R v McNell [1922] HCA 33

R v McNell [1922] HCA 33 - HCA 1922 case summary — Zoe

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By the said regulations it was provided (inter alia) as follows : - "11. A charge will be made to cover the costs of receiving, sampling, and smelting the ore to matte, of thirty shillings per ton of ore (net weight); and for the further expenses of realizing the values therein there shall be an additional charge per ton of ore (net weight) of three shillings and sixpence per unit of copper in the agreed assay value for copper less the schedule deduction afore- said, and six per cent. of the agreed assay value in gold and silver less schedule deductions." "15. Forthwith after agree- ment of assays advances in part payment towards purchase of the ores will be made, if desired by the sellers, after making the fore- going deductions and charges, up to ninety per cent. of the net value of the ore, calculated at such prices for the metals con- tained in it as may be fixed from time to time by the Minister by notice in the Government Gazette, and which until further notice will be : - Copper - £56 10s. per ton of standard copper. Gold - 80s. per ounce of fine gold. Silver - 2s. per ounce of fine silver." "16. The marketable products of smelting of any ore or metal-bearing material presented to the Smelting Works for purchase will be sold by the Minister at his discretion as opportunity offers, and any balances remaining from the sale of such products after payment of all the expenses incurred by the Government on account of the purchase, receiving, and treatment of such ore or material, and the shipment and selling of the products therefrom, inclusive of interest at the rate of six per cent. per annum calculated from day to day from the time of payment of such expenses up to the date of the final payment of the balances to the sellers, will be paid, in final completion of the purchase of such ore or material, to the sellers thereof in proportion to the percentages which the values of the separate lots form of the total value of all the lots smelted from which the aforesaid products have been derived, calculating such values on the prices assumed as above for the purpose of making advances."

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can be arrived at. The present crisis has, of course, considerably - affected the copper market, and for a time at least market values must fall, and, were settlements based on these values, the whole of the Ravensthorpe District would suffer therefrom. It is therefore on behalf of all concerned, and at the request of all, that I beg to place the matter before you for your consideration." And on 29th - August 1914 the following notice was posted : - " Settlement for all ore received prior to 29th August 1914 will be made in accordance with regulation 13 of 25th February 1914 unless written notice is given to the ore-buyer forthwith by the owners of the ore that they - wish such settlement to be deferred and made in accordance with - the price actually realized for the matte, and that they agree to the matte being disposed of by the Hon. the Minister for Mines on such - terms in such market and at such times as in his sole discretion he may think most advisable. Furthermore, final settlement for all ore received at the Smelting Works after 29th August 1914 will be by payment to the seller of such balance as may accrue from the actual sale on such terms as the Minister may determine of the product of - his ore after deduction of advances, interest and all other expenses incurred in placing such product upon the market and selling it." The operations proceeded. but it was found that the charges fixed by the Regulations were insufficient to meet the working costs. The principal causes of the loss were the fineness of the ores, which resulted in slow smelting, increased costs for power, labour and water, and the high silica contents of the ores, which compelled the use of large ratios of flux and coke. It was ascertained that the charges must be increased by 10s. per ton, and the Minister, in March 1915, so ordained. It was apparently impolitic to increase the smelting - charge, but it was thought that a revision of the Regulations and the charges as to silicious ores and as to ores which in the opinion of - the Government's ore-buyer required sintering and screening would : achieve the desired result. Consequently the 1914 Regulations were cancelled, and new Regulations were made in July 1915. The material alterations are contained in clauses 11 to 17, which are as follows : - " 11. A charge will be made to cover the costs of receiving, _ sampling, and smelting the ore to matte, of thirty shillings per ton of ore (net weight); and for the further expenses of realizing the :

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e-buyer may make an extra charge on any parcel of ore in which the silica (SiOz) exceeds forty per cent., of sixpence for each unit of silica (SiOz) in excess of forty. 12. Any ore or metal-bearing material offered for purchase which in the opinion of the ore-buyer requires sintering before blast-furnace treatment may be charged five shillings per ton for sintering, in addition to the regular smelting charges, and any ores which in his opinion require screening may be screened through a three-quarter inch screen, and charged seven shillings and sixpence per ton of fines passing through the screen, to cover costs of screening and sintering. 13. Ores which contain iron and sulphur in sufficient quantity to have a value as flux and fuel in the treatment of other ores, may be smelted at a reduced charge, calculated on such value, at the discretion of the management. 14. A charge will be made of two shillings per ton of ore accepted at the Works for purchase for smelting treatment, and shall be payable to the owners of the Smelt- ing Works by way of rental for the use thereof. 15. Forthwith after agreement of assays advances in part payment towards purchase of the ores will be made, if desired by the sellers, after making the foregoing deductions and charges. up to ninety per cent. of the net value of the ore, calculated at such prices for the metals contained in it as may be fixed from time to time by the Minister by notice in the Government Gazette, and which until further notice will be : - Copper - £56 10s. per ton of standard copper. Gold - 80s. per ounce of fine gold. Silver - 2s. per ounce of fine silver. 16. The market- able products of smelting of any ore or metal-bearing material presented to the Smelting Works for purchase will be sold by the Minister at his discretion as opportunity offers, and any balances remaining from the sale of such products after payment of all the expenses incurred by the Government on account of the purchase, receiving, and treatment of such ore or material, and the shipment and selling of the products therefrom, inclusive of interest at the rate of six per cent. per annum calculated from day to day from

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charge actual costs as opposed to the charges fixed by the Regula- tions. The accounts may have contained errors in other directions - _ for instance, charging the auriferous ores on the fixed rate and the | copper ores on the basis of actual costs ; but if the Minister and his officers had been right in their main contention, the petitioners would not have been damaged by the false statement, whatever view one takes of the moral aspect of the matter. In our opinion, however, the controversy as to the fraud of the Government officers is misconceived. The new mode of enforcing claims against the Crown given by Part IIL. of the Crown Suits Act is, by force of sec. 37, subject to a condition that the petition for relief be filed within twelve months after the claim has arisen. The function of sec. 37 is not to bar a cause of action, as in the case of the ordinary statutes of limitations, but to prevent a party resorting to the special statutory procedure unless he comes within the time specified. No Court has any right or power to act in opposition to the e words of the statute. The only relevance of the argument as to concealed fraud must, therefore, be in relation to the point of time at which the claim or demand arose or accrued. ; It was suggested, on the authority of Gibbs v. Guild (1), that, in the case of concealed fraud, producing damage to the petitioners, the cause of action only arose or accrued upon the date of the discovery of the fraud or upon the date when the fraud, with reasonable dili- gence, might have been discovered. If the fraud is the cause of action, then the argument is useless to the petitioner, for such cause of action is not within the ambit of sec. 33 of the Crown Suits Act. And if, as the petitioners must assert, the breach of contract relied upon in this case only arose from the discovery of the fraud, then Gibbs v. Guild is no authority for the argument. Brett L.J. puts the matter thus (2) : - ' But assuming that the Statute of Limitations would be binding, the Courts of equity, on doctrines of their own, sometimes applied, if other circumstances arose, a particular kind of equity. They did not construe the statute so as to give an equity, they adopted an equity which was quite independent of the statute, but which no doubt had an effect on the transaction notwithstanding the statute, that is to say, they said if the existence - (1) (1882) 9 Q.B.D., 59. (2) (1882) 9 Q.B.D., at pp. 68-69.

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for each campaign respectively was made and received, and vouchers signed, and, as far as both parties then thought, that particular campaign was completely settled for. It was like a distinct and separate contract of sale, delivery on the one side and payment on the other being definitely and assumedly final. The dates of the vouchers and the evidence as to the first five campaigns establish that the "claim or demand" as to them arose more than twelve months before the filing of the petition. The action is consequently, as far as it relates to them, incompetent by reason of sec. 37. Frand therefore is strictly speaking immaterial. But there are reasons for referring to it. The public administration of an Australian State is concerned. It should be made clear at once that nothing is imputed to any Minister of the Crown. Subordinate officers alone are involved in the charge of fraud. Burnside J., who tried the case and heard the witnesses, shrank from imputing to anyone moral fraud as known at common law. He found that false statements had been made intentionally to mislead, but he rested his finding of fraud on equitable considerations of duty to give true information. His language is very much that of the head-note to Nocton v. Ashburton (1). Lhave carefully considered his Honor's finding ; and, although itis difficult to reconcile with an absence of moral fraud the intentional misleading he finds, I think I apprehend what he means. That Shepherd, the manager of the State Smelting Works, deliberately caused to be set down in the final vouchers. as for actual expenses of realization, as distinguished from expenses of smelting, a sum which he knew was in excess of the actual expenses of realization is beyond doubt. That he did so to mislead the respondents into thinking they were true is equally undoubted. That Montgomery, the State Engineer, though not originating this, yet permitted this course to be adopted isalso undoubted. And that the producers of ore accepted the figures as correct and took the balance on that basis is plain. Such conduct is indefensible, and more particularly from the high stand- point of public administration. But one thing it is fair to add. In my opinion, neither Shepherd nor Montgomery had any intention to deprive the respondents of a single penny to which they were, in the opinion of these officers, strictly entitled. Shepherd pressed (1) (1914) A.C, 932.

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plicity. The Under-Secretary and the Secretary might perhaps by deeper scrutiny have detected the objectionable character of the proposals, But when so much is routine and dependent on the special and technical knowledge of branch officers, and so little of the details of such a contract as the present is personally known to the secretarial officers of a great Department, it would be preposterous on such materials as are before us to impute any bad faith to the Secretary or Under-Secretary, and, as I have said, the Minister is unchallenged. The Minister had the papers before him just as the Secretary had, and the Secretary had less responsibility. Neither of them can be brought into this accusation. What, then, was the object of Shepherd in putting forward, and in Montgomery in per- mitting him to put forward, these false figures? That appears to me to be this : - The State Smelting Works, if confined to the regula- tion charges for smelting, would show a loss, and, though it was believed by Shepherd and Montgomery that the notice of August 1914, properly read, covered all actual expenses of smelting, they thought it was very imperfectly and inconclusively worded to carry out that result. They therefore, and particularly Shepherd, arranged in the final vouchers the total actual costs of smelting and realization, so that while not exceeding them in the whole, part of the actual smelt- ing costs was represented as part of the actual realization costs, leaving the claim in the voucher for smelting costs to stand at the schedule rates. Though no more money was deducted than Shepherd and Montgomery believed the vendors were liable to bear for total expenses, the course adopted was wholly improper. It deceived and was intended to deceive the vendors. It led them to think that the Government still regarded the regulation smelting charges as binding and complete and that the actual costs of realization, as distinguished from smelting, were higher than they really were. It was intended to induce the vendors to believe they had no reason to challenge the Government's construction of the August notice, and the inducement succeeded. If the figures had been truthfully arranged, the vendors could, and probably would, have there and then challenged the

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shipment and selling of the products therefrom " will be paid "on final completion of the purchase" to the sellers, &e. It is the conten- tion of the Crown that when the stage of final settlement is reached, all the previous dealings in respect of the ore are disregarded. Regulation charges, it is said, are nothing ; advances are loans, and meant to be debited as such with interest, and all the expenses in fact incurred by the Government from first to last are to be taken into account and charged against the proceeds of sale. That is not the interpretation as I read the Regulations. The words quoted are in their natural sense opposed to it. The " part pay- ment" by way of advancesis final and not aloan. It is an advanced payment pro tanto, and as it is made before the Government receives the proceeds of the foreign sale, interest is charged, but that is to equalize accounts on the "final completion of the purchase" as if payment took place then. There would otherwise be no meaning in "final." There is nothing which says that the charges in the Ith regulation are to be upset. The expression " payment of all the expenses incurred by the Government" from purchase to date, is not at all inconsistent with a collateral provision in reg. 11 that some of those expenses shall be fixed at a certain time or rate; the point in the phrase quoted is "after payment" of the expenses, whatever they may be. It is the authority to deduct expenses that is important, so as to get at the net sum for distribution. The whole difficulty arises from the fact that the Government in its laud- able desire to assist the mine-owners, to smelt their ore, and to devise a means of getting them money results as soon as possible and long before the mine-owners could otherwise get them. has combined the statutory authority to treat the ore and make a charge for its statu- tory services, with a further step of providing the money. It has become the purchaser as well as the smelter, the smelting charges being fixed by regulation and having the force of law; and it is not to be supposed, without very express words, that they have been abandoned or supplanted by rates not authorized by law. The repetition of reg. 11 is itself against such a supposition. In my

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Judgment (146 paragraphs)