Doctrine of Executive Necessity
57The Crown cannot contract so as to fetter the future exercise of a statutory power or discretion required to be exercised in accordance with the public interest or by the criteria specified in the statute. Most of the cases relied on by the Commonwealth are authority for this proposition (Ayr Harbour Trustees v Oswald (1883) 8 HL 623 at 634, 638, 640; (1882-83) LR 8 App Cas 623; Watson's Bay and South Shore Ferry Co Ltd v Whitfeld (1919) 27 CLR 268 at 277; William Cory & Son Ltd v London Corporation [1951] 2 KB 476 at 484; Commissioners of Crown Lands v Page [1960] 2 QB 274 at 286, 289 and cf at 291-293; Cugden Rutile (No. 2) Pty Ltd v Chalk [1975] AC 520; L'Huillier v State of Victoria [1996] 2 VR 465; City of Subiaco v Heytesbury Properties Pty Ltd [2001] WASCA 140; (2001) 24 WAR 146). That is not the present case. The issue raised in this case is whether a contract entered into by the Commonwealth as land owner can be terminated at will or on reasonable notice (even if this is contrary to the express terms of the contract), or whether terms that might otherwise be implied cannot be implied because the Commonwealth has changed its policy in relation to the licence granted in 2000 to the NSWRA. No decision cited has gone so far.
58The Commonwealth relied upon the following passage from the judgment of Mason CJ in Attorney-General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1 at 17-18. His Honour said:
"The Executive cannot by representation or promise disable itself from, or hinder itself in, performing a statutory duty or exercising a statutory discretion to be performed or exercised in the public interest, by binding itself not to perform the duty or exercise the discretion in a particular way in advance of the actual performance of the duty or exercise of the power: see Watson's Bay and South Shore Ferry Co. Ltd v Whitfeld (1919) 27 CLR 268, at 277; Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54, at 74-76; Malvaso v The Queen (1989) 68 CLR 227 at 232-234; Birkdale District Electric Supply Co v Southport Corporation [1926] AC 355, at 364; Cudgen Rutile (No. 2) Ltd v Chalk [1975] AC 520, at 533-534; Southend-on-Sea Corporation v Hodgson (Wickford) Ltd [1962] 1 QB 416, at 423-425; Western Fish Products Ltd v Penwith District Council [1981] 2 All ER 204. Accordingly, it has been said that 'a public authority ... cannot be estopped from doing its public duty', to use the words of Lord Denning M.R. in Lever Finance v Westminster London Borough Council [1971] 1 QB 222, at 230. See also Rootkin v Kent County Council [1981] 1 WLR 1186; [1981] 2 All ER 227. As Gummow J observed in Minister for Immigration v Kurtovic (1990) 92 ALR 93, at 111, the principle has been explained on the footing that:
'in a case of a discretion, there is a duty under the statute to exercise a free and unhindered discretion and an estoppel cannot be raised (any more than a contract might be relied upon) to prevent or hinder the exercise of the discretion; the point is that the legislature intends the discretion to be exercised on the basis of a proper understanding of what is required by the statute, and that the repository of the discretion is not to be held to a decision which mistakes or forecloses that understanding'. cf. Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629, at 638.
No doubt the principle gains some of its force from the circumstance that the discretion has a legislative foundation and it is not readily to be supposed that the legislature intended that a proper exercise of the discretion in the public interest was to be frustrated, hindered or circumvented by executive action. Nonetheless there is no reason why the same principle should not apply to common law powers and functions of the Crown or the Executive when they involve the making of decisions in the public interest." (Emphasis added.)
59It was submitted for the Commonwealth that it follows from the last quoted sentence that where the Crown exercises its common law powers as an owner of land by entering into a contract in respect of the future use of that land, it cannot disable itself from deciding in the future that in the public interest the land should be used in a different way, namely, in the present case, as a national park.
60Hence, the Commonwealth submitted that whether or not it was entitled to terminate the licence for breach, it was not bound to continue the licence for the defined Term, because it now considers it to be in the public interest that the land should be used as a national park and not as a rifle range. Counsel for the Commonwealth accepted that on the Commonwealth's contentions, its assessment of what is in the public interest and whether there has been a change of public policy is unexaminable.
61The case most often cited for the proposition that a contract is not enforceable against the Crown if it would fetter future executive action in the public interest is Rederiaktiebolaget Amphitrite v R [1921] 3 KB 500 ("The Amphitrite"). That case concerned an assurance given by the British Government to the Swedish owners of a ship during the First World War. It appears from the report that the British Government had a policy of detaining neutral ships unless they were replaced by other ships of the same tonnage. Whether that power was exercised pursuant to statute, such as a Defence Regulation, or in the exercise of a prerogative power does not appear from the report. In L'Huillier v State of Victoria Callaway JA (at 483) described the power as a prerogative power relating to defence, and I assume that is so.
62In The Amphitrite the ship owners sought and obtained an assurance from the British Legation at Stockholm that the ship would be allowed to leave the British port after it had discharged its cargo. Whilst waiting to reload, the owners received notice from the Government that loading facilities were withdrawn and that clearance would not be granted, except on terms with which the owners could not comply. The result was that the ship was detained and eventually sold to avoid further loss. The ship owners presented a petition of right claiming damages for breach of the Government's undertaking contained in the correspondence by which the owners were assured that the ship would not be detained. There is no suggestion that the Crown was a party to any commercial contract for the hire or use of the ship. The contract sued on was the Government's undertaking through the Legation at Stockholm that the ship would not be detained.
63In an extempore judgment Rowlatt J said that there was no enforceable contract because the assurance given by the Government was merely an expression of intention to act in a particular way in a certain event (at 503). In Robertson v Minister of Pensions [1949] 1 KB 227 Denning J (at 231) considered this to be the ratio of the case, so that it was not an authority where the Crown undoubtedly had made a contract. However, the reason Rowlatt J considered there was no contract was that:
"My main reason for so thinking is that it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises. It cannot by contract hamper its freedom of action in matters which concern the welfare of the State."
64This was the ratio. No authority was cited for the proposition and none was referred to in argument. The only reasoning in support of the proposition was (at 503-504):
"Thus in the case of the employment of public servants, which is a less strong case than the present, it has been laid down that, except under an Act of Parliament, no one acting on behalf of the Crown has authority to employ any person except upon the terms that he is dismissible at the Crown's pleasure; the reason being that it is in the interests of the community that the ministers for the time being advising the Crown should be able to dispense with the services of its employees if they think it desirable. Again suppose that a man accepts an office which he is perfectly at liberty to refuse, and does so on the express terms that he is to have certain leave of absence, and that when the time arrives the leave is refused in circumstances of the greatest hardship to his family or business, as the case may be. Can it be conceived that a petition of right would lie for damages? I should think not."
65As Denning J observed in Robertson v Minister of Pensions, that reasoning cannot stand in the light of the Privy Council's decision in Reilly v R [1934] AC 176 where Lord Atkin, delivering the advice of the Privy Council, said (at 179) that any implication that the Crown could dismiss its employee at pleasure would be excluded by an express term to the contrary. This and other decisions to like effect were followed by the Court of Appeal in Suttling v Director-General of Education [1985] 3 NSWLR 427. There the Court of Appeal held by majority that it should not follow the decision of the English Court of Appeal in Dunn v R [1896] 1 QB 116 that a servant of the Crown can be dismissed at pleasure, notwithstanding that he has entered into a contract for a fixed term. That decision was upheld in the High Court (Director-General of Education (NSW) v Suttling [1987] HCA 3; (1987) 162 CLR 427), but on a narrower ground. In Jarratt v Commissioner of Police for NSW and State of New South Wales [2005] HCA 50; (2005) 224 CLR 44) the plurality (McHugh, Gummow and Hayne JJ) described the criticisms of the principle that the Crown can dismiss its servants at pleasure made by McHugh J in Suttling v Director-General of Education as being well based and gave reasons as to why the common law principles were not readily adapted to a modern system of public administration (at [64]-[72]).
66Thus the reasoning of Rowlatt J in The Amphitrite does not now support the proposition quoted at para [64], if it ever did. Moreover, Rowlatt J said that the principle did not apply to a "commercial contract". If the Government made a commercial contract "it must perform it like anybody else or pay damages for the breach" (at 503).
67The decision in The Amphitrite has been criticised. Writing in the Law Quarterly Review in 1929 Sir William Holdsworth said that the proposition that the Crown "cannot by contract hamper its freedom of action in matters which concern the welfare of the State" was laid down for the first time in that case, that it was a sweeping proposition for which no authority was cited, and that the analogy with what was then an undoubted rule that the Crown has no authority, except under statutory powers, to employ any person except on terms that he is dismissible at the pleasure of the Crown was "a slender foundation for such a great superstructure". Sir William Holdsworth concluded that the principle as so expressed was opposed to the common law principles which underlay English constitutional law (Holdsworth, reviewing "A Case Book on Constitutional Law" (1929) 45 LQR 162 at 166-167). He repeated these views in Volume 10 of A History of English Law published in 1938 (at pp 657-658). It appears from Volume 10 of A History of English Law that the common law principles underlying constitutional law which Sir William Holdsworth thought were opposed to the doctrine espoused in The Amphitrite were those that defined the rights and liberties of the subject as against the Crown (at 658). These included the freedom from arrest by warrant of a secretary of State, the invalidity of general warrants, the right to liberty of discussion, the right to petition and the right of public meeting. Although these principles have no direct application to the extent to which the Crown is bound by contract, Sir William Holdsworth saw an inconsistency between the proposition asserted in The Amphitrite and the liberties of the subject that limit the freedom of action of the Crown in matters which it asserts concern the welfare of the State.
68In Hogg & Monahan, Liability of the Crown, 3rd ed (2000) the learned authors noted that The Amphitrite seemed to have been followed rarely and had been severely criticised (at 9.6(a), p 227 and fn 77). However, in L'Huillier v State of Victoria Callaway JA with whom Charles JA agreed, "unhesitatingly rejected" a submission that "the Amphitrite doctrine" was wholly unsound as a matter of principle or could be reduced to a rule of construction (at 479). But that case concerned a possible fetter on the exercise of a statutory power.
69In Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [1977] HCA 71; (1977) 139 CLR 54 Mason J (as his Honour then was) noted the criticism that the statement of principle in The Amphitrite was expressed too generally and added (at 74-75):
"Public confidence in government dealings and contracts would be greatly disturbed if all contracts which affect public welfare or fetter future executive action were held not to be binding on the government or on public authorities. And it would be detrimental to the public interest to deny to the government or a public authority power to enter a valid contract merely because the contract affects the public welfare. Yet on the other hand the public interest requires that neither the government nor a public authority can by a contract disable itself or its officer from performing a statutory duty or from exercising a discretionary power conferred by or under a statute by binding itself or its officer not to perform the duty or to exercise the discretion in a particular way in the future."
70Aickin J also expressed reservations about the principle (at 113-114).
71In A v Hayden [1984] HCA 67; (1984) 156 CLR 532 Gibbs CJ also said that Rowlatt J spoke too widely. I consider that case below (at [85]-[87]).
72Mitchell, "The Contracts of Public Authorities", London School of Economics and Political Science, 1954, argues that Rowlatt J's attempted distinction between the agreement before him and cases of "commercial contracts" is to be explained on the basis that The Amphitrite was concerned with defence requirements based on military need, and is limited to that which is necessary for public safety (at pp 53-54). He said:
"Even so, the emphasis on public safety is a considerable limitation of a principle which was on its face widely expressed, but which must it is thought be narrowly confined, both on grounds of principle and convenience, if government contractors are to have any confidence in their dealings. It was precisely this point which was emphasized by Richards C.B. in Attorney-General v Lindegren (1819) 6 Price 287 ..."
73Attorney-General v Lindegren concerned a contract for the purchase of stores on behalf of the Navy during the Napoleonic wars. Richards CB said (at 304, 146 ER 811 at 817):
"Public confidence in the dealings of the Government with persons in the character of this defendant, is of the first importance, and should be regarded above all other considerations; and that confidence ought not to be shaken in consequence of the result of any subsequent calculation and inquiry by the Commissioners of a public board, showing that their contract has been injurious to the public merely on the grounds of too great liberality in remunerating the service required and performed."
74Thus even in the time of war, the Court did not adopt so wide a principle as that the Crown cannot by contract hamper its freedom of action in matters which concern the welfare of the State. It was a commercial contract. But the distinction between contracts that are commercial and those that are not is imprecise. Nor is there an obvious logical distinction. If the Crown is always to act in the public interest as it perceives it from time to time so that it cannot fetter its future actions by contract, there is no obvious reason why it should not be free to do so whether the contract is commercial or non-commercial, whatever that distinction is. Either type of contract could seriously affect the public welfare.
75A better explanation of the principle, and the limitation on it, is found in Board of Trade v Temperley Steam Shipping Co Ltd (1926) 26 Ll L Rep 76, and Commissioners of Crown Lands v Page.
76In Board of Trade v Temperley Steam Shipping Co Ltd the Board of Trade had compulsorily requisitioned a ship. It became subject to a charter to the Board of Trade under which the obligation to pay hire was suspended if the vessel ceased to be in working order. The vessel needed repair. Under the Munitions of War Act 1916 a surveyor with the Board of Trade was required to assess the extent of repair that would be allowed. Unless the use of materials for repairs were sanctioned, the repairs could not be done. Materials for repair were rationed. The surveyor did not treat the vessel differently from other vessels. By an error of judgment he permitted only limited repairs to be carried out. The result was that the vessel was out of operation for longer than it would otherwise have been. The ship owner contended that it was an implied term of the charter that the clause providing for the suspension of the obligation to pay hire did not apply where the ship was out of service due to the act of the Board of Trade's surveyor in refusing to allow sufficient repairs. Roche J said (at [78]):
"I think and I hold that in this charter-party it is to be implied that the Crown should do nothing in connection with and in relation to and in the carrying out of the contract contained in the charter-party to prevent the shipowners from keeping the vessel seaworthy and to prevent them earning their hire. But I am utterly unable to imply in the charter-party a term or condition that the Crown should do nothing by virtue of some general legislation or by virtue of some executive action entirely remote from the charter-party and done by persons not connected with the performance of the contract directly or indirectly to bring about the results in question."
77This judgment was upheld in the Court of Appeal (Board of Trade v Temperley Steam Shipping Co. Ltd (1927) 27 Lloyds L Rep 230). It is the distinction drawn by Roche J that was subsequently endorsed by Devlin LJ in Commissioners of Crown Lands v Page (at 293).
78In Commissioners of Crown Lands v Page, Devlin LJ said (at 291, 292 and 293):
"When the Crown, or any other person, is entrusted, whether by virtue of the prerogative or by statute, with discretionary powers to be exercised for the public good, it does not, when making a private contract in general terms, undertake (and it may be that it could not even with the use of specific language validly undertake) to fetter itself in the use of those powers, and in the exercise of its discretion.
...
When the Crown, in dealing with one of its subjects, is dealing as if it too were a private person, and is granting leases or buying and selling as ordinary persons do, it is absurd to suppose that it is making any promise about the way in which it will conduct the affairs of the nation. No one can imagine, for example, that when the Crown makes a contract which could not be fulfilled in time of war, it is pledging itself not to declare war for so long as the contract lasts.
... in making a lease or other contract with its subjects, the Crown does not (at least in the absence of specific words) promise to refrain from exercising its general powers under a statute or under the prerogative, or to exercise them in any particular way."
His Lordship then approved the distinction drawn by Roche J in Board of Trade v Temperley Steam Shipping Co. Ltd quoted above.
79The point made is that the Crown, when contracting in one capacity, cannot fetter a power it has in another capacity, whether under statute or the prerogative, that is to be exercised in the public interest.
80William Cory & Son Limited v London Corporation [1951] 2 KB 476 is an illustration. There it was held that a public authority with a duty to make bylaws in relation to the disposal of refuse could not make a contract that fettered the future exercise of that power. The London Corporation had a dual character. As sanitary authority it entered into a contract with the plaintiff for the plaintiff to remove refuse using lighters and barges. As health authority the London Corporation made bylaws regulating the fittings required for any vessel used for removing refuse from the Port of London. The bylaws made the contract commercially impossible of performance. No term could be implied, and no express term would have been valid, that would have precluded the Corporation from making such bylaws as it thought proper in the public interest.
81This same principle was applied in City of Subiaco v Heytesbury Properties Pty Ltd. Ipp J, who gave the leading judgment, described the case as one of "executive necessity". His Honour appears to have endorsed the rule as stated by Rowlatt J in The Amphitrite (at 157, [43]). There an assignee of a lease contended that it was an implied term of the lease that the right of the lessee to enjoy the demised premises was a right to enjoy them for the purpose of conducting a manufacturing business. The City of Subiaco was the lessor. It exercised its statutory power under a town planning scheme to rezone the land as residential. Clearly the lease could not fetter the future exercise of its statutory power of rezoning. Ipp J said (at [55]):
"In my opinion, any contractual fetter or limitation of any kind upon executive discretion would have to be clearly and expressly stated before a court would construe a contract as qualifying freedom of executive action. That is not the case with the leases presently under consideration."
82This was relied upon by the Commonwealth in the present case. However, what Ipp J said has to be read in context. The context in which his Honour referred to freedom of executive action was the future exercise by the executive of a statutory power to be exercised in a different capacity from the capacity in which it entered into the lease.
83L'Huillier v State of Victoria was also concerned with the exercise of a statutory power. Callaway JA, with whom Charles JA agreed, held that a term of a contract that purportedly prevents the due exercise of a future "public law discretion" will be void. His Honour held that unless the contract prevents the due exercise of discretion when it is required to be exercised, the provision will not be void, but will be construed "subject to the repository's right not to perform the contract in the future if performance would be inconsistent with the proper exercise of the discretion." (at 481). This was approved by Nettle JA in Port of Portland Pty Ltd v State of Victoria [2009] VSC 282; (2009) 27 VR 366 at [88]. The Commonwealth submitted that on this principle the licence should be read as impliedly conferring on the Commonwealth the right to terminate the licence if it considered it necessary in the public interest to do so and that the clause providing for the licence to continue until 14 days after a Relocation Notice was given should be construed as impliedly subject to such a term.
84Callaway JA did not define what he meant by a "public law discretion". It undoubtedly included the kind of statutory discretion involved in that case, namely, a discretion as to who should be appointed to a high public service office and on what terms. Callaway JA made it clear that the principle which he outlined did not apply to a case in which a discretion was properly exercised when the contract was made (at 481).
85In A v Hayden officers of the Australian Secret Intelligence Service, a creature of the executive, sought to enforce terms of a contract with the Commonwealth that the Commonwealth would keep their identities confidential. They sought an injunction to restrain the Commonwealth from disclosing their identities to the Victorian Police Commissioner who was investigating whether they had committed criminal offences. Whilst Mason J (at 556-561), Murphy J (at 563), Brennan J (at 585-588), and Deane J (at 592, 595-596) held that the term was not enforceable, that was on the grounds that the term infringed public policy by interfering with the investigation of crime and hence the administration of justice.
86Brennan J said (at 587):
"The Crown cannot bargain away its ability to act in the public interest."
That is to be understood in light of his Honour's fuller exposition (at 588) that:
"The Crown has no capacity to bind itself by a term which is contrary to public policy, and no servant or agent of the Crown has or can be given authority to bind the Crown by such a term. The powers of the Crown cannot be exercised contrary to what the law recognizes as public policy. It follows that the Crown's ability to assist in the investigation of crimes reasonably suspected to have been committed cannot be fettered by an unqualified contractual obligation not to disclose the identity of a person: circumstances may arise which justify disclosure in the public interest."
87The contracts between the plaintiffs in that case and the Commonwealth had no statutory basis. They were entered into in the exercise of the Crown's prerogative. It is noteworthy that the case was not decided on the broad ground advanced in this case that the Crown cannot by contract fetter the future exercise of executive power in the public interest. Gibbs CJ said (at 543):
"The suggestion made by Rowlatt J in [the Amphitrite], that the Government cannot by contract fetter its executive action in matters which concern the welfare of the State is too wide. It is true that speaking generally the Government cannot by contract disable itself or its officers from performing a duty cast on it by statute or from freely exercising a statutory power or discretion ... The same principle may apply when the Crown is entrusted with powers under the prerogative. ... However this principle has no application to the present case, where there exists no relevant power or duty granted or imposed by statute or available under the prerogative ..."
88In Northern Territory of Australia v Skywest Airlines Pty Ltd (1987) 48 NTR 20; 90 FLR 270, the Northern Territory did not raise a defence of executive necessity to seek to justify its refusal to be bound by a contract that had been entered into following a competitive tender. The contract was made in the exercise of executive authority for the supply of aerial medical flight services in the Territory. Nonetheless, Kearney J observed (at 47, 294):
"In general, and for good reasons, a government rightly regards itself as bound to carry out a contract it has lawfully and properly entered into, when the other party is not in breach. The reasons are rooted in commonsense and good government - in general, in a proper concern to protect the public revenue against unnecessary and unwarranted loss, to preserve the government's reputation for integrity and to retain its credibility, particularly with the business community. Because of its responsibilities to the people, a government may nevertheless sometimes have to break its contract because of some overriding public interest, such as the exigencies of war; there is however no suggestion that any public interest requires that the Government break this contract ..."
89I do not think it correct to say that Kearney J intended to confine the circumstances in which the doctrine of executive necessity might qualify the executive's contractual obligations to cases of war or public safety (compare M Allars, Administrative Law, Government Contracts and the Level Playing Field, (1989) 12 UNSWLJ 114 at 123). Nonetheless, this judgment also gives no encouragement to a wider doctrine of executive necessity as qualifying a government's contractual obligations otherwise than where the contract attempts to fetter the future exercise of a statutory power or discretion in the public interest, or where the contract would fetter the future exercise of a prerogative power which the Crown enjoys separately and distinctly from the capacities of its subjects, such as the prerogative to declare war.
90In Commonwealth of Australia v Hooper [1992] NSWCA 44; (1992) Aust Contract R 90-010, a contract to which the Commonwealth was found to be a party gave to the Australian Gaslight Company ("AGL") a right of first refusal to acquire a pipeline on terms no less favourable than those offered to any third party. The pipeline was owned by the Pipeline Authority established under the Pipeline Authority Act 1973 (Cth). The Commonwealth contended that the Authority did not have the power to dispose of the pipeline as a going concern. Gleeson CJ, and on appeal, the Court of Appeal, held that even if that were so, the Commonwealth was still required to ensure that AGL had the first right of refusal to acquire the pipeline. In the Court of Appeal the Commonwealth argued that if the contract were interpreted in this way:
"... it imposed a fetter on the Commonwealth, discouraging it from considering legislation of a certain kind (that is, which would enable the contractual obligation be avoided) at pain of being liable in damages or possibly having to comply with s 51(xxxi) of the Constitution if it did not. It was said that there is an established principle that the Crown cannot make such fettering contracts. For this proposition counsel relied upon 'The Amphitrite' (1921) 3 KB 500; Commissioners of Crown Lands v Page (1960) 2 QB 274; and West Lakes Limited v South Australia (1980) 25 SASR 389.
91Priestley JA, with whom Samuels and Handley JJA agreed, said of this submission:
"Neither of the first two decisions has attracted much approval: see the discussion in M Aronson & H Whitmore; Public Torts and Contracts, at 194-7; and Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 at 74-78 (Mason J) at 113 (Aickin J). The criticism is that the proposition for which the two English cases stand is much too widely expressed. In the Westlakes case, the second paragraph in the reasons of King CJ would seem to negate the possibility of a doctrine, if it has any effect in Australia, being of any help to the Commonwealth in the present case."
92Commonwealth v Hooper also provides no encouragement to an expansive doctrine of executive necessity.
93In support of its submission that where the Commonwealth enters into contract whose substance or operation involves questions of public policy, the Commonwealth may treat the contract as not binding if public policy changes, the Commonwealth cited pp 233, 236-239 and 249 of Seddon, Government Contracts, 5th ed, Federation Press.
94Dr Seddon described a "special form of government privilege" that "a contract cannot, despite its binding nature, fetter the government's ability to carry out its programmes and policies." (at p 233). Dr Seddon opined that the doctrine of executive necessity permits the Government to break a contract with impunity if it needs to do so for reasons of policy (at [5.2] and [5.3]). He said (at pp 237, 238-239):
"If it turns out that at sometime in the future the government needs to take a different path from that contemplated at the time of making the contract in question, then the doctrine of executive necessity allows the government to do so with impunity even though this brings about a breach of the original obligations. ... It is suggested that the justification for a government to break a contract on the basis of executive necessity should be confined to those circumstances where a policy decision is behind the need to break the contract."
95I do not consider this to be a correct statement of the law. Dr Seddon cites no authority for these propositions. He notes that in The Amphitrite the contract was broken by the necessities of war. The propositions go beyond any authority cited to me, or of which I am aware.
96The high point of the authority relied upon by the Commonwealth is the dictum of Mason J in Attorney-General v Quin quoted at para [57] above. It is not clear what Mason CJ intended to encompass by his reference to the non-fettering of "common law powers and functions of the Crown or the Executive" that involve making decisions in the public interest. In Ansett Transport Industries his Honour had described the principle as stated by Rowlatt J in The Amphitrite as having been expressed too generally. I do not infer that his Honour intended to resile from that statement. I consider his Honour was referring to the Crown's exercise of a prerogative that it enjoys alone and in contradistinction to the capacities of its subjects. In other words, the kind of common law power which Devlin LJ described Commissioners of Crown Lands v Page at 291, viz. a discretionary power by virtue of the prerogative to be exercised for the public good. At the widest, his Honour was referring to common law powers and functions involving the future exercise of a duty or discretion required to be exercised in the public interest, as that was the principle in relation to the exercise of a statutory discretion his Honour addressed.
97In my view, the doctrine of executive necessity has no role to play in the present case. The deed of licence did not fetter the exercise of a future duty or discretion by the Crown. It was a contract by which the Crown acted in what was then perceived to be the public interest in reconciling the competing demands for use of the Malabar Headland. It was a present exercise of the Commonwealth's power as owner of the land, not the fettering of a future exercise of a duty or discretion.
98I accept that this entry into the deed of licence can be characterised as an exercise of the prerogative in some sense (Johnson v Kent [1975] HCA 4; (1975) 132 CLR 164). However, the "prerogative" is an ambiguous term. Blackstone said (Blackstone, Commentaries on the Laws of England, 1765, Book 1, p 232):
"By the word prerogative we usually understand that special pre-eminence, which the king hath, over and above all other persons, and out of the ordinary course of the common law, in right of his royal dignity. ... And hence it follows, that it must be in its nature singular and eccentrical; that it can only be applied to those rights and capacities which the king enjoys alone, in contradistinction to others, and not to those which he enjoys in common with any of his subjects:".
99It is to the prerogative in this sense that Devlin J referred in Commissioners of Crown Lands v Page when he said (at 293) that:
"... the Crown does not (at least in the absence of specific words) promise to refrain from exercising its general powers under a statute or under the prerogative, or to exercise them in any particular way."
100The power (not discretion) the Commonwealth exercised in entering into the deed of licence was not an exercise of the prerogative in this sense. It was the exercise of the Crown's power as owner of the land. In that respect, the Crown had the same capacity and stood in the same position as any other person. It was not an exercise of a "public law discretion" (to use the words of Callaway JA in L'Huillier v State of Victoria).
101By asserting the alleged right to terminate the licence at will or on reasonable notice, or by asserting that the licence is not binding on it, or that terms should not be implied that would otherwise be implied, the Commonwealth is not seeking to exercise a power or discretion in a different capacity from that in which it contracted (Board of Trade v Temperley Steam Shipping Co Ltd per Roche J at 78; and Commissioners of Crown Lands v Page at 293).
102No argument was addressed as to the effect of s 64 of the Judiciary Act 1903 (Cth) which provides:
"64 Rights of parties
In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject."
103The section affects substantive rights and is not merely procedural (Maguire v Simpson [1977] HCA 63; (1977) 139 CLR 362). It has been said that the words "as nearly as possible" must be an acknowledgment of the existence of the doctrine of executive necessity (Seddon, p 328). Whilst this may be so, those words indicate that the doctrine should be narrowly confined, so as to assimilate the position of the Crown as completely as possible to that of a subject (Commonwealth v Evans Deakin Industries Ltd [1986] HCA 51; (1986) 161 CLR 254 at 264-265).
104None of the authorities cited and no other that I have considered has applied the doctrine in circumstances analogous to the present case that involves no fettering of a future discretion, no fettering of a statutory discretion, and no action by the Crown in a different capacity from that in which it contracted. All there is is a change of policy. In State of New South Wales v Bardolph [1934] HCA 74; (1934) 52 CLR 455, Evatt J observed that "the repudiation of subsisting agreements by a new administration can seldom be ventured upon with success" (at 463). That is this case.
105The Commonwealth is not entitled to terminate the licence either at will or on reasonable notice. The licence is for a defined term, that is, until 14 days after the giving of a Relocation Notice. It would be contrary to that express term for the licence to be terminated by the Commonwealth either at will or on reasonable notice. There was no dispute that even though at law a mere licence to occupy the land would be terminable at will, even in breach of contract (Wood v Leadbitter (1845) 13 M & W 838; 153 ER 351; Cowell v Rosehill Racecourse Co. Ltd (1937) 56 CLR 605), in an appropriate case equity would restrain the licensor from revoking the licence in breach of contract (Graham H Roberts Pty Ltd v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93; R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 4th ed LexisNexis Butterworths at [21-240]-[21-275]).
106By its cross-claim in the 2012 proceeding the Commonwealth purported to terminate the licence. Counsel for the Commonwealth said that that was not done by way of termination for breach, but pursuant to the asserted power to bring the licence to an end because there had been a change of public policy. That purported termination should be restrained unless the Commonwealth is entitled to terminate the licence because the NSWRA is in default.