Poulton v Commonwealth - [1953] HCA 101 - HCA 1953 case summary — Zoe

CTHHCA

Poulton v Commonwealth

[1953] HCA 101

High Court of Australia|1953-07-01|Before: Fullagar J, Kitto JJ, Owen J

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Source facts

Court

High Court of Australia

Decision date

1953-07-01

Before

Fullagar J, Kitto JJ, Owen J

Source

Original judgment source is linked above.

Judgment (96 paragraphs)

[1]

High Court of Australia Fullagar J. Williams, Webb and Kitto JJ. Poulton v Commonwealth [1953] HCA 101

[2]

The plaintiff in this action, Malcolm Coote Poulton, was at all material times a dealer in wool. The defendants in the action, as originally framed, were the Commonwealth of Australia, the Australian Wool Realization Commission (a corporation constituted under the Wool Realization Act 1945-1950 Cth.) and Michael Joseph Donlon, George Henry Donlon and William Donlon. The three lastnamed defendants were brothers who carried on a business of wool growing in partnership under the name of Donlon Brothers. Michael Joseph Donlon died after the commencement of the action, leaving a will in which his two brothers were named as executors. The plaintiff alleged that in November 1942 he had bought certain wool from Donlon Brothers and submitted that wool for appraisement under the National Security (Wool) Regulations then in force, and he claimed (to state the matter for the moment only in the most general way) that in respect of that wool he was entitled to share in the "profits" which are the subject matter of the Wool Realization (Distribution of Profits) Act 1948-1952. The amount directly involved in the case is small, but I was informed that it was in the nature of a "test case", and that it was expected to determine, for a very large number of similar cases in which wool was handled (to use a neutral term) by dealers, whether the share of "profit" attributable to the wool should go to the dealer or to the grower.

[6]

The Australian "Wool Purchase Arrangement" was made between the two Governments almost immediately after the commencement of the war in September 1939. It provided that the United Kingdom Government should purchase from the Commonwealth Government all wool produced in Australia during the period of the Arrangement, except wool required for the purpose of woollen manufacture in Australia. The period of the Arrangement was to be the duration of the war and one full wool year thereafter. A "wool year" is a year ending on 30th June. The price was to be 10.75 pence sterling per pound of greasy wool, which is the equivalent of 13.4375 pence Australian. This price was arrived at only after an interchange of many cables and a number of interviews in London, in the course of which the Commonwealth pressed most strongly for a higher price. It was a term of the Arrangement that the United Kingdom Government and the Commonwealth Government should divide equally any profit which might arise from the resale by the United Kingdom Government outside the United Kingdom of wool purchased by it under the Arrangement. It was also a term of the Arrangement that the acquisition of the wool and the handling of the wool to the f.o.b. point should be the responsibility of the Commonwealth Government. For these services a "handling charge" not exceeding three farthings Australian per pound of wool purchased was to be paid by the United Kingdom Government. In fact, the actual sum of three farthings per pound was paid for the first three wool years. It is convenient to mention here that, in the event, the Arrangement applied to the wool of six wool years, i.e., the years 1939-1940 to 1944-1945 inclusive, and the system of appraisement and acquisition which (as will be seen) was set up under it continued during the year 1945-1946. The Arrangement was modified in two respects during that period with regard to the amounts to be paid by the United Kingdom Government. In the first place, the purchase price for the year 1942-1943 and subsequent years was increased to 15.45 pence Australian per pound. In the second place, it having appeared that the actual cost of "handling" was less than three farthings per pound, it was arranged that for the year 1942-1943 and subsequent years any difference between three farthings per pound and the actual cost of handling should be credited to the United Kingdom Government.

[7]

It was necessary, of course, for the Commonwealth Government to take steps in Australia for the implementing of the Wool Purchase Arrangement, and the National Security (Wool) Regulations were accordingly made by the Governor-General under the National Security Act 1939. In fact, these regulations were made on 28th September 1939, a short time before all the details of the Arrangement had been settled between the two Governments. By these regulations a Central Wool Committee and State Wool Committees were established, the Central Wool Committee being given "all powers and authorities conducive or incidental to the purpose of the Regulations", which was "to provide for the carrying out of the Wool Purchase Arrangement". The general scheme underlying the regulations was that the Commonwealth should purchase all Australian wool, including what might be required for purposes of local manufacture, and should pay for all that wool a price per pound equal to the price per pound payable by the United Kingdom Government for wool sold to that Government under the Wool Purchase Arrangement. That price per pound was a flat rate. On the other hand, the wool to be purchased by the Commonwealth comprised many hundreds of classes of wool of widely differing quality and value, and to pay for all these at a flat rate was out of the question. What had to be done, therefore, was to arrive as nearly as possible at an appropriate price for each class of wool on such a basis that the average price per pound payable by the Commonwealth for all the wool would be equal to the price per pound receivable from the United Kingdom Government for wool sold by the Commonwealth to that Government. This was achieved by means of a system of "appraisement" or valuation, subject to what was called a "table of limits" prepared by highly skilled experts. The plan is explained in Ritchie's Case [1] in a passage which I will quote. "The plan upon which the regulations proceeded was to substitute appraisement for auction as the mode of selling wool and otherwise to adhere as closely as possible to the procedures for the handling and disposal of wool customary in peace-time. Wool was catalogued by the wool-selling broker to whom the grower had sent it and the appraisement was conducted upon the floors of the wool-selling broker's store by three appraisers, one representing the wool-selling broker and the other two (wool buyers in peace-time) representing the Commonwealth. Every appraisement was made according to a table of limits which for each wool season or year the Central Wool Committee caused to be prepared" [2] . The table of limits was constructed for each wool year by a Technical Advisory Committee. It was necessarily based on an anticipation - founded on experience and on information obtained - as to the quantity of the various types which would come forward for appraisement. And the object in view was that the average price per pound which would be paid by the Commonwealth for the whole of the clip of the wool year should approximate as nearly as possible to the flat rate per pound payable to the Commonwealth by the United Kingdom.

[10]

There is one other regulation which is of importance in this case. That is reg. 30, which provided: "(1) All moneys payable by the Government of Great Britain under the arrangement made by that Government with the Commonwealth for acquiring Australian Wool shall be received by the Central Wool Committee, and out of such moneys the Central Wool Committee shall defray all costs, charges and expenses of administering these Regulations, and make the payments for wool to the suppliers. (2) Any moneys which may be received by the Central Wool Committee from the Government of Great Britain under or in consequence of such arrangement over and above the purchase price payable by such Government thereunder for the wool and any surplus which may arise shall be dealt with as the Central Wool Committee shall in its absolute discretion determine". To quote again from Ritchie's Case [1] : "It will be seen that sub-reg. (1) covers the flat-rate price payable by the United Kingdom and the amount not exceeding three farthings a pound for expenses. Sub-regulation (2) conferred upon the Central Wool Committee a discretion to determine how the half share of profits payable by the United Kingdom under the Wool Purchase Arrangement should be dealt with and profits or moneys arising otherwise, as, for instance, from wool tops or wool for manufacture for export" [2] . It was not, of course, known in the beginning whether there would ever be any "profit" or "surplus". But administrative arrangements were made from the beginning by the Central Wool Committee in anticipation of there being ultimately a fund distributable under reg. 30 (2). It was determined that the suppliers of shorn wool (i.e., wool shorn from the living sheep) should share in any such fund, but that the suppliers of skin wool (i.e., wool fellmongered from the skins of dead sheep) should not. Accordingly, for the purposes of each appraisement, wool of the former class was listed in the broker's catalogue as "participating" wool, and wool of the latter class as "non-participating" wool. It will be seen later that this distinction formed the basis of the distribution ultimately provided for by the Wool Realization (Distribution of Profits) Act 1948-1952.

[12]

In the case of non-participating wool, payment of the full appraised price was made by the Central Wool Committee within fourteen days after appraisement, and those who had supplied such wool for appraisement received nothing more. In the case of participating wool, payment of ninety per cent (in later years ninety-five per cent) of the appraised price was made within fourteen days of appraisement. The reason for the retention of a percentage of the appraised price was that it could not be known with certainty in advance whether the total of the appraised prices of all the wool appraised in the wool year would average out at a price equal to, or greater than or less than, the flat rate payable by the United Kingdom Government. In actual fact a very remarkable degree of accuracy was attained, and in every year the total of the appraised prices averaged out at a price a little less than the flat rate. Accordingly, after the end of the wool year, when this was ascertained, the Central Committee made two further payments consisting of the retained percentage of the appraised price (called the "retention money") and a further percentage to bring the total payment up to "flat rate parity", i.e., approximately to the amount which would have been the appraised price if it had been possible to achieve the object of the appraisement with mathematical accuracy. Because payments were made up to flat rate parity in respect of the whole shorn clip, and because the United Kingdom Government was paying only for so much of the wool clip as was not required for purposes of manufacture in Australia, the Central Wool Committee required funds over and above what it received from the United Kingdom Government. These funds were derived from the proceeds of the sale of wool for local manufacture, from certain operations under the National Security (Wool Tops) Regulations and the National Security (Price of Wool for Manufacture for Export) Regulations, and (before the year 1942-1943) from the surplus amount not expended of the "handling charge" of three farthings per pound. All moneys received in respect of wool were received by the Central Wool Committee, and none were paid into consolidated revenue.

[14]

The wool purchased by the United Kingdom Government under the Wool Purchase Arrangement was dealt with in one or other of the following ways. Some was shipped from Australia to the United Kingdom. Some was sold by the United Kingdom Government to buyers in other countries, and shipped from Australia to those other countries. Some was held in Australia for storage or treatment on behalf of the United Kingdom Government, and some was shipped to the United States for storage there in pursuance of arrangements between the Governments of the United Kingdom and the United States. The quantity stored in Australia was very large indeed, and the Central Wool Committee erected some 400 stores averaging over an acre in extent. The wool sent to countries other than the United Kingdom was sold at prices known as "export issue prices", which were determined by the United Kingdom Government. The accounts in respect of such sales were kept in England by the United Kingdom Government, and these included a "distributable profits account". In 1945, however, after the end of the war with Germany, very large quantities of the wool purchased by the United Kingdom Government remained in store in Australia and elsewhere, and it was impossible to determine at that stage whether there would ultimately be any profits to be dealt with in accordance with the Wool Purchase Arrangement. As a result of negotiations conducted in that year, a plan was agreed upon between the Government of the United Kingdom and the Governments of the Commonwealth, South Africa and New Zealand respectively, for the winding up of the wool scheme. One of the main objects of the plan was to dispose of the large stocks of wool held by the United Kingdom Government without unduly disturbing the market and depressing the prices of the current and future wool clips. The plan was called the "Disposals Plan", and it is set out in the schedule to the Wool Realization Act 1945-1950 Cth.. This Act, which received the Royal assent on 11th October 1945, came into force by proclamation on 16th November 1945, but the plan took effect as from 1st August 1945.

[16]

I do not regard the details of the plan as having vital importance in this case, but I think I should state its effect in outline so far as it affected Australia. The stock of Australian-grown wool in the ownership of the United Kingdom at 31st July 1945 was transferred to the joint ownership of the United Kingdom Government and the Commonwealth Government, and was to be held and disposed of by a "Joint Organization", which was to be incorporated as a private company in England with an Australian subsidiary. The Australian subsidiary was the Australian Wool Realization Commission, which was constituted and incorporated by the Act, and which is a defendant in this action. The United Kingdom and the Commonwealth were each to take up fifty per cent of the original capital represented by the opening stock of Australian-grown wool, which opening stock was to be taken into account at its original cost less the amount standing to the credit of the divisible profits account. Payment of the Commonwealth's share of the original capital was to be made in four annual instalments, but there was provision for such payment to be made out of Australia's share of current profits, if any. The operating costs of the Joint Organization were to be borne equally by the wool industry and the Joint Organization itself. The contribution of "the industry" was provided for by Acts of the Commonwealth Parliament entitled the Wool (Contributory Charge) Assessment Act 1945-1951, and the Wool (Contributory Charge) Act 1945, both of which received the Royal assent on the same day as the Wool Realization Act 1945-1950. The ultimate balance of profit or loss was to be shared or borne equally by the United Kingdom and the Commonwealth. With regard to the wool year 1945-1946 (described as the "interim period") it was agreed that the United Kingdom should purchase the whole clip in the same way as in the six preceding years, but it was to be handled by the Joint Organization, and the Commonwealth was to reimburse to the United Kingdom one half of the cost of so much of the clip as remained unsold at the end of the wool year. In the following year (1946-1947) the normal system of selling wool by auction in Australia was resumed. Actually in that year the Joint Organization purchased a very substantial quantity of Australian wool at auction sales.

[20]

The word "dealer" is defined by s. 4 as meaning, in relation to any wool, "a person, not being a broker or a person who owned the sheep from which the wool was produced, who submitted the wool for appraisement in the course of a business of dealing in wool or of acting as an agent in the submission of wool for appraisement". Sub-section (1) of s. 7 provides that, subject to the Act, an amount equal to each declared amount of profit shall be distributed by the Australian Wool Realization Commission in accordance with the Act. Sub-section (2) provides that "There shall be payable by the Commission, out of each amount to be distributed under this Act, in relation to any participating wool, an amount which bears to the amount to be distributed the same proportion as the appraised value of that wool bears to the total of the appraised values of all participating wool". (The expression "participating wool" has already been explained.) Sub-section (3) provides that "Subject to this Act, an amount payable under this Act in relation to any participating wool shall be payable to the person who supplied the wool for appraisement". Sub-section (1) of s. 8 provides: - "For the purposes of this Act, wool which was submitted by a dealer for appraisement shall be deemed to have been supplied for appraisement - (a) where only one dealer has dealt with the wool - (i) if that dealer submitted the wool as agent for another person - by that person; or (ii) if that dealer submitted, or purported to submit, the wool on his own behalf - by the person from whom he obtained the wool; or (b) where more than one dealer has dealt with the wool - by the person for whom the first such dealer to deal with the wool acted as agent, or by the person from whom that dealer obtained the wool, as the case may be". Sub-section (2) provides that sub-s. (1) shall not apply in relation to wool which was owned by a dealer at any time before 28th September 1939. Sub-section (3) provides that, notwithstanding the terms of any contract (whether made before or after the commencement of the Act), a dealer shall not be entitled to recover from another person the whole or any part of any moneys paid to that other person under the Act. It will be seen that, in the definition of "dealer", and also in s. 7 (3), and s. 8 (2) a distinction is drawn between "supplying" wool for appraisement and "submitting" wool for appraisement. In effect, for the purposes of s. 7 (3), though subject to s. 8 (2), a "dealer" is not to be regarded as a person who "supplied" wool for appraisement. Section 28 provides: "No action or proceedings shall lie against the Commission or the Commonwealth for the recovery of any moneys claimed to be payable to any person under this Act, or of damages arising out of anything done or omitted to be done by the Commission in good faith in the performance of its functions under this Act". Section 29 provides: "Subject to this Act and the regulations, a share in a distribution under this Act, or the possibility of such a share, shall be, and be deemed at all times to have been, absolutely inalienable prior to actual receipt of the share, whether by means of, or in consequence of, sale, assignment, charge, execution or otherwise".

[23]

This method of meeting the situation, however, was never regarded as satisfactory, one reason doubtless being that it represented a departure from general policy. There were probably other reasons also. Accordingly, in the later war, a system of "permits", which appears to have had no actual legal authority or sanction, was instituted. In October 1939, the Central Wool Committee forwarded a circular to dealers, which was in the following terms: "Under the National Security (Wool) Regulations, Clause 14 provides: "No person shall sell or buy or contract to sell or buy any wool except in accordance with these Regulations". The Central Wool Committee has borne in mind the desirability of maintaining as far as possible, consistently with the Regulations, existing practices, and early in its meetings considered the position of wool dealing having regard to Clause 14. The Committee resolved to issue to Wool Dealers a permit to allow them to continue to receive wool from growers and other owners on terms and conditions which, while consistent with the Regulations, will enable dealers who obtain permits to continue the substance of their business. A condition of the permit is that the dealer will give an undertaking in the following terms: - "(1) All wool received will be submitted for appraisement in the store or stores of an approved Wool Selling Broker. (2) The dealer will keep true and correct records of all transactions, pursuant to which he received wool, sufficient to enable a proper distribution amongst the growers and other owners of such wool of all payments which may follow the appraised price of such wool. (3) The dealer will upon notice in writing from the Central Wool Committee under the hand of the Secretary produce such records to the Central Wool Committee or its Executive Member. (4) The dealer will fully and faithfully account in respect of the proceeds of such wool to the Growers or other owners from whom he receives such wool in accordance with the terms and conditions upon which he shall have obtained and received such wool from them". There is no restriction upon dealing in sheepskins".

[34]

In the next place, I think that the circumstances of the insertion of the "inset" are important. In November 1939, the New South Wales Country Wool and Skin Buyers' Association, an association of which the plaintiff was a member, had issued to its members, including the plaintiff, a circular (Exhibit A9) with which was forwarded a copy of a letter from the Central Wool Committee to the New South Wales State Wool Committee. The enclosure contained the following passage: "The procedure of Dealers will largely depend on circumstances. Probably in the case of large purchases, money will be advanced on the wool received, and the balance of the appraised price, less commission or other remuneration, will be paid to the grower when received by the dealer from his Wool-selling Broker. In the case of small lots the grower or other owner may desire to make a final settlement with the dealer when passing over the wool, and he could probably do this without actually divesting himself of the legal title to the wool in such a way as to contravene reg. 14. The Permit does not allow a dealer to submit wool for Appraisement on his own account". The circular, referring to the terms of the enclosure, contained the following paragraph: "The reference to small lots is particularly interesting, and there appears to us no reason why it should not apply to everything. It must not be overlooked, however, that the dealer's name in all cases must appear on contracts as the agent, as you still cannot buy wool outright". At a later date the association forwarded to its members, including the plaintiff, a clause in the terms of the "inset" with the suggestion that it should be used in the invoice or other document recording a transaction between wool grower and dealer. The plaintiff thereupon caused to be added to the printed form which he had previously used the words of the "inset", while leaving the words "Bought from" standing. The words of the "inset" are, of course, only applicable where the commodity being received by the dealer is wool. In such a case it is a well-settled rule of construction that special words prevail over general words: cf. Glynn v. Margetson & Co. [1] (a case of written words in a printed form) and Western Assurance Co. of Toronto v. Poole [2] . In the latter case the Court took the view that words in a printed form had been left standing through carelessness. In the present case the words "Bought from" were possibly left standing by the dealer not through carelessness but in the farsighted hope of having the "best of all possible worlds". But in such cases an ambiguity, even if - perhaps especially if - it be a studied ambiguity, must generally be resolved by preferring the special words to the general.

[38]

I have felt somewhat more difficulty over the second question of construction which arises on Exhibit A3. It was contended for the defendants that the word "proceeds" did not include a share in any "wool profit" which might ultimately become distributable or be distributed, though it was conceded that they included the appraised price, and it was not, I think, seriously disputed that they included the amount paid for adjustment to flat rate parity. Strong reliance was placed on the use of the word "retained" as showing that what was referred to was something of which it could be predicted with certainty that it would be payable to the dealer in the first place. But the actual language of such a document ought not to be too closely scanned, nor ought it to be assumed that every term in it is intended in a strictly pure and accurate sense. I am of opinion that the language used really means that Donlon Brothers are making over to the plaintiff every amount which may become payable in respect of the wool after and by reason of its submission to appraisement. The whole idea of the "inset" is, in my opinion, to provide that, although no property in the wool is passing to the dealer, yet the dealer is to be entitled to all moneys which would become payable to the growers if they submitted the wool for appraisement themselves directly as owners. There is no real difficulty, I think, in regarding the word "proceeds" as covering a share in any fund that might arise under the clause relating to "profits" in the Wool Purchase Arrangement. At the hearing I excluded certain evidence tendered by Mr. Isaacs to show that there was a general expectation that there would be further payments over and above appraised price and adjustment to flat rate parity. It is possible that, in so doing, I took too narrow and strict a view, but in any case it does not matter, for what Mr. Isaacs sought to establish by direct evidence is, in my opinion, to be inferred from all the circumstances existing, and indeed might almost be treated as a notorious fact. Such an expectation is indeed implied in the very practice of cataloguing wool as participating and non-participating. Everybody would know that this classification was made in anticipation of a decision of the Central Wool Committee with regard to profits which might arise from the Wool Purchase Arrangement. Nor would the experience of the wool scheme of the war of 1914-1918 have been forgotten. In Ritchie's Case [1] it is said that "It is clear that from the beginning the distribution, in whole or in part, of the Australian share of any surplus arising on divisible profits account was contemplated" [2] . And again "The receipt of the payments" (in respect of profits) "is an actual consequence of the submission of wool for appraisement. It is a consequence which from the beginning was contemplated as a contingent result of submitting the wool for appraisement" [1] .

[55]

The attack on the regulations was based on the argument that they provided for the acquisition of property by the Commonwealth otherwise than on just terms, and, therefore, were not authorized by s. 51 (xxxi.) of the Constitution. It is to be observed at the outset that a somewhat similar argument (though I do not know that reliance was expressly placed on s. 51 (xxxi.)) was put forward in John Cooke & Co. Pty. Ltd. v. The Commonwealth [1] . The argument was dealt with by Viscount Cave speaking for the Privy Council in the following terms: "As a last alternative it was suggested that the Commonwealth Government must be taken to have requisitioned the appellants' wool and accordingly must pay for it on requisition terms In their Lordships' opinion there is no foundation for this suggestion. Regulation 10 of the Wool Regulations did indeed forbid the sale of wool except through or to or with the consent of the Central Wool Committee or otherwise in accordance with the regulations; and this regulation no doubt made it difficult, if not impossible, for a wool-owner to dispose of his wool except to the Commonwealth Government and on the terms offered by that Government. But there was no legal compulsion on any wool-owner to bring in his wool for sale. The Commonwealth Government proceeded throughout by the method of agreement, and resort was never had to the method of requisition" [2] . It has already been mentioned that the National Security (Wool) Regulations of 1939, unlike the War Precautions (Wool) Regulations of 1916, did purport to compel owners of wool to send in their wool for appraisement and provided that the property should pass to the Commonwealth on final appraisement. It may be, therefore, that the element of " legal compulsion", which Lord Cave found lacking in the earlier case, is present in the case before me. I am prepared, without deciding the point, to assume, as I think it was really assumed throughout in argument, that there was here, in each year of the scheme, an acquisition of property within the meaning of s. 51 (xxxi.). But the terms of the acquisition appear to me to have been entirely just.

[68]

The plaintiff is not, in my opinion, a person who supplied wool for appraisement within the meaning of the Act. I have already drawn attention to the distinction which the Act draws between "supplying" and "submitting" wool for appraisement. He may very well be an equitable assignee of the persons who supplied the wool for appraisement within the meaning of the Act. In that capacity, however, ss. 8 and 29 do stand in his way. He contends then that those sections are invalid. One answer to his contention may very well be that ss. 8 and 29 are an essential part of the scheme of the Act as it stands, that they are not severable, and that, if they fall, the whole Act falls. But, however this may be, I am unable to entertain any doubt that the whole Act, including ss. 8 and 29, is a perfectly valid exercise of the legislative power of the Parliament. It was suggested by counsel for the defendants that the Act might be supported under various powers given by s. 51 of the Constitution, but it seems quite plain to me that it is a valid exercise of the powers conferred by s. 51 (vi.) and (xxxix.). Nothing could be clearer than that the acquisition of the wool and the legislation under which it was effected were war measures. It was no mere matter of assisting producers in a crisis created for them by the war, as, for example, in the case of the apple and pear acquisition. Wool was a commodity of incalculable strategic importance alike to the United Kingdom at war and to the Commonwealth at war. The connection of the measures taken with the conduct of the war is immediate and obvious, and those measures were clearly authorized by the defence power. From the beginning the possibility of a profit, and of a distribution of profit, is envisaged, and all wool is appraised as "participating" or "non-participating". When a profit arising from the sale of wool is realized, although it is not realized from the source originally contemplated, it must be within the defence power to provide by legislation for the distribution of that profit. The manner of distribution might have been left, as had been originally contemplated, to the "wisdom fairness and discretion" of the Central Wool Committee, or it might have been placed in the hands of its successor, the Wool Realization Commission. But the Parliament was perfectly at liberty to exercise its own "wisdom fairness and discretion" with or without the advice of the commission. The provisions of ss. 8 and 29 are plainly incidental to the exercise of the discretion. I can see no reason whatever for saying that the Parliament is exceeding its powers if it says: "For the purposes of this distribution we will not recognize any assignment of any expectancy of a share in profit". Such a provision might be dictated either by considerations of policy or by considerations of convenience. Nor can I see the slightest reason for saying that the Parliament is exceeding its powers if it says: "If a grower's wool came for appraisement through a dealer, we will pay the share of profit attributable to that wool to the grower and not to the dealer".

[74]

On 4th November 1942, the plaintiff, a wool dealer, received certain wool from the three Donlon brothers who were wool growers, and thereafter he submitted it for appraisement under the National Security (Wool) Regulations. It was duly appraised, and the property in it passed to the Commonwealth by force of reg. 15. It was listed as participating wool in the appraisement catalogue used by the appraisers for the purpose of the appraisement. Accordingly, when the Wool Realization (Distribution of Profits) Act came into force in 1948, a share of each amount to be distributed under that Act became payable by the defendant commission in relation to this wool, the share being an amount bearing the same proportion to the total amount to be distributed as the appraised value of the wool in question bore to the total of the appraised values of all participating wool (s. 7 (2)). This share became payable to the person who supplied the subject wool for appraisement (s. 7 (3)). For the purposes of the Act, wool submitted by a dealer for appraisement as agent for another person (where only one dealer has dealt with the wool) is deemed to have been supplied for appraisement by that other person (s. 8 (1)), and two or more persons who have jointly supplied wool for appraisement are to be treated as one person for the purpose of determining their claims in relation to that wool in any distribution under the Act (s. 7 (4)). The result is that a share in each distribution, proportionate in amount to the appraised value of the Donlon brothers' wool, is payable to them. They are accordingly shown, on the distribution list prepared and kept under s. 18, as persons who, in the opinion of the commission, are entitled to share in distributions under the Act. The plaintiff, however, seeks to establish in this action that he is entitled, with respect to each share which becomes payable to the Donlon brothers in a distribution, either to intercept the share as it becomes payable to them, or to have the share paid to him upon their receiving it, or to recover from the Commonwealth an amount equal to the share as for money had and received to his use or to the use of the Donlon brothers in whose place he claims to stand.

[79]

Then what does the word "proceeds" include? Prima facie, the word comprises all moneys which at any time may be paid out by the Commonwealth or its agencies in consequence of the submission of the wool for appraisement. The moneys to which the present action relates fall clearly enough within this general description. Fullagar J. considered, and we agree, that they are not to be excluded because of a supposition that the parties were not contemplating any moneys other than the full appraised price of the wool (including the retention money) and the flat rate adjustment. The possibility of further moneys becoming payable at some future date was notorious, and it was acknowledged, both generally and in relation to the Donlons' wool in particular, by the inclusion of that wool in the class designated in the Central Wool Committee's books as participating wool. But the agreement between the plaintiff and the Donlons was that the "proceeds" should be "retained" by the plaintiff; and it was contended that the use of the latter word provides a clear indication that the plaintiff was to be entitled to such proceeds only as might come to his hands. The adoption of this view would end the case, for, as we have mentioned already, it is the Donlons and not the plaintiff whom the commission, in accordance with the Act, has placed on the distribution list as the persons entitled to receive payments in relation to the Donlons' wool. But the word "retained" affords too slender a foundation for this conclusion. It reflects the anticipation of the parties that all moneys which the submission for appraisement might produce would be received by the plaintiff as the agent through whom the wool was submitted, but much more would be needed to reduce the otherwise complete generality of the expression "the proceeds". It is not to be supposed that the parties intended, by using the word "retained" in a precise and literal sense, to make the ultimate destination of moneys resulting from the appraisement of the wool vary according as the Commonwealth might choose to pay them to the plaintiff or to the Donlon brothers.

[80]

The result is that, if there is no valid statutory provision in his way, the plaintiff is entitled by virtue of the transaction of 4th November 1942 to insist, at least as against the defendants Donlon, that all moneys to be distributed under the Wool Realization (Distribution of Profits) Act in relation to the wool to which that transaction referred shall be paid to him. But the first obstacle in his way is that, whether the transaction operates as an equitable assignment of those moneys or not, once they are paid to the Donlons any right in the plaintiff to recover them is in terms denied by s. 8 (3) of the Act. The section provides that notwithstanding the terms of any contract (whether made before or after the commencement of the Act), a dealer shall not be entitled to recover from another person the whole or any part of any moneys paid to that other person under the Act. The Court was invited to hold that on the true construction of the sub-section what is precluded is the recovery of moneys paid under the Act in one class of case only, viz., that in which the person seeking to recover relies, for the establishment of his right, upon a contract specifically referring to those moneys as moneys paid under the Act. A claim to recover those very moneys by virtue of a title to be paid all moneys answering a description wider than that of moneys paid under the Act was said to be left untouched. This contention places upon the sub-section a limitation which is entirely arbitrary and finds no support in the language used. Of course the provision applies only when moneys paid under the Act are claimed by a dealer on the ground that their character as moneys paid under the Act entitles him to recover them; but that may be the case, not only where the dealer relies for his title upon a transaction or instrument referring by specific description to moneys paid under the Act, but also where he relies upon a title to moneys of a particular genus of which moneys paid under the Act are a species. The sub-section, according to its express terms, may invalidate a right even though conferred by a contract made before the commencement of the Act; and, unless it is to be assumed that this refers only to contracts made after the intention of the Government to procure the passing of the Act had become known - a suggestion too fanciful to be entertained - this fact is in itself a sufficient refutation of the argument, for contracts made before the Act, if they do give any right to recover moneys paid under the Act, must necessarily do so by the use of a general description which embraces those moneys.

[83]

Counsel for the plaintiff submitted that on its true construction this section has no application in the present case, because its operation is entirely prospective in the sense that it renders ineffectual such alienations only as are made after the passing of the Act, or perhaps (as the reference to the possibility of a share may indicate) such only as are made after the Bill for the Act was introduced into Parliament. The purpose or policy which this submission ascribes to the section is simply to preclude, as far as possible, changes in the distribution list during the period, possibly a period of many years, over which the successive distributions may have to extend. But the language of the section is altogether against this view. Of course, the section is prospective in one sense: it precludes only future alienations and the future recognition of past sales, assignments, &c., as alienations. But what ground is there for limiting by reference to their date the sales, assignments, &c., which are not to be treated as effectual alienations? The answer which was offered commenced by asserting that the word "share" in the first two places in which it occurs in s. 29 means, not a sum of money, but a right to participate in a distribution. (It was recognized that the Act does not create any right which is enforceable by action (see s. 28); but a right is conferred to receive moneys in distributions under the Act, and it is that right to which the word "share" was said to refer.) The next step was a submission similar to that which was made in relation to s. 8 (3), namely, that the sales, assignments, &c., to which s. 29 refers are those only which specifically mention shares or possibilities of shares in distributions under the Act, and do not include those which apply to such shares or possibilities because they fall within a wider description. And the final step was to say that, since a share or possibility of a share (in the sense contended for) was unknown before the Act commenced, or at the earliest before the Bill for the Act was introduced into Parliament, s. 29 cannot be held to preclude the alienation of a share or the possibility of a share by the operation of a transaction which occurred before the happening of these events.

[85]

Failing, as we must hold that he does, in his arguments upon the construction of ss. 8 (3) and 29, the plaintiff falls back upon a challenge to the constitutional validity of those provisions. That the Act, broadly considered, is a valid exercise of the defence power was not questioned. Indeed it could not fairly be questioned, for the Act is plainly a law for winding up an immense enterprise which was designed to play, and in fact played, a part of major importance in the conduct of the second World War. But the particular provisions referred to were attacked on the ground that, if they have the meaning we have attributed to them, they are unsupported by the considerations which link the other provisions of the Act with constitutional power. They purport to interfere with rights which belong to the sphere of State legislative power, it was said, and to do so in a manner not in any way incidental to defence. Counsel conceded that a law of the Commonwealth resting upon the defence power might validly prescribe the persons who should participate in distributions such as have here to be considered, and might validly prescribe the conditions upon which those persons should be entitled to receive their shares. But he maintained that, if the Parliament chose to make moneys payable to a person unconditionally, it could not proceed to destroy proprietary or contractual rights of other persons which, according to State law, would arise with respect to the right to receive those moneys upon its accrual or with respect to the moneys themselves upon their payment. An individual donor, he pointed out, could not make the subject matter of his gift inalienable by the recipient or prevent it from being caught by antecedent transactions within the terms of which it might happen to fall. The flaw in the argument is apparent. We are here concerned, not with a disposition of property taking effect under the general law, but with an exercise of legislative power; and there is no analogy whatever between the limitations which the law of property imposes upon the powers of individuals in the making of gifts and the limitations which the Constitution sets to the power of the Parliament in providing for the appropriation of moneys within its disposition. The challenge to the validity of ss. 8 (3) and 29 may be answered in a sentence by saying that, where an Act validly provides for payments to be made to individuals whom it selects, a provision debarring other persons from so asserting any rights they may have as to deprive the chosen individuals of the benefit of the moneys which the Act intends for them, either by preventing them from receiving those moneys or by preventing them from having the disposition of those moneys when received, is a provision which is plainly incidental to the main purpose of the legislation and is supported by the same head of constitutional power. Indeed, such provisions are frequently found forming integral parts of legislative schemes under which money benefits are to accrue to persons within particular descriptions. Examples in point may be found in s. 144 of the Social Services Consolidation Act 1947-1952 Cth., s. 85 of the Defence Forces Retirement Benefits Act 1948-1952 Cth., and s. 55 of the Workers' Compensation Act 1926-1953 N.S.W.. Even apart from express statutory provision the law has sometimes treated inalienability as an incident of statutory payments to be inferred from their very nature: Davis v. Duke of Marlborough [1] ; In re Robinson [2] ; Paquine v. Snary [3] and see, generally, Halsbury's Laws of England, 2nd ed., vol. 4, pp. 471-475, pars. 869-873.

[93]

But in any event, the argument advanced in support of the submission that the regulations were void as not affording just terms of acquisition is completely lacking in substance. Before Fullagar J., a great deal of evidence, oral and documentary, was adduced to show that the price realized by the Australian Government for the wool acquired under the regulations gave the growers as favourable a return for their wool as could reasonably have been obtained, and that the manner in which the appraisement system operated to distribute the flat rate price amongst the wool growers in accordance with relative values as expertly determined on the basis of a table of limits accurately prepared by persons of great knowledge and experience, was as fair as any that could have been devised. But we do not need to review this evidence in any detail, or to add to the comments which Fullagar J. has made upon it; for, with the whole history of the matter laid open for examination, and with every possible ground of criticism of the regulations available to be relied upon, in the end the attack has been pressed at one point only. It commences with the statement, indeed the admission as the argument regards it, which is contained in reg. 2, that the purpose of the regulations was to provide for the carrying out of the Arrangement made between the Government of Great Britain and the Government of the Commonwealth for acquiring, in connection with the war, all wool produced in Australia, with certain exceptions. Thus, it was said, the acquisition of wool was provided for by the regulations for the sole purpose of servicing the Wool Purchase Arrangement. The ultimate objective was recognized as being the successful prosecution of the war, but the method adopted, counsel insisted, was neither more nor less than the compulsory acquisition of wool for the purpose of reselling it to the United Kingdom Government under the Arrangement, subject to the exception of so much as might be required for local manufacture. The Arrangement entitled the Australian Government to receive a flat rate price, a payment to cover handling charges, and one-half of any profit which should result to the United Kingdom Government from the sale to other countries of any of the wool not required for Britain's own needs. Thus, in relation to all the wool acquired except such of it as was needed for local manufacture, the acquisition by the Commonwealth was for the sole purpose of getting in exchange for it, without incurring any risk of loss, a net sum consisting of the flat rate price plus the one-half share of profits resulting from disposals by the United Kingdom. For such an acquisition, it was contended, terms could not be just which failed to entitle the dispossessed owners, as of right, to have divided amongst them or applied for their benefit, if not in ratable proportion to the appraised values of their respective parcels of wool, at least in some reasonable manner, whatever moneys the Commonwealth might actually receive in respect of its half share of the United Kingdom's profit on external sales. And the final step in the argument was to point to reg. 30 (2) and adopt the statement of the effect of the regulations which appears in the Court's judgment in Ritchie v. Trustees Executors & Agency Co. Ltd. [1] : "No payment to the supplier of wool, beyond, at all events, appraised value (whether appraised value simpliciter or adjusted to flat rate is not material) was required by the regulations; all else remained a matter of administration" [2] . Thus, it was said, the suppliers of the wool were given no right to participate in the profit, and that circumstance suffices to make the terms of acquisition unjust. The mere chance of participation in consequence of an administrative decision given in exercise of a discretion does not make them just.

[95]

The argument concedes that there may be cases in which terms of acquisition are just notwithstanding that the Commonwealth intends to dispose of the property by a transaction which may yield a profit; but it maintains that this cannot be so where the proposed transaction is one in which the Commonwealth runs no risk of loss. The point that is made seems to be that in such a case the role of the Commonwealth is substantially that of a mere conduit pipe, the acquisition simply creating a detour by which the property passes from the owner to a waiting purchaser instead of passing between them by means of a direct sale as it might if the acquisition had not occurred. In a case in which the position may fairly be described in these terms, it may well be considered that there would be injustice in the Commonwealth's retaining for itself any part of the price which the owner could have obtained for himself if the acquisition had not prevented him from doing so. But the situation which we have to consider is not of this kind at all. The wool growers were not in a position to make a bargain as advantageous as that which the Commonwealth Government made. Indeed they were not in a position to market their wool at all; for the whole apparatus by which the Australian wool clip had been disposed of in peacetime conditions had collapsed with the outbreak of war. The terms which the Commonwealth Government secured by the Wool Disposals Arrangement were such as could not have been obtained in the prevailing circumstances, except by means of inter-Government negotiations on the highest political level, dealing with the country's entire output of wool for the whole period of the war and conducted on the footing that the Commonwealth, in the exercise of its war-time powers, would establish a highly-specialized organization for the handling of the wool, invest that organization by means of legislation with adequate powers for its purposes, ensure that the whole of the wool produced in Australia during the war would come to the organization's hands, and make available to it the men it needed of the appropriate qualifications and experience, the material equipment necessary for handling and storage purposes and the like, the requisite facilities for transport to the seaboard, and the necessary amount of shipping space. It is quite absurd to suggest that in this situation the demands of justice could not be satisfied by anything short of a legal right conferred upon the wool growers to have passed on to them, not only the agreed flat rate price, but also any moneys the Commonwealth might receive from the United Kingdom Government as its half-share of any ultimate disposal profits. Whether justice required that as much should be assured to the wool growers as was in fact provided for them by the regulations may be left an open question. What we have to consider is whether, in relation to the Commonwealth's share of any profit that might arise from sales to other countries, there was any necessity to do more than the regulations did, namely, to exclude that profit from the Commonwealth's consolidated revenue and commit its application to the discretionary judgment of the Central Wool Committee, which consisted in the main of persons drawn from the wool industry. By so doing the regulations created a high degree of probability that the profit would be applied for the benefit of those engaged in the industry, in some manner regarded by the committee as appropriate to the circumstances as they should turn out to exist. Those circumstances, of course, could not be foreseen, and they admitted of so much variation that upon a practical view of the matter it was almost inevitable that there should be allowed to some responsible body the latitude of judgment with which the committee was in fact entrusted. A decision as to what was the best and fairest course to adopt would have to be made when the time came, after considering, inter alia, how much there was to dispose of and what had happened to the industry in the period that had elapsed. It is quite a hopeless proposition to maintain that because reg. 30 (2) left this matter in the realm of administrative discretion the acquisition was upon terms which were not just.