v. The Queen [158], and in the decision of this Board in Commercial Cable Co. v. Government of Newfoundland [159]. The vital preliminary question is, therefore, one of fact; was an order or resolution passed by the Lieutenant-Governor in Council authorizing the contract?" [160]. In that case no contractual obligation resulted from the acts of the Executive because of the statutory restrictions which fenced its power of contracting. The reference to Churchward v. The Queen [161] in this judgment must be taken to be to the pronouncement of Shee J., for Cockburn C.J. in giving judgment made statements of a different import. He said: -- "I am very far, indeed, from saying, if by express terms, the Lords of the Admiralty had engaged, whether Parliament found the funds or not, to employ Mr. Churchward to perform all these services, that then, whatever might be the inconvenience that might arise, such a contract would not have been binding; and I am very far from saying that in such a case a petition of right would not lie, where a public officer or the head of a department makes such a contract on the part of the Crown, and then afterwards breaks it. We are not called upon to decide that in the present case, and I should be sorry to think that we should be driven to come to an opposite conclusion" [162]. He also said: -- "I agree that, if there had been no question as to the fund being supplied by Parliament, if the condition to pay had been absolute, or if there had been a fund applicable to the purpose, and this difficulty did not stand in the petitioner's way, and he had been throughout ready and willing to perform this contract, and had been prevented and hindered from rendering these services by the default of the Lords of the Admiralty, then he would have been in a position to enforce his right to remuneration. But then his petition and his ground of complaint must have assumed a wholly different shape. He must then have alleged a performance, or a readiness to perform on his part, and a right to receive remuneration" [163]. It will be seen that Cockburn C.J. was not troubled by the consideration to which he adverted, that Parliament may refuse to provide funds to enable the Government to pay, but Isaacs C.J., (then Isaacs J.) in his judgment in The Commonwealth v. Colonial Combing, Spinning and Weaving Co. [164], at p. 450 regarded that consideration of great importance. He said: -- "There emerges from this the general understanding that Parliament is not to be fettered in its discretion as to public expenditure by anything the Executive may do. Parliamentary discretion would be severely fettered if the Executive could make a compact binding the Crown in law to pay away portion of the public funds and leaving to Parliament the alternative of assenting to the payment or disavowing a public obligation. That would be seriously weakening the control by Parliament over the public Treasury." In that case, the question, now material to be mentioned, reserved for the consideration of the Full Court, was as follows: -- "Was it within the legal power of the Commonwealth Executive Government apart from any Act of the Parliament or regulation thereunder to make or ratify at the times the same were respectively made or ratified any and which of the following agreements" [165]. The agreements were then mentioned. Knox C.J. and Gavan Duffy J., as he then was, said: -- "In our opinion the answer to this question depends on the meaning of sec. 61 of the Constitution, which is as follows: `61. The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth"' [166]. They reached the following conclusion: -- "It is clear that none of these agreements is made in maintenance of the Constitution, and in our opinion it is equally clear that none is made in execution of the Constitution, because none of them is prescribed or even authorized by the Constitution itself, and execution of the Constitution means the doing of something immediately prescribed or authorized by the Constitution without the intervention of Federal legislation. It is true that sec. 64 of the Constitution directs that the sovereign through his Ministers shall administer such departments of State as the Governor-General in Council may establish, and they would probably be authorized to make such contracts on behalf of the Commonwealth as might from time to time be necessary in the course of such administration; but it is not pretended that the contract now in question comes within that category" [167]. This statement condemns the agreements because it was beyond the powers of the Executive Government as defined by the express terms of the Constitution of the Commonwealth to enter into them. But Isaacs J. condemned the arguments also on the ground that the Executive Government exceeded the limitations imposed upon it by constitutional practice. He said: -- "In other words, the constitutional practice that the Crown's discretion to make contracts involving the expenditure of public money would not be entrusted to Ministers unless Parliament had sanctioned it, either by direct legislation or by appropriation of funds, had, like many other general customs of the country, acquired such consistency and notoriety that, stating it in legal terms, everyone must be deemed to have notice of it, and consequently no Court can regard any contract as valid which violates that practice. It is that same rule of law which is restated in Mackay's Case [168]"[169].

[147]

The contract in the present case depends upon the authority of the Crown to do what is necessary for or incidental to the conduct and management of an undertaking which it lawfully carried on with the advice of its Ministers. The contract is not rendered wholly invalid because of the operation of any express parliamentary or legislative restriction on the authority of the Government to make it or to spend revenue on the objects specified by the contract. But, although there is no such restriction, the Crown is subject to a constitutional incapacity to resort to the revenue without legislative authority to discharge the liabilities which it assumed to incur. The effect on the contract of that incapacity is stated by Shee J. in Churchward v. The Queen [170], the third case referred to by Viscount Haldane as illustrating the constitutional principle which determines what conditions are to be implied in the obligation resulting from the Crown's "ordinary contracts." The Lords Commissioners of the Admiralty, on behalf of the Crown, had engaged to pay the suppliant in that case, a subsidy of £18,000 per annum out of funds to be provided by Parliament for that purpose in consideration that he would provide and maintain certain services including steam vessels whereby the mail could be conveyed. The suppliant claimed redress for the breach of an implied covenant on the part of the Crown to employ him to carry the mails. The covenant which he sought to imply would not have had as one of its terms, that the liability was to be satisfied out of funds to be provided by Parliament. Indeed that was one of the reasons given for deciding that the covenant in the terms alleged by the suppliant should not be implied. The pronouncement of Shee J., which was approved by the Judicial Committee in Mackay v. Attorney-General for British Columbia [171], and by the House of Lords in Attorney-General v. Great Southern and Western Railway Co. of Ireland [172] , is in these terms: -- "I should have thought that the condition which clogs this covenant, though not expressed, must, on account of the notorious inability of the Crown to contract unconditionally for such money payments in consideration of such services, have been implied in favour of the Crown ... The condition of parliamentary provision is usually notified to Government contractors, for services of a continuing character, by covenants like the one before us. When not so notified, the occurrence of the alleged inconvenience -- such are known to be the justice and honour of Parliament -- is too improbable to induce any of the Queen's subject to forego when the opportunity offers the advantages of a good Government contract. It was beyond the power of the commissioners, as the suppliant must have known, to contract on behalf of the Crown, on any terms but those by which the covenant is restricted and fenced. I am of opinion that the providing of funds by Parliament is a condition precedent to it attaching. The most important department of the public service, however negligently or inefficiently conducted, would be above control of Parliament were it otherwise" (Churchward v. The Queen [173]). Before making this pronouncement Shee J. stated the considerations which guided him in formulating this conception of the obligation arising from a contractual promise of the Crown, whether the promise is unconditional, or conditional upon Parliament providing the money out of which it may be discharged. He said: "As a matter of ordinary law, between subject and subject, a covenant so guarded would be held to be binding on the covenantor only in the event of his being supplied with funds from the source which the contract had indicated. The cases cited by the Attorney-General, Gurney v. Rawlins [174], Dawson v. Wrench [175] and Hallett v. Dowdall [176], are on this point." This conception is clearly suggested by Baron Parke's observations in Gurney v. Rawlins [177], "The defendants undertake by an instrument under seal that this sum of money shall be paid, if the funds prove adequate; therefore it is equivalent to a covenant to pay if J.S. go to Rome." It appears therefore that the exigency of binding constitutional practice fashions the promise of the Crown into a promise to pay out of moneys lawfully available under parliamentary appropriation for the discharge of the promise. The contract under which the respondent claims to be paid is one of the "ordinary contracts" of the Crown -- the conception introduced by Viscount Haldane in the passage which has been quoted in his judgment in Attorney-General v. Great Southern and Western Railway Co. of Ireland [178], and, as such, means that the Crown would pay out of funds "which Parliament may or may not provide." In Australian Railways Union v. Victorian Railways Commissioners[179], at p. 353 Isaacs C.J. said: -- "It is true that every contract with any responsible Government of His Majesty, whether it be one of a mercantile character or one of service, is subject to the condition that before payment is made out of the Public Consolidated Fund Parliament must appropriate the necessary sum. But subject to that condition, unless some competent statute properly construed makes the appropriation a condition precedent, a contract by the Government otherwise within its authority is binding." Without appropriation, therefore, there may be a contract, but, unless there is an appropriation, the Crown's liability to pay does not attach. In New South Wales v. The Commonwealth [180], at pp. 175, 176, Richand Dixon JJ. said: -- "But under the Constitution of each of the States the pecuniary obligations of the States cannot be answered out of the consolidated revenue except under parliamentary appropriation. The general doctrine is that all obligations to pay money undertaken by the Crown are subject to the implied condition that the funds necessary to satisfy the obligation shall be appropriated by Parliament."

[148]

Evatt J. found that in the two relevant financial years funds were available under parliamentary appropriation out of which the Government was at liberty to pay the respondent for the publication of the advertisements at the stipulated rates. I agree with that finding. To prove the fulfilment of the condition precedent to the Crown's liability ex contractu to pay these moneys to the respondent, it is not necessary to show that the Appropriation Acts contain a specific provision of funds to meet this particular contract. The Appropriation Acts passed by Parliament placed money at the disposal of the Government for "Government Advertising." There was, as Evatt J. found, sufficient money available to the Government when the contract was entered into, to answer the pecuniary obligations of the Crown under it for the remainder of that financial year, and the amount appropriated by Parliament for that service in the next financial year was sufficient to discharge all liabilities in respect of it for that year. There was no restriction against the application of such money to this contract. In The Commonwealth v. Colonial Ammunition Co. [181], at p. 222 Isaacs and Rich JJ. said: "The object of supply and appropriation is simply to furnish the Crown with authority and opportunity to obtain the money it desires for the government of the country." No attack is made on the good faith of Ministers in entering into the contract. The condition implied in the obligation which the contract imposed on the Crown was, in my opinion, satisfied by a sufficient appropriation of moneys by Parliament, whereby moneys were supplied to the Government out of which it could, consistently with parliamentary control over expenditure, discharge that obligation. The respondent is therefore entitled to judgment for the amount claimed. Sec. 65 of the Judiciary Act provides: "No execution or attachment, or process in the nature thereof, shall be issued against the property or revenues of the Commonwealth or a State in any such suit; but when any judgment is given against the Commonwealth or a State, the Registrar shall give to the party in whose favour the judgment is given a certificate in the form of the Schedule to this Act, or to a like effect." Sec. 66 of the same Act says: "On receipt of the certificate of a judgment against the Commonwealth or a State the Treasurer of the Commonwealth or of the State as the case may be shall satisfy the judgment out of moneys legally available." The form of certificate of judgment is, so far as material, as follows: -- "I hereby certify that A.B. ... did on the ... day of ... obtain a judgment of the High Court in his favour, and that by such judgment the sum of £ was awarded to him." The remedy thereby given a successful plaintiff does not purport to override the right of the Parliament of the State to control the disbursement of the revenue; and, if there is no money available under parliamentary appropriation to pay the judgment, its satisfaction must await the pleasure of the Parliament. "It never has been contended, and I do not suggest that it ever could be properly contended, that anyone but the State Parliament could appropriate the King's State revenue" (Australian Railways Union v. Victorian Railways Commissioners [182] per IsaacsC.J.).

New South Wales v Bardolph [1934] HCA 74;

At a glance

Court

Decision date

Before

Source

Judgment (196 paragraphs)

New South Wales v Bardolph [1934] HCA 74; (1934) 52 CLR 455 (30 November 1934)

Parties

Legislation Cited (2)

Cases Cited (1)