New South Wales v Commonwealth (No 3) [1932] HCA 12

[82]

ibject to a charge in favour of the trust, apply to the moneys by the Crown. The Crown is not liable for the moneys but is liable only to repay money of the same amount; d this is so notwithstanding the fact that statutory obligations exist requiring a separation in account and an appropriation 1 account of moneys so that they may ever be ready against e fulfilment of the Crown's obligations. Although the inapplic- to the Crown of the doctrines of equity relating to tracing of trust moneys arises rather from the nature of the which the Crown occupies as a sovereign exercising the s of government than from statutory enactment, yet the Act appears clearly to recognize that the existence of "' funds " e Treasury and accounts for special purposes impresses no ¢ moneys with any equitable charge or other right of property of the subject but leaves the actual moneys at the credit e Crown its property to be dealt with according to law. Sec. of the Audit Act 1902 enacts that the Consolidated Revenue count, the General Loan Account, the Trust Account, the Special sits Account and such other accounts as the Treasurer may shall be kept in such bank, or banks, as the Treasurer may in direct ; sec. 19 provides that the several accounts of the nent in any Bank shall, for interest purposes, be considered e account. It may be observed that, if part of the moneys ned in the one account and so dealt with were the specific y of others, it would be a statutory invasion of private right treat them as available credits for the purpose of keeping down rest or debits in other accounts. Sec. 21 enacts that all moneys d into any bank by the Treasurer to any account under the it Act shall be deemed to be public moneys, and to be lent by is Majesty to the bank. Again this looks in the same direction s all moneys as " public" including " trust moneys " tion of " public moneys "' - see. 5) and as all alike resulting wn debt. It is true that sec. 30 speaks of moneys coming possession or under the control of a person in the Public ice by virtue of his office or employment for or on account of, r the use or benefit of, any other person. But the directions

[87]

lying to the credit of the account are allowed interest at rate as may from time to time be arranged between the Colonial er and the Public Trustee computed on the daily balance of he account, but they may be placed on deposit for a fixed period ith the Colonial Treasurer at interest. It might have been possible 'the Public Trustee to deal with trust funds altogether indepen- ntly of the Treasury, but when the course was taken of making account a Treasury account, it followed that the Treasury became, t the custodian of specific funds to be followed as identifiable y in its hands, but the acknowledged debtor of the trust, interest for the investment with it of the moneys. These vations apply also to moneys paid under the Lunacy Act 1898, sec. 130, whether to the Consolidated Revenue or to a trust and also to the Colonial Treasurer's Registrar of Probate ;, Which appears to represent moneys paid into Court under rs made in the probate jurisdiction. accounts which were said to contain moneys impressed a trust or equitable interest are contained in special deposit counts. They include the accounts mentioned in sees. 102 (1) (6) and 105 of the Bankruptcy Act 1898, although it might been thought that these accounts would now stand in the e of the State Debt Commissioners (see sec. 9 of the State Debt nd Sinking Fund Act 1904). Similar principles apply to these Moneys at the credit of the Testamentary Trust Fund hed under the Trustee Companies' Acts, sec. 20 or sec. 21, to be invested with the Treasury. This is true also of the m "lodged as a trust fund with the Colonial Treasurer " at interest f r sec. 4 of Act No. 13 of 1886. The Special Deposits Account es the Compensation Insurance, the Fire and Marine Insurance, eral Accident Insurance and the Treasury Guarantee Funds. funds could not in any event be regarded as the proceeds of ty or money held in a fiduciary character, but they are at interest with the Treasury: see sec. 4 of Act No. 18 A number of other accounts are kept at the banks which

[122]

and for whom the State is a trustee or to whom it stands in some other fiduciary relationship, it is clear that the section does apply to moneys standing to the credit of the State with a banking corporation which the State may lawfully apply to its own purposes. These purposes would include, if the State saw fit so to apply such moneys, the satisfaction of any liability to which it is subject under any of the above-mentioned Finan Agreements. If the operation of the section were, upon its true construction, limited to the character last above-mentioned, it would clearly be a valid exercise of the legislative powers of the Commonwealth (New South Wales v. The Commonwealth {No. 1} (1) ). I agree that, by force of sec. 154 of the Acts Interpretation Act 1901-1930, the section should be read so as not to exceed the legislative power of the Commonwealth, if upon the construction of the language which the Legislature has used, it has the ¥ operation contended for by the plaintiff. Having regard to object and purpose of the Financial Agreements Enforcement Ad, in my opinion the language in which sec. 15 is expressed doe not require the construction that Parliament intended to empower the Commonwealth to ensure the payment to it of any mon standing to the credit of the State to answer its liability und a Financial Agreement, other than the moneys which the Stat might lawfully draw and disburse for its own purposes. Upon this construction it is not necessary to apply sec. 15a of the Ae Interpretation Act 1901-1930 to hold the section to be valid. I not think that sub-sec. 5 of sec. 15 of the Financial Agre Enforcement Act demonstrates that it was the intention of Parli that sec. 15 should have the wide operation which was conten for by counsel for the plaintiff. The relationship which would arise between the person depositing money with the State for th purposes mentioned in the sub-section and the person making deposit would be debtor and creditor, not trustee and cestui trust or bailee and bailor. Upon the fulfilment of the condi mentioned, the money would be due from the State to the depos upon the footing of debtor and creditor. The question,

[132]

declared by this Act to be public moneys." In the books of one: or both of these banks there are accounts of the Treasurer styled respectively as follows : "' Consolidated Revenue Account," " General Loan Account," and other accounts as set out in annexure "B" to the affidavit of Thomas Dwyer Kelly, the expenditure accountant to the Treasury of the State of New South Wales. It appears by this affidavit that for very many years, such of the above-mentioned accounts as are in each bank respectively, have been treated as on account for the purpose of utilizing the aggregate credit balance and so enabling money to be withdrawn from any: of the accounts for any lawful expenditure to which the account is applicable although it may be in debit. On 11th April 1932 the total ne cash balances in the above-mentioned banks, respectively, in Sydne to the credit of the plaintiff State were £63,007 and £22,582. 0) the same date, however, for example, in the Bank of New South Wales the Consolidated Revenue Account was in debit £10,451,654 while the "Special Deposits Account' was in credit £17,589,709 and the "Supreme Court Accounts '' were in credit £482,586. The result was that on that date the maximum sum which could bi drawn by the plaintiff against either of the two last-mentione accounts was only £63,007, the amount of the total net cash balance in that bank on that day. For the Bank of New South Wales it was further deposed that a practice had been followed for many years in pursuance of which the Treasurer pays into that bank | towards the end of each banking day, a considerable sum of money to the credit of the Government generally, and subsequently supplies - the bank with a distribution sheet which specifies the different Government accounts to which the sum so paid in is to be allocated and the respective amounts to be credited to each account. For the Commercial Banking Co. of Sydney Ltd. it was deposed that all moneys paid into that bank to the credit of any of the above- mentioned accounts of the State in its books are paid in by the Treasurer or some officer of the State. It is further deposed that _ all the moneys which are paid to either bank to the credit of any of the above-mentioned accounts are received by the banks respectively _ as moneys of His Majesty in the right of the State of New South Wales, and no information is given by or on behalf of the Governm

New South Wales v Commonwealth (No 3) [1932] HCA 12 - HCA 1932 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (148 paragraphs)