Smith Nominal v Welden [1922] HCA 35

Smith Nominal v Welden [1922] HCA 35 - HCA 1922 case summary — Zoe

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sec, 5 (1) of the Act is to sell at the best price when it sells at all. So far as material, for my purpose, the words of the agreement are these: " In consideration of the Government of South Australia undertaking to receive and market on my behalf wheat delivered by me, I hereby agree to abide by and accept the conditions and actions of the said Government unreservedly so far as the said wheat is concerned, and hereby authorize the said Government to handle and sell the said wheat in conjunction with other wheat in such manner as the said Government may consider to be to the best advantage," &c, That is to say, the owner agrees to the con- ditions and actions of the Government unreservedly, and empowers it to handle and sell his wheat in conjunction with other wheat as the Government may think to be to the best advantage. The agreement is unskilfully drawn; and there may be legitimate doubt as to the precise meaning of the words "conditions . . . of the said Government." I rather think that the word " conditions " has the same sense as in sec. 12 (1) of the Act. The Governor may make regulations for carrying out the Act, and in particular for "(d) prescribing the conditions subject to which wheat acquired may be sold or disposed of "; and, in the agreement, the phrase may well involve that the owner agrees to abide by and accept the conditions subject to which his wheat may be received and sold. But there is no _ justification, in my opinion, for implying on the part of the Govern- ment a promise safely and securely to hold. Such a promise was alleged in the declaration in Coggs v. Bernard (1), and had to be admitted for the purpose of the argument in that case; and the contention was that there was no consideration for that promise such as would create an obligation enforceable under English law to keep safely. The Court held that the confidence induced by undertaking any service for another is @ sufficient legal consideration to create a duty in the performance of the service ; but neither the promise nor the voluntary undertaking on the part of the Govern- ment has been established here.

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and protect such wheat as the owners thereof might desire to deliver to the Government for sale on account of the owners; but the words are future in effect, and do not apply to 1916-17 wheat, the subject of these proceedings. Under these contracts between the Government and the agents, conditions might be framed as to care

to be taken by the "agents"; but any such conditions would be matter of contract between the Government and the agents, not between the Government and the owner. They would not impose any liability on the Government towards the owners. The only liability that the original Act seems to impose on the Government : is, as to wheat voluntarily delivered for sale, to sell - if sale were _ possible - all the pooled wheat at the best price ; and to divide the _ proceeds, less expenses, &c., among the owners in proportion to the number of bushels delivered by the owners respectively; and, under the scheduled form of agreement, there were to be periodical settlements as circumstances may permit. Under sec. 3 of the amending Act 1916, wheat stored by the owner thereof to the satis- faction of the Minister in a barn or other place approved by the Minister was to be deemed to have been delivered to the Govern- _ ment; and if the Government, by implication, is to be legally respon-
sible for the safe-keeping of all wheat delivered, it would be legally tesponsible for such wheat stored by the owner himself; and even
for its own wheat acquired under the compulsory powers. Having tegard to the fact that in the scheduled agreement there is an under- _ taking on the part of the Government to "receive and market " the wheat, but no undertaking to "hold" or "keep" it, and to the fact that in sec. 3 of the Principal Act the only stacking, storing and protecting of wheat contemplated is stacking, storing and pro- tecting by the "agents," and to the fact that nowhere in the Act is there any reference to the Government holding the wheat, and to the fact that until the Act of 1919 (sec. 3) there was no power con- ferred on the Government itself to stack, store and protect the wheat, I am strongly inclined to the opinion that until the Act of 1919 came into operation the only holders of the wheat were to be the "agents" - not the Government. The wheat was to be delivered to the Government (sec. 4); but it was to be held by the

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tains the terms on which each owner delivers his wheat to the Government. The learned counsel for the Government contended that the words in the agreement set forth in the Schedule to the Act, "T hereby agree to abide by and accept the conditions and actions of the said Government unreservedly so far as the said wheat is concerned," exonerated the Government from all responsibility in respect of the wheat of each owner who signed an agreement. But Lam unable to take this view of the agreement. Words of exonera- tion from liability should be clear and precise, and the words used in the agreement are words of authority rather than of exoneration. No doubt, if the Government were exonerated from all respon- sibility in respect of each owner who delivered wheat to it, then it would be difficult to infer the duty suggested by the petitioner. But, even if the Government is not expressly exonerated from all liability, still the question remains what, if any, duty is imposed upon it by reason of the agreement and the Act, or flows from the relation established by them. The agreement itself only purports to give authority in respect of the owner's own wheat; the words are "wheat delivered by me," "the said wheat," " to sell the said wheat in conjunction with other wheat." And sec. 5 of the Act does no more than fix the sum which each owner is to receive in respect of wheat delivered by him to the Government. It is true that neither the agreement nor the Act expressly defines the duty of the Government as to the safe-keeping of wheat delivered to it, but the law may, nevertheless, attach a duty as an incident to the : relationship established by virtue of that agreement and the Act. A bailee, by reason of the bailment, is bound to his bailor to take care of goods placed in his hands, And a Government empowered by statute to carry on a business would be liable to its customers for negligence in the conduct of that business (Brabant & Co. v. King (1); Fowles v. Eastern and Australian Steamship Co. (2) ). In my opinion, similar duties arise in the present case, and include a duty, on the part of the Government towards each owner who delivers wheat to it for sale, to take such care of that wheat as a _ prudent owner would exercise in relation to his own wheat. This

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Judgment (114 paragraphs)