Smith Nominal v William Charlick Limited [1924] HCA 13

Smith Nominal v William Charlick Limited [1924] HCA 13 - HCA 1924 case summary — Zoe

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Knox ©.J. The respondent sued to recover a sum of £1,952 7s. 8d. paid by it to the Wheat Harvest Board, on 16th April 1920, as money received by the Board to the use of the respondent. The circumstances in which the money was paid may be briefly stated as follows : - Throughout the year 1920 the Board had, subject to the control of the Minister, the management of the affairs of the South Australian Wheat Harvest Scheme, and by force of the provisions of the Wheat Harvest Acts had a monopoly of the right to sell wheat in South Australia. Before 30th January 1920 the Board had entered into contracts with the respondent for the sale of certain quantities of wheat, some at 5s. and some at 6s. 6d. per bushel, and portion of the wheat covered by these contracts was still undelivered on 1st February 1920. On 31st January 1920 the Board gave notice to the respondent that the price of wheat for local consumption had been increased to 7s. 8d. per bushel as from midnight on 31st January, and requiring it to supply a statement of stocks of flour as at 31st January. On 2nd February the Board gave notice to the respondent that it had cancelled the balance undelivered in respect of all contracts unfulfilled at that date. On 4th February 1920 two letters were written by the Board to the respondent. By one the demand for particulars of stocks of flour held on 31st January was repeated; the other contained the following passage : - '' We have to advise you that we will debit your account on the basis of 7s. 8d. for all wheat supplied for local consumption from Ist instant inclusive. This will relate to wheat the subject of existing contracts as well as any other because you will be in a position to recover the difference." On 18th March 1920 the respondent supplied particulars of stocks of flour and wheat held by it on 31st January. On 27th March 1920 the Board wrote to the respondent a letter in the following words, namely : - " Promptly on the occasion of the last increase in the price of wheat, and in other letters since, we have intimated to you that seeing the restriction was removed from the price of flour for local consumption, and that you have been empowered to charge on the price based on 7s. 8d. per bushel for f.a.q. wheat, we should expect you to pay into the pool the difference on account

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as an authority for the proposition that the threatened ex of right by the party receiving the money may amount ig compulsion so as to prevent the payment from being voluntary when the necessities of the party paying are so great that he must choose between payment and inordinate loss. I am unable to agree in this view. In Hills v. Street (1) the money sued for was paid for the purpose of preventing a sale of the plaintiff's goods, As Best C.J. said(2): - '"The payments . . . were forced from the plaintiff, under an apprehension that his goods would be sold. It is impossible to say that payments made under such circumstances can be considered as voluntary payments." It is true that in that case the defendant had a legal right to have the plaintiffs goods sold, but only for the amount of the rent and reasonable expenses attending the distress. The plaintiff protested against the amount demanded by the defendant in respect of expenses, but the defendant said the law allowed them and he would have them. In effect, the defendant, having a right to have the plaintiff's goods sold in order to satisfy (inter alia) a sum of £3 15s. in respect of certain charges, threatened to make use of his legal power of sale in order to extort from the plaintifi payment of a further sum of £5 10s. to which he was not entitled but which he insisted he a legal right to recover in respect of those charges. In my opinion the decision in Hills v. Street was an application of the rule that the count for money received will lie for money paid by the plaintiff in discharge of a demand illegally made under colour of an office; as excessive fees paid to a broker under a distress. It is so treat in Bullen and Leake, 3rd ed., p. 50 - a passage cited with approval by Walton J. in William Whiteley Ltd. v. The King (3). In Kendal v. Wood (4) the acceptances were given under a mistake of fact. The plaintiff became aware of the true state of : before the bill became due and paid it with knowledge of facts but under protest. The decision proceeded on the footing that the plaintiff was at all events partially liable on the bill, and that if, as appeared to be the case, the bill had been discounted by a third party the plaintiff would have no defence to an action upon it. It

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and purchases of wheat except to or from the Minister or a person authorized by him, a provision which rendered less necessary the exercise of the acquisition power. But once the agreement as scheduled was made, it was a statutory contract, for, not only is it called an " agreement " in sec. 4 of Act No. 1229, but it is called a "contract" in Acts Nos. 1251, 1291, 1353 and 1368. The effect of the 'contract' was to surrender to the Government whatever power of disposition of the wheat the owner possessed, and to surrender it irrevocably. Although the owner nominally remained - the owner until the wheat was sold, his rights in respect of the wheat were entirely changed. He could not deal with it in any way, he could not revoke his agreement, for the Act gave no power to do so. Indeed sec. 4 conferred express power on the Government to sell, which no act of the parties could affect. What the Act substituted for the ordinary right of ownership were the statutory rights which the owner was given under the "contract " and the direct provisions of the Act (see Sinclair v. Brougham (1) ). It is not really necessary for me to enter into the nature of those statutory rights; and, therefore, in view of the fact that Smith v. Welden (2) is now under appeal to the Privy Council, I say no more than is absolutely essential to the present case. Certain things, however, are explicit on the face of the Act. One is that the invitation to every wheat-owner was to agree to the Government selling his wheat "in conjunction with other wheat " as it thought fit (see the agreement). Another was that the price the owner was to receive was arrived at by dividing the total net returns for "wheat sold by the Government" by "the number of bushels of wheat received for sale" - that is, wheat under the first branch. " Settlement " will be made on that basis (sec. 5 (2) ). So that the "other wheat" in the agreement unquestionably brings into account the wheat of the owners making similar agreements. And the total mass of the wheat of each season dealt with by the Acts is called a " pool" (see sec. 7 of Act No. 1291, sec. 9 of Act No. 1353 and sec. 10 of Act No. 1368). Every owner so agreeing therefore knew he was embarking in a scheme in which other wheat- owners were or would probably be interested, certainly so far as the

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With respect to the precise relation in which the Crown may stand towards owners of wheat by reason of the direct provisions of the legislation or with respect to its precise duties by reason of the relative positions of the parties either severally or collectively and the circumstances that have supervened (Dominion of Canada v. City of Levis (3) ), I am not concerned to inquire. But the authorities I have referred to convince me of this : that the relation of the Crown and its relevant legal duties do not so far extend as to include legal responsibility to a person in the situation of the respondent merely because it is a possible buyer of wheat which has been delivered to the Government to sell; and a fortiori I should say this is so as to the Government's own wheat acquired compulsorily under the other branch of the enactment. I agree with the respondent's contention that the powers conferred on the Government referable to the first branch of the Act, however extensive within their ambit, are limited to the sale of wheat and to acts preparatory to and consequential on such sale. But I do not agree that the discretion of the Crown within that ambit is limited as suggested, namely, by an incapacity to declare that a given person shall be excluded from prospective buyers. Business reasons may impel any merchant for his own advantage to resolve once for all that he will have no future dealings with an individual ; and, if that individual had in the merchant's opinion treated him injuriously or shabbily, it would not be unnatural to eliminate the individual as an undesirable customer. Business reasons are not to be ignored in this scheme. Unless some provision to the contrary, express or implicit, is found, I do not see any reason why the Government, acting for all the owners, could not take the same course, and yet not fail in its duty. The agreement provides, it will be observed, that the Government is to handle and sell "the said wheat . . . in such manner as the

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I cannot think that the three cases on which the judgment was based justify the doctrine which I understand to be propounded, that a claim for money had and received for the use of the plaintiff should be successful in every case in which a person '" demands from another money which he is not bound to pay, and which the party demanding knows he is not bound to pay," provided always that the payment is made " only to avert some great evil which will, as both parties know, immediately follow if the demand is not complied with." Such a proposition is far too wide. If a property owner refuse to sell to an adjoining owner, except on extortionate terms, a strip of land one foot wide, which is necessary for the adjoining owner to acquire if he is not to be excluded from the public road, such a claim would be rejected. In each case the proper issue would seem to be, had the party receiving the money the right to take advantage of his neighbour's necessity or not. In the case of Hills v. Street (1) the amount paid to prevent the sale of the goods included moneys which were justly payable, and moneys which were not justly payable; and it was only the moneys which were not justly payable that the plaintiff recovered. The defendant had no right to use the inducement of threatened sale in respect of these latter moneys. In the case of Kendal v. Wood (2) the defendant had no right to demand £1,000 of the £5,000 bill which the plaintiff met in order to avoid dishonour - it had been included by mistake. The use of the whip to the extent of £1,000 was not justified. In the case of Melbourne Tramway and Omnibus Co. v. Melbourne City Corporation (3) the payment was made under a threat that proceedings would be at once taken to recover the licence fees for the tramcars as vehicles for hire, proceedings which would throw the whole tramway system into confusion unless the tramway company paid at once the amount demanded. But in that very case the Full Bench of Victoria held that the licence fees were not in law payable ; so that the threat was nut based on any legal right.

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But the case does not end here. The decision of Poole J. may be - right although we do not accept his reasons. The question still remains had the Wheat Board any right to refuse to sell any wheat in the future to the plaintiff company unless the company paid more than the contract price. Was the use of the whip justifiable? Was the pressure legitimate or illegitimate? In my opinion, the pressure was clearly illegitimate. The Wheat Board had no right or power to refuse to sell to the company in the future, whatever the circumstances should be, or to insist upon payment of the additional - price as a condition of making future sales. What it has done is in excess of its powers, and even in fraud of its powers. The Board is, at best, a statutory creation, created by the Governor-in-Council under the Wheat Harvest Acts 1915 to 1918; and it has no power except those conferred by or under the Act No. 1229 and the subsequent Acts. What the Board does outside those powers is simply nugatory. The Board has certainly no power greater than that conferred by Act No. 1229, sec. 5, on the Government (see ; Regulations of 26th February 1919, referred to by consent though not put in evidence); and according to sec. 5: "(1) All wheat delivered to the Government for sale by the Government on account of the owners may be sold at such time or times and at such place or places as the Minister may decide and at the best price obtainable at the time." Under this section, therefore, the Minister may decide as to times and places of selling, but, if the Government sell, it must sell "' at the best price obtainable at the time." By its prospective threat not to sell at all to the company, the Board, in effect, says it will disobey the Act even if the company should offer the best price. Moreover, if the Board has power to sell, it is a power to exercise discretion as to specific transactions - not a power to exclude a - certain buyer for ever or indefinitely. I mentioned in the case of - Commonwealth v. Colonial Combing, Spinning & Weaving Co. (1) some - of the authorities on this subject. The discretion given must be exercised when the occasion arises, according to the facts existing at the time (Weller v. Ker (2); Chambers v. Smith (3): Moore v.

At a glance

Court

Decision date

Before

Source

Judgment (168 paragraphs)