Metway Bank Ltd v State of Queensland
[1993] QCA 183
•20/05/1993
[1993] QCA 183
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
C.A. No. 269 of 1992
Brisbane
[Metway Bank Limited v. State of Queensland]
METWAY BANK LIMITED
Plaintiff
- and -
STATE OF QUEENSLAND
First Defendant
- and -
THE MEMBERS OF THE PERMANENT BUILDING SOCIETIES CONTINGENCY FUND COMMITTEE, namely JOHN ANGUS REYMENT, BRIAN JOHN
HERD, RONALD EARNEST HANCOCK and DONALD
STANLEY STEVENS
Second Defendants
The President
Mr Justice PincusMr Justice Derrington
Judgment delivered 20/05/93
REASONS FOR JUDGMENT BY THE PRESIDENT AND DERRINGTON J.
JOINTLY, PINCUS JA. SEPARATELY. ALL AGREEING IN THE ORDER.
DEMURRER ALLOWED. STATEMENT OF CLAIM IS STRUCK OUT AND THE
ACTION DISMISSED, WITH COSTS TO BE TAXED.
unjustly enriched.
BANKS AND BANKING - Permanent Building Society contributed to a Contingency Fund then became a public company - whether State of Queensland held contributions on implied, Quistclose, or constructive trust - whether State of Queensland unjustly enriched.
| Counsel: | Mr P.A. Keane Q.C., with him, Mr J. Sheahan for the defendants Mr J.D. Muir Q.C. with him Ms. D. O'Reilly for the plaintiff |
| Solicitors: | Crown Solicitors for the defendants Messrs. Feez Ruthning for the plaintiff |
| Hearing Date(s): | 01/03/93 and 02/03/93 |
THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
C.A No. 269 of 1992
Brisbane
| Before | The President Mr Justice Pincus Mr Justice Derrington |
[Metway Bank Limited v. State of Queensland]
BETWEEN:
METWAY BANK LIMITED
Plaintiff
- and -
STATE OF QUEENSLAND
First Defendant
- and -
THE MEMBERS OF THE PERMANENT BUILDING SOCIETIES CONTINGENCY FUND COMMITTEE, namely JOHN ANGUS REYMENT, BRIAN JOHN
HERD, RONALD EARNEST HANCOCK and DONALD
STANLEY STEVENS
Second Defendants
REASONS FOR JUDGMENT - THE PRESIDENT AND DERRINGTON J.
Judgment delivered 20/05/93
This is a demurrer by the defendants to the plaintiff's Statement of Claim in an action instituted on 12 November, 1992. The relief claimed by the plaintiff is as follows:
"1. A declaration:-
(a) that the Permanent Building Societies Contingency Fund established under the Building Societies Act 1985 (as amended) is held by the first defendant on trust for the several Permanent Building Societies established under that Act which made contributions to that Fund;
(b) that pursuant to terms of that trust the first defendant is obliged to distribute the Fund to several Permanent Building Societies which made contributions to it in proportion to the amounts of contribution by each Permanent Building Society.
2. Alternatively, a declaration that the first defendant
is obliged by the requirements of justice and good
conscience to distribute the Fund to the several
Permanent Building Societies which made contributions
to it in proportion to the amounts of contribution by
each Permanent Building Society .3. An order that the first defendant pay to the plaintiff $17,876,365 contributed by the plaintiff to the Fund and the earnings thereon.
4. Alternatively to paragraph 3, an order for all such accounts, inquiries and directions as may be necessary in respect of the amount contributed by the plaintiff to the Fund and the earnings thereon to determine the amount the first defendant should pay to the plaintiff and an order that the first defendant pay to the plaintiff that amount.
5. An injunction against the first and second defendants restraining them, by themselves their servants and agents, from parting with, disbursing, or otherwise dealing with the Fund save as to the extent of the difference between $17,876,365 contributed by the plaintiff to the Fund and the earnings thereon and the amount held in the Fund.
6. Alternatively, an injunction against the first and second defendants, by themselves their servants and agents, restraining them from parting with, disbursing or otherwise dealing with the Fund save as to the extent of the difference between the amount determined in accordance with paragraph 4 and the amount held in the Fund.
7. Further or other relief.
8. Costs."
The plaintiff has been a public company and has carried on business as a bank since 1 July, 1988, but was previously a permanent building society (Metropolitan Permanent Building Society) and, as such, contributed to the Permanent Building Societies Contingency Fund which was initially established in 1976 under amendments made that year to the Building Societies Act, 1886. The total amount presently in the Fund (Statement of Claim paragraph 13) is in excess of $70 million.
After the 1976 amendments, sections 28(4), 36A, 36B, 36C, 36D(1), 36E(1) & (2), 36D(1) & (2), 36P and 36W of the 1886 Act provided:
"28...
(4) Notwithstanding anything to the contrary contained in the rules of a Permanent Society a Permanent Society is empowered to invest in the Contingency Fund any portion of its funds which it is required so to do pursuant to section 36D and such further portion of its funds as it sees fit that is not immediately required for its purposes.
...
36A. Contingency Fund. (1) There shall be established and
kept in the Treasury a fund to be called the Permanent
Building Societies Contingency Fund, which in this Act is
referred to as the Contingency Fund.
(2) The purpose of the Contingency Fund is to provide
protection, to the extent prescribed, to all persons who -(a) subscribe, contribute or lend money to or deposit money with Permanent Societies;
(b) purchase or otherwise acquire shares in Permanent Societies; or
(c) give credit to Permanent Societies in the ordinary course of business of the Societies.
36B. Moneys constituting the Contingency Fund. (1) The
Contingency Fund shall consist of -(a) contributions by way of compulsory levy on the Permanent Societies registered under this Act;
(b) loans from Permanent Societies registered under this Act made either voluntarily or by proportionate precepted loan;
(c) moneys borrowed by the Contingency Fund Committee from time to time from any bank, finance company or insurer authorized to carry on business in Queensland under the Insurance Acts 1973 of the Commonwealth or under the Insurance Act 1960-1976 or from any other source approved by the Treasurer of Queensland in writing;
(d) interest accrued from time to time from the investment of moneys comprising the Contingency Fund;
(e) all other moneys lawfully paid into the Contingency Fund.
...
36C. Payment out of Contingency Fund. There shall be paid
out of the Contingency Fund -(a) all moneys in payment of all claims (including costs incurred in relation thereto) established against the Fund and settled by the Contingency Fund Committee in accordance with this Act;
(b) all moneys paid in accordance with this Act in repayment of voluntary and precepted loans and borrowings made for the purposes of the Fund and in payment in accordance with this Act of interest thereon;
(c) all moneys paid in accordance with this Act in
payment of expenses incurred in relation to-
(i) claims made against the Fund;
(ii) functioning of the Contingency FundCommittee;
(iii)the Fund;
(d) all moneys paid in accordance with this Act in payment of expenses incurred or sustained in relation to any indemnification under section 36M(2) of this Act.
36D. Contributions and loans. (1) All Permanent Societies
registered under this Act shall -(a) pay to the Contingency Fund by way of compulsory contribution the amount prescribed by subsection (2);
(b) pay to the Contingency Fund amounts by way of compulsory contribution as the Contingency Fund Committee from time to time determines; and
(c) make to the Contingency Fund precepted loans as the Contingency Fund Committee determines.
...
36E. Contingency Fund Committee. (1) There shall be
constituted from time to time as prescribed by this Act a
committee called the Permanent Building Societies
Contingency Fund Committee.
The committee is in this Act referred to as the
Contingency Fund Committee.
(2) The function of the Contingency Fund Committee is to
administer the Contingency Fund established and keptpursuant to this Act.
...
36O. Claims against the Contingency Fund. (1) Subject to the provisions of this section, the Contingency Fund Committee may receive and settle any claim against the Contingency Fund made by a liquidator or an administrator appointed pursuant to this Act.
(2) No person other than a liquidator or an administrator referred to in subsection (1) shall be entitled to make a claim against the Contingency Fund or to recover any amount by any action in relation to the Fund.
...
36P. Application of Fund moneys. (1) Where any moneys are paid out of the Contingency Fund to a liquidator or an administrator of a Permanent Society which may lawfully be applied by him in settlement of claims by members or depositors of the Society admitted or admissible to proof against the Society then, notwithstanding anything to the contrary in the rules of the Society, such moneys shall be applied by him so as to permit as nearly as possible all such claims to be met proportionately having regard to the amount of moneys received by him from the Fund which may be so applied.
(2) Where Registered Societies have invested moneys in the Contingency Fund pursuant to section 28(4) the Contingency Fund Committee may repay to the investing Societies the whole or part of such moneys and interest thereon, having regard to the commitments of the Fund as known to the Committee as at the date of payment, but in either case such repayment shall be made as follows:-
(a) firstly to Societies that have voluntarily so invested, if such repayment is desired by the Society;
(b) secondly to Societies that have invested by way of precepted loan; and
(c) in a manner that permits all such investments to be repaid proportionately having regard to the moneys available in the Fund.
...
36U. Investment in Contingency Fund. (1) The Contingency Fund Committee may from time to time invest moneys held in the Contingency Fund that are surplus to the commitments of the Fund, as known to the Committee as at the date of investment, in the following manner -
(a) any of the Government securities of the Commonwealth or of any of the States of the Commonwealth;
(b) on any interest bearing term deposit in any bank;
(c) on deposit in any savings bank;
(d) on the security of a certificate of deposit issued by any bank;
(e) with any dealer in the short term money market, approved by the Reserve Bank of Australia as an authorized dealer, who has established lines of credit with that bank as a lender of last resort;
(f) on loan to the Treasurer of Queensland at such rate as may be negotiated by the Committee but not less than the prescribed minimum rate (if any);
(g) in any other investment or class of investment approved by the Treasurer of Queensland in writing,
and may also from time to time vary any such investment.
(2) An investment made pursuant to subsection (1) shall
be for a period not in excess of three months or such
other period as may be authorized by the Treasurer of
Queensland in writing.
(3) The amounts of interest accruing at any time and from
time to time in respect of moneys invested by the
Contingency Fund Committee pursuant to this section shall
be paid to the credit of the Contingency Fund."
At the time when the Contingency Fund was initially
established, the Audit Act 1874-1960 was in force, but that legislation was repealed in the following year by the Financial Administration and Audit Act 1977. Material provisions of the 1977 legislation, as subsequently amended, include sections 6, 7, 9, 10(1),(6) and (7), and 11 which provide:
"6. Property in public moneys and public property. All public moneys and public property are the property of the Crown in right of the State.
...
7. Consolidated Fund. The Consolidated Fund will consist
of - (a) the consolidated revenue fund established under the Constitution Act 1867 and subsisting immediately before the commencement of this Act; (b) the Loan Fund established under the Financial Administrative and Audit Act 1977. ... 9. Trust and Special Funds. The special accounts collectively comprising and styled the "Trust and Special Funds" by The Audit Acts Amendment Act of 1951 and in existence immediately prior to the commencement of this Act shall be preserved, continued in existence and established under this Act and shall constitute the Trust and Special Funds for the purposes of this Act.
10. The public accounts. (1) The public accounts are to
be kept by the Treasurer and are to consist of-
(a) the Consolidated Fund;
(b) the Trust and Special Funds.
...
(6) There shall be paid into each fund of the Trust and
Special Funds-(a) all moneys that are required by this Act or any other Act or law to be paid into that fund;
(b) all moneys received for the purposes for which that fund is established.
(7) There is to be paid out of each fund of the Trust and Special Funds all expenditure relevant to that fund and authorised to be made by -
(a) this Act; and
(b) an Annual Appropriation Act; and(c) an Appropriation Act other than an Annual Appropriation Act; and
(d) an Act other than an Appropriation Act that appropriates public moneys;
and refunds of moneys paid into that fund and later
ascertained not to be so payable.
11. Powers of Treasurer re Trust and Special Funds. (1)
The Treasurer-(a) may establish additional funds that will form part of the Trust and Special Funds and specify the purpose for which each such additional fund is established.
(b) may close any fund forming party of the Trust and Special Funds save any such fund as is established by any Act.
(2) On the closure of any fund forming part of the Trust
and Special Funds under subsection (1)(b) -(a) the balance of moneys standing at credit in that fund upon its closure; and
(b) moneys required under an Act to be paid into that fund; and
(c) moneys received after that closure from the sale of public property purchased or produced or for work paid for out of that fund; and
(d) moneys received after that closure by way of repayment of loans or advances made from that fund or of interest on those loans or advances;
are to be paid to the credit of the Consolidated Fund or a
fund of the Trust and Special Funds as specified by the
Treasurer.
(3) The Treasurer may approve and allow the payment of
interest on such moneys standing at credit in any fund
forming part of the Trust and Special Funds as are held
as part of the Treasurer's cash balance at a rate
determined by him.
(4) The balance of any fund forming part of the Trust and
Special funds shall not be overdrawn save with the
approval of the Governor in Council, given upon such terms
and conditions as he thinks fit, first had and obtained."Further, section 5 contains definitions to be inserted
into the Act unless the contrary intention appears, including
the following:
" `Annual Appropriation Act' means an Appropriation Act founded upon the Approved Estimates in any financial year; `appropriation' means a sum of money appropriated by an Appropriation Act for supply services or a specified or an unspecified sum of money appropriated by any other Act for special services;
`Appropriation Act' means an Act authorizing moneys to be issued and applied for supply services in any financial year;
`Consolidated Fund' means the Consolidated Fund established under section 7 but the term does not include the funds of the Trust and Special Funds;
`other moneys' means moneys, negotiable instruments or securities of any kind for the payment of moneys, other than public moneys, collected, received or held by the Treasurer, an accountable officer, an accounting officer or other officer or employee of a department in the course of his official duties;
`other property' means property, other than public property and other moneys, held by the Treasurer, an accountable officer, an accounting officer or other officer or employee of a department in the course of his official duties;
`public moneys' means moneys, negotiable instruments or securities of any kind for the payment of moneys collected, received or held by any person for or on behalf of the Crown in right of the State and includes all moneys which, pursuant to any Act, are directed to be paid to or expressed to form part of the Consolidated Fund or a fund of the Trust and Special Funds;
`public property' means all property other than public moneys held by an person for or on behalf of the Crown in right of the State.
`services' means supply services or special services;
`special services' means services for which moneys are or may be issued out of the public accounts and applied under the authority of an Act other than an Appropriation Act;
`supply services' means services specified in the Approved Estimates for which moneys are or may be issued out of the public accounts and applied under the authority of an Annual Appropriation Act and includes purposes for which the Treasurer, pursuant to this Act, allocates funds appropriated by Parliament under an Appropriation Act other than an Annual Appropriation Act pending the passing of an Annual Appropriation Act;
`Trust and Special Funds' means the Trust and Special
Funds established under this Act."
The Building Societies Act 1886 was repealed by the
Building Societies Act 1985 which made no reference to the Contingency Fund established under the earlier legislation. It was not suggested that any consequence favourable to either party flowed from this legislative omission. In practice, without complaint from the plaintiff in this litigation, the amount standing to the credit of the earlier Contingency Fund appears to have been transferred to the Contingency Fund established pursuant to section 134 of the 1985 Act, which was not materially different in its terms from section 36A of the 1886 Act, as amended.
Similarly, subsection 36D(1) of the 1886 Act was substantially reproduced in subsection 137(1) of the 1985 legislation. Pursuant to those provisions, the plaintiff paid compulsory contributions totalling the amount claimed in the action to the Contingency Fund between 1976 and 1 July, 1988, when it was converted into a public company pursuant to subsection 122A of the 1985 Act.
Each of the provisions of the 1886 Act set out above was
substan
tially
reprodu
ced in
the
1985
legisla
tion.
Thus,
section
s
28(4),
36B,
36C,
36E,
360,
36P,
and 36U
became
section
s
43(5),
135,
136,
138,
147,
148 and
152
respect
ively.
It
is
desirab
le,
before
proceed
ing
further
, to
conside
r what,
if any,
interes
t or
entitle
ment
the
plainti
ff had
in the
Conting
ency
Fund
prior
to 1
July,
1988
althoug
h the
plainti
ff's
argumen
t did
not
extend
to such
an
exercis
e but
concent
rated
upon a
later
time.
The
nature
of the
plainti
ff's
content
ions
can be
drawn
from
paragra
phs 18
to 22
of its
Stateme
nt of
Claim,
which
are in
the
followi
ng
terms:
"18. The first defendant has at all times held the Fund
impressed with a trust on the following terms:-(a) to use the fund for the specific purpose of s.134(2) of the Act ("the specific purpose"), and to make the following payments associated with that purpose ("the associated purposes"):-
(i)
settling claims made under s.147 of the Act;
(ii) making the payments referred to in s.136 of the Act;
(iii) making the investments referred to in s.152
of the Act;
(iv) entering into contracts of insurance or indemnity pursuant to s.153 of the Act; and
(v) making loans to permanent building societies pursuant to s.154 of the Act, ("the primary trust") and
impressed with a further trust on the following
terms:-(b) to return any excess of contributions not required for the specific purpose and the associated purposes to the permanent building societies which had made contributions to the Fund in proportion to the amount of those contributions ("the secondary trust").
19. The primary trust arose by the terms of the Act (ss.134(2), 136, 147, 152, 153 and 154).
20. The secondary trust arose pursuant to an implied agreement between the permanent building societies and the first defendant by the following facts, matters and circumstances:-
(a)
the specific purpose for which the Fund was established was that purpose stated in s.134(2) of the Act;
(b)
to that end, the only payments permitted by the Act to be made from the Fund were payments for the associated purposes;
(c)
by reason of s.26 of the FIQ Act that specific purpose could not, after 1 July 1992, continue to be carried out;
(d)
there was, upon establishment of the Fund, and at all relevant times, a mutual intention between the permanent building societies and the first defendant that the contributions should not become part of the assets of the first defendant, but should be used exclusively for the specific purpose and the associated purposes;
(e)
the first defendant's rights in respect of the Fund were limited to keeping it in the treasury (s.134(1) of the Act); accepting loans from the Fund to the Treasurer of Queensland (s.152(1)(f) of the Act); and permitting payments for the other associated purposes;
(f)
neither the permanent building societies nor the first defendant intended that any part of the Fund be used for any purpose other than the specific purpose and the associated purposes;
(g)
neither the permanent building societies nor the first defendant intended that any part of the Fund become part of the revenue of the first defendant (save whilst on any loan to the Treasurer of Queensland pursuant to s.152(1)(f) of the Act), nor that the first defendant have any beneficial interest whatsoever in the Fund;
(h)
in the premises there was an implied agreement between the permanent building societies and the first defendant that should the Fund for any reason no longer be required for the specific purpose and the associated purposes for which the contributions were made the first defendant would repay to the permanent building societies their respective aliquot shares of the Fund;
(i)
in the premises the first defendant has, since 1 July 1992:-
(i) held the Fund pursuant to the terms of the secondary trust;
(ii) held in trust for the permanent building societies their respective aliquot shares of the Fund; and
(iii) held in trust for the plaintiff its aliquot
share of the Fund.
21. Further or alternatively:-
(a)
neither the permanent building societies nor the first defendant intended that the first defendant acquire any beneficial interest in the Fund;
(b)
a presumption or inference arose, by the facts, matters and circumstances surrounding establishment of the Fund that, should the Fund for any reason be no longer required for the purpose for which it was established, the first defendant would hold the beneficial interest in any part of the Fund not required for that purpose in trust for return to the permanent building societies which made contributions to the Fund in proportion to the amount of those contributions;
(c)
in the premises the first defendant has, since 1 July 1992:-
(i) held the beneficial interest in the Fund upon a resulting trust for the permanent building societies which made contributions to the Fund in proportion to the amount of those contributions;
(ii) held in trust for the plaintiff its aliquot share of the Fund.
22. The presumption or inference referred to arose from
the following facts, matters and circumstances:-(a) the specific purpose for which the Fund was established was that purpose stated in s.134(2) of the Act;
(b) the Act did not make any provision for dealing with the Fund should that purpose fail;
(c) establishment of the Fund in 1976 resulted from the initiative of the Association of Permanent Building Societies of Queensland Limited comprising all permanent building societies in Queensland ("APBS"), whose incentive was, having regard to the collapse of eight permanent building societies in Queensland, that the first defendant introduce legislation to create the Fund, to operate as a loss fund, to provide protection to the persons referred to in s.134(2) of the Act, the Fund to be comprised by contributions from the members of the APBS and loan investments made by members from time to time;
(d) at that time it was not the intention of the members of the APBS that, should the purpose for establishment of the Fund fail, it be used by the first defendant for other purposes;
(e) at that time it was not within the contemplation of the members of APBS that any future circumstance would arise whereby the Fund would no longer be required for the purpose for which it was established;
(f) the Fund was to be, and at all times has been, kept in the Treasury (s.134(1) of the Act);
(g) the Committee was constituted to administer the Fund (s.138 of the Act);
(h) the Committee was not paid by the first defendant from the Consolidated Fund or other funds of the first defendant but from the Fund (s.136(c)(ii) of the Act);
(i) the Committee was empowered to invest surplus moneys in the Fund including "on loan to the Treasurer of Queensland" (s.152(1)(f) of the Act);
(j) the Fund has not, and cannot, comprise part of the Consolidated Fund, as the Fund has been, and is, a fund kept in the accounts of the first defendant as a "Special and Trust Fund", within the meaning of s.9 of the Financial Administration and Audit Act, 1977 (as amended), with the effect that, pursuant to ss.10(2)(a) and 11(1)(b) of that Act it is not, and never has been, a Fund belonging to the first defendant, or which the first defendant has been or is, entitled to appropriate, or close."
Apart from subparagraphs 20(c) and (i) and 21(c), all these allegations are equally applicable, if material, in relation to the time immediately prior to 1 July, 1988. At least the sub-paragraphs mentioned, and comparable paragraphs (such as paragraph 16) which it is unnecessary to set out, are properly to be ignored on a demurrer as merely the assertion of legal conclusions: South Australian v. The Commonwealth (1962) 108 CLR 130, 141-142; Kathleen Investments (Australia) Limited v. The Australian Atomic Energy Commission (1977) 139 CLR 117, 135, 144.
The basis of this portion of the plaintiff's case is the principle laid down by the decision of the House of Lords in Barclays Bank Ltd. v. Quistclose Investments Ltd. (1970) A.C. 567. See also Re Australian Elizabethan Theatre Trust (1991) 102 ALR 681, 689ff and the cases and articles there cited. The essence of the plaintiff's case on this aspect is an alleged mutual intention (and "implied agreement") that
(i) the Contingency Fund should not be "part of the assets of the first defendant, but should be used exclusively for the specific purpose and the associated purposes" (cf sub-paragraph 20(d) of the Statement of Claim); and
(ii) "should the Fund for any reason no longer be required for the specific purpose and the associated purposes ... the first defendant would repay to the permanent building societies their respective aliquot shares of the Fund" (sub-para.29(h)).
(It was assumed, arguably incorrectly, that although the fund was applied for a number of years to its statutory purposes, ultimately that purpose "failed" when the legislation was altered).
The above contentions by the plaintiff provoked a dispute concerning the principles applicable to the creation of such a trust by the State of Queensland. The debate concerned not only what was established by New South Wales v. The Commonwealth (No.3) (1932) 46 CLR 246 but whether a different test was adopted in other authorities such as Aboriginal Development Commission v. Treka Aboriginal Arts and Crafts Ltd. (1984) 3 NSWLR 502, 516-517, 519 and cases cited and see the remarks of Toohey J. in Mabo v. Queensland (No.2) (1992) 175 CLR 1 at pp.201-203. Further, there was argument whether the issue was governed by these principles or whether the test applicable with respect to a private person was to be applied in relation to the State by virtue of section 9 of the Crown Proceedings Act 1980: reference was made to Evans Deakin Industries Limited v. The Commonwealth (1986) 161 CLR 254.
It is unnecessary to enter upon any of these matters, although it is open to question whether the Crown would need a power of disposition of money or other property before its intention to do so could give rise to a trust. No such power exists without a statutory basis: Australian Alliance Assurance Co. Ltd. v. Goodwyn (1916) St.R.Qd.225, Auckland Harbour Board v. R. (1924) AC 318; cf Cudgen Rutile (No.2) Pty. Ltd. v. Chalk (1974) AC 520. However that may be, the Contingency Fund is a creature of statute and that the only relevant intention is that of the legislature as discernible from the material Act or Acts, not from any anterior discussions which may have taken place involving members of the Government of the day. Further, nothing gives relevance to the plaintiff's intention in making compulsory contributions to the Fund.
For reasons which will emerge, it is unnecessary to consider whether the legislation provided, at least implicitly, that the Government had beneficial ownership of the Contingency Fund. Even a statutory intent that, during the operation of the Fund, the Government should have no beneficial interest in it (as distinct from legal title) would not restrict the legislature's right to provide for the disposition of the Fund upon the termination of the purposes for which it was created.
Although the point was not formally abandoned, it was no part of the plaintiff's case that it had any entitlement in respect of the Contingency Fund by virtue of any statutory provisions. In the circumstances, brief reference to the matter will suffice.
Essentially, the argument which might be advanced for the plaintiff depends upon according a wide meaning to the concept of investment spoken of by sections 28(4), 36D and 36P(2) of the 1886 Act (sections 43(5), 137 and 148(2) of the 1985 Act). If a compulsory contribution is an investment (see subsection 28(4) of the 1886 Act and subsection 43(5) of the 1985 Act), it is arguable that section 36P(2) of the 1886 Act (section 148(2) of the 1985 Act) provided a right to a proportional refund of any amount in the Contingency Fund in excess of requirements.
Another view, urged by the defendants and probably favoured by the plaintiff, is that subsections 36P(2) of the 1886 Act and 148(2) of the 1985 Act were only concerned with the repayment of voluntary and precepted loans.
As the plaintiff seemed to recognize, even if an argument might be maintained in favour of a wide view of what constitutes an investment, subsequent legislation to which reference will be made, sections 122D and 122E of the Building Societies Act 1985 and sections 23 and 26 of the Financial Institutions (Queensland) Act 1992, effectively removed any basis for a claim by the plaintiff to a statutory interest in the Contingency Fund at least by 1 July, 1992.
That then was the position immediately prior to 1 July, 1988, when the plaintiff was converted from a permanent building society to a public company. The presently material statutory provisions are section 122D and subsections 122E(1)(a) and (b) and (e), and (3) of the Building Societies Act 1985, which provided:
"122D. Refunds from Contingency Fund. The public company shall be entitled to be refunded out of the Contingency Fund the amount of all voluntary and precepted loans made by the Building Society to the Contingency Fund together with interest thereon at the same and in the same manner as it would have been entitled had it continued to be a Building Society.
122E. Transitional (1) On and from the day on which the
building society is incorporated as a public company -(a) all real and personal property and all right and interest therein and all management and control thereof that, immediately before that day, were vested in or belonged to the building society shall, by virtue of this Part without any conveyance, transfer or assignment, vest in or belong to the company.
(b) all debts, moneys and claims, liquidated and unliquidated, that, immediately before that day, were due or payable to or by, or recoverable by or against, the building society shall be debts due and moneys payable to or by and claims recoverable by or against the company.
... (e)
the company may, in addition to pursuing any other remedies or exercising any other powers that may be available to it, pursue the same remedies for the recovery of moneys and claims referred to in this subsection and for the prosecution of suits, actions and proceedings so referred to as the building society might have done but for the incorporation.
...
(3) For the purposes of this section the property of the building society shall include all estates and interests in property, whether real or personal, vested or contingent."
Taken in isolation, the provisions of s.122E referred to might be sufficient to have preserved any interest which the plaintiff had in respect of the Contingency Fund. However, special provision is made in relation to the Contingency Fund by s.122D, which seems clearly intended as a special, exhaustive statement of the entitlements of a public company with respect to the Contingency Fund after conversion from a permanent building society. The plaintiff scarcely contended otherwise and accepted (Statement of Claim paragraph 28) that it has been paid what it was entitled to under s.122D. Further, paragraph 14 of the Statement of Claim alleges:
"14. The Fund now comprises only contributions by permanent building societies pursuant to s.137(1)(a) of the Act, and ... earnings thereon."
Indeed, in the course of argument, counsel for the plaintiff expressly disavowed any submission that the plaintiff had any beneficial interest in respect of the Contingency Fund prior to the enactment of the Financial Institutions Queensland Act 1992. That in itself is incompatible with the notion that the plaintiff derived such an interest in conformity with the principles laid down in Barclays Bank v. Quistclose.
The plaintiff's remaining contention was that a trust was imposed by operation of law upon the enactment of the Financial Institutions Queensland Act 1992, not by the operation of that Act but by the effect of equity upon the "conscience" of the State of Queensland. For this purpose, the intentions of the parties, to which reference has been made, were relied on by the plaintiff as circumstances from which it is to be concluded that a fiduciary obligation came into existence. The alternatives advanced in paragraphs 21 to 26 of the Statement of Claim are as follows:
"Further or alternatively:-
(a) neither the permanent building societies nor the first defendant intended that the first defendant acquire any beneficial interest in the Fund;
(b) a presumption or inference arose, by the facts, matters and circumstances surrounding establishment of the Fund that, should the Fund for any reason be no longer required for the purpose for which it was established, the first defendant would hold the beneficial interest in any part of the Fund not required for that purpose in trust for return to the permanent building societies which made contributions to the Fund in proportion to the amount of those contributions;
(c) in the premises the first defendant has, since 1 July 1992:-
(i)
held the beneficial interest in the Fund upon a resulting trust for the permanent building societies which made contributions to the Fund in proportion to the amount of those contributions;
(ii) held in trust for the plaintiff its aliquot share of the Fund.
22. The presumption or inference referred to arose from
the following facts, matters and circumstances:-(a) the specific purpose for which the Fund was established was that purpose stated in s.134(2) of the Act;
(b) the Act did not make any provision for dealing with the Fund should that purpose fail;
(c) establishment of the Fund in 1976 resulted from the initiative of the Association of Permanent Building Societies of Queensland Limited comprising all permanent building societies in Queensland ("APBS"), whose incentive was, having regard to the collapse of eight permanent building societies in Queensland, that the first defendant introduce legislation to create the Fund, to operate as a loss fund, to provide protection to the persons referred to in s.134(2) of the Act, the Fund to be comprised by contributions from the members of APBS and loan investment made by members from time to time;
(d) at that time it was not the intention of the members of the APBS that, should the purpose for establishment of the Fund fail, it be used by the first defendant for other purposes;
(e) at that time it was not within the contemplation of the members of APBS that any future circumstance would arise whereby the Fund would no longer be required for the purpose for which it was established;
(f) the Fund was to be, and at all times has been, kept in the Treasury (s.134(1) of this Act);
(g) the Committee was constituted to administer the Fund (s.138 of the Act);
(h) the Committee was not paid by the first defendant from the Consolidated Fund or other funds of the first defendant but from the Fund (s.136(c)(ii) of the act);
(i) the Committee was empowered to invest surplus moneys in the Fund including "on loan to the Treasurer of Queensland" (s.152(1)(f) of the Act);
(j) the Fund has not, and cannot, comprise part of the Consolidated Fund, as the Fund has been, and is, a fund kept in the accounts of the first defendant as a "Special and Trust Fund", within the meaning of s.9 of the Financial Administration and Audit Act 1977 (as amended), with the effect that, pursuant to ss.10(2)(a) and 11(1)(b) of that Act it is not, and never has been, a Fund belonging to the first defendant, or which the first defendant has been or is, entitled to appropriate or close.
23. Further or alternatively:-
(a) on 1 July, 1992 by reason of s.26 of the FIQ Act, the Fund was no longer required for purpose for which it was established; (b) the first defendant at that date did not have an interest, beneficial or otherwise, in the Fund, and was not otherwise entitled to deal with it; (c) the plaintiff did not intend the beneficial interest in the Fund to pass otherwise than pursuant to s.147 of the Act; (d) in the premises there arose on that date a constructive trust in respect of the Fund whereby the first defendant - (i) held in trust the beneficial interest in the Fund for those permanent building societies which had made contributions to it in proportion to the amount of those contributions;
(ii) held in trust for the plaintiff its aliquot share of the Fund.
24. In the premises:-
(a) the first defendant now holds the Fund:- (i) impressed with the implied trust; alternatively
(ii) impressed with the presumed resulting trust; alternatively
(iii) impressed with the constructive trust; and
(b) is obliged to return the Fund to the entities which made contributions to it.
25. Further or alternatively:-
(a)
the purpose for which the Fund was established, and for which the contributions were made, is that purpose in s.134(2) of the Act;
(b) by reason of:-
(i) s.26 of the FIQ Act;
(ii) the circumstances that the purpose of thecontinuation of the Fund has thereby
failed; and
(iii) the matters in paragraphs 22 and 23(a), (b)
and c),
the first defendant is obliged by the requirements of justice and good conscience to distribute the Fund to the entities which made contributions to it.
26. If such a distribution is not made:-
(a) the first defendant will be unjustly enriched at the plaintiff's expense by:-
(i) the ability to use the Fund for purposes which would otherwise have to be met out of the Consolidated Fund, or raised from other sources; and
(ii) the ability to use the Fund to make ex gratia payments as it sees fit to the exclusion of some or all of the entities which contributed to the Fund;
(b) any recipients of such ex gratia payments who receive distributions greater than in proper proportion to the amounts contributed by them will be unjustly enriched at the plaintiff's expense;
(c) there will, in all the circumstances, be an injustice to the plaintiff.
The authorities principally relied on by the plaintiff were Muschinski v. Dodds (1980) 160 CLR 583; Baumgartner v. Baumgartner (1987) 164 CLR 137 and Australia and New Zealand Banking Group Limited v. Westpac Banking Corporation (1988) 164 CLR 662, each of which involve very different circumstances from those in this case. Although the principles seem clearly established, they are not necessarily easy to apply in practice.
In Baumgartner, Mason CJ. and Wilson and Deane JJ., in their joint judgment referred back to Muschinski v. Dodds and said (at pp.147-148):
"Deane J. (with whom Mason J. agreed) reached this result by applying the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. His Honour said, (1985 160 CLR, at p.620):
`... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do; cf Atwood v. Maude (1868) LR 3 Ch.App.369, at pp.374-375) and per Jessell MR, Lyon v. Tweddell (1881) 17 Ch.D.529, at p.531).'
His Honour pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention `to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle' ((1985) 160 CLR, at p.614): see also at p.617. In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust (1985 160 CLR, at p.616)."
In Australia and New Zealand Banking Group v. Westpac Banking Corporation, Mason CJ and Wilson, Deane, Toohey and Gaudron JJ. at p.673 described the basis of the common law action of money had and received "as lying not in implied contract but in restitution or unjust enrichment ...". Later on the same page, their Honours continued:
"The common law right of action may arise in circumstances which also give rise to a resulting trust of specific property or funds or which would lead a modern court to grant relief by way of constructive trust. However, notwithstanding that the grounds of the action for recovery are framed in the traditional words of trust or use and that contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience, the action itself is not for the enforcement of a trust or for tracing or the recovery or specific money or property. It is a common law action for recovery of the value of the unjust enrichment and the fact that specific money or property received can no longer be identified in the hands of the recipient or traced into other specific property which he holds does not of itself constitute an answer in a category of case in which the law imposes a prima facie liability to make restitution. Before that prima facie liability can be displaced, there must be circumstances (eg., that the payment was made for good consideration such as the discharge of an existing debt or, arguably, that there has been some adverse change of position of the recipient in good faith and in reliance on the payment) which the law recognises would make an order for restitution unjust.
The prima facie liability to make restitution is imposed
by the law on the person who has been unjustly enriched.
In the ordinary case of a payment of money, that person
will be the payee. ...".
The argument for the plaintiff confirmed what is apparent
from its pleading, namely, that the effect of section 26 of the Financial Institutions (Queensland) Act 1992 is central to its case. Section 26 provides for the amendment of the Building Societies Act 1985 by the omission of section 3 and the insertion of the following section:
"Application of Act.
3(1) This Act does not apply to a permanent building
society.
(2) Sub-section (1) has effect even though other
provisions of this Act are expressed to apply to a
permanent building society."
It is also necessary to set out part of section 23 of the
Financial Institutions (Queensland) Act, and regulation 3 of the Financial Institutions (Queensland - Savings and Transitional Provisions) Regulation 1992, which was enacted pursuant to that provision. Section 23 provides:
"Regulations.
23(1) The Governor-in-Council may make regulations of a
savings or transitional nature consequent on the enactment
of this Act ...
(2) A regulation may provide for the continuance,
winding-up or distribution of the Permanent Building
Societies Contingency Fund established under the Building
Societies Act 1985 and has effect despite any provision of
that Act.
(3) If a regulation so provides, it has effect despite
any provision of this Act, ... "
Regulation 3 is as follows:
"Continuance of Permanent Building Society Contingency
Fund
3(1) The Permanent Building Societies Contingency Fund
established under the Building Societies Act 1985 is
continued for the purposes of the administration and
winding up of the following societies and the distributionof the balance of the Fund -
...
(2) Subsection (1) has effect despite any provision of
the Act ... "
According to the preamble to the Financial Institutions
(Queensland) Act 1992, it is an Act "to provide for the formation, registration, management and regulation of certain financial institutions, and for other purposes." One aspect of the legislation involves an alternative prudential system of permanent building societies. Paragraphs 31 and 32 of the Plaintiff's Statement of Claim are in the following terms:
"31. On 11 November, 1992 the Treasurer introduced a Bill,
namely the Building Societies Fund Bill 1992, which:-(a) by Part 4:-
(i) would provide for the Fund (save $500,000) to be appropriated to the Consolidated Fund; and (ii) would purport to close the Fund; and
(b) by Parts 2 and 3:-
(i) would provide $25 million of the Fund to be appropriated from the Consolidated Fund for purposes other than the specific purposes; and (ii) would provide $49.995 million of the Fund to be appropriated from the Consolidated Fund for purposes other than the specific purpose;
all for the benefit (directly or indirectly) of all contributors to the Fund except the plaintiff, to the exclusion of any benefit to the plaintiff.
32. For the reasons herein, the proposed:- (a) closure of the Fund; and
(b) appropriation of the Fund,
(i) are contrary to law; and
(ii) are in breach of the first defendant'sobligations to the plaintiff as trustee of
the Fund; and
(iii) purport to confer a direct benefit on the first defendant in breach of its fiduciary obligations to the plaintiff as trustee of the Fund; and/or
(iv) are otherwise contrary to the plaintiff's equitable interest in the Fund.
The Bill is available to the Court. It provides for the Contingency Fund to be reduced to $500,00000 and the balance paid to the Consolidated Fund, with the remainder of the $500,000.00 paid to the Consolidated Fund and the Contingency Fund closed after all claims on the Contingency Fund have been resolved and all expenses paid. An amount of $25 million dollars is required to be paid from the Consolidated Fund to a new fund, the Building Societies Fund, to be used in connection with the cost of supervision incurred under the Financial Institutions legislation, and an amount approximating the balance paid to the Consolidated Fund is to be paid to statutory reserves to be kept by each building society to be used for any purpose for which the capital of the society may properly be used but to be paid to members of the building society only on a winding up.
It is doubtful, to say the least, whether there is scope for the operation of the principles for which Muschinski, Baumgartner and Australia and New Zealand Banking Group v. Westpac are authority in relation to monies paid to public funds under valid statutory enactment. See also David Securities Pty. Ltd. v. Commonwealth Bank of Australia (1992) 175 CLR 353.
However, even if there may be opportunity for those principles to operate where the monies were exacted for specific statutory purposes which are not to be pursued because the legislation is repealed, there is nothing unjust or unconscionable in the proposed conduct of the State of Queensland if it is pursued to its intended ends. At the moment, the attainment of those objectives is apparently interrupted while the plaintiff seeks to establish its rights but, as the plaintiff's own Statement of Claim asserts, the circumstances to be considered include what is proposed. There is nothing in the course pleaded to raise the equity in the plaintiff's favour for which it argues. There is no discernible unfairness or injustice involved. In any event, it is a matter for Parliament, not the Court, to decide how the contributions which have been paid should be used or distributed.
The demurrer is accordingly allowed. There is no prospect of any amendment which would enable the plaintiff to succeed and, therefore, the Statement of Claim is struck out and the action dismissed, with costs to be taxed.
| THE COURT OF APPEAL | [1993] QCA 183 |
| SUPREME COURT OF QUEENSLAND |
Appeal No. 269 of 1992
Brisbane
| Before | The President Mr Justice Pincus Mr Justice Derrington |
[Metway Bank Limited v. State of Queensland]
BETWEEN:
METWAY BANK LIMITED
Plaintiff
- and -
STATE OF QUEENSLAND
First Defendant
- and -
THE MEMBERS OF THE PERMANENT BUILDING SOCIETIES CONTINGENCY FUND COMMITTEE, namely JOHN ANGUS REYMENT, BRIAN JOHN
HERD, RONALD EARNEST HANCOCK and DONALD
STANLEY STEVENS
Second Defendants
REASONS FOR JUDGMENT - PINCUS J.A.
Judgment delivered 20/05/93
This is a demurrer to a statement of claim seeking declaratory relief, in circumstances fully set out in the reasons for judgment of the President. The essential question is whether the plaintiff bank is entitled to a refund of moneys exacted from it when it was a building society, under compulsion of a Queensland statute. Those moneys formed part of a Contingency Fund established in 1976 to meet deficiencies which might arise out of the failure of Queensland building societies. The Fund ceased to protect the plaintiff when it was turned into a bank in 1988. Building societies are, since 1992, subject to a new statutory regime of which the Contingency Fund forms no part, under the Financial Institutions (Queensland) Act 1992.
There is a current proposal to pass a statute to dispose of the Fund. The plaintiff has argued that, while the passage of the statute would admittedly be lawful, it presently has an equitable interest in the Fund; it seeks to establish that interest in this suit. An alternative claim is that, as the plaintiff asserts, it is entitled to be paid an amount equivalent to its interest in the Fund, as a matter of
quasi-contract. The proposed statute disposing of the Fund would effectively extinguish any interest the plaintiff has in the Fund. Although the plaintiff's pleading says, as I understand it, that the statute would be unlawful, no submission to that effect was made. It is plain that such a statute would not be invalid as being an unconstitutional expropriation of property by the Queensland Parliament; no provision inhibits legislation of that sort.
The statement of claim is, insofar as it complains of the intention to pass a statute disposing of the whole Fund including the plaintiff's alleged interest in it, legally untenable. Further, if it is the case, as the pleading seems to allege, that the Government proposes to secure the passage of the statute I have mentioned, the question whether or not the plaintiff now has an interest in the Fund may in the end be academic. We were told that it is not intended to proceed further with the statute until this litigation is concluded.
We were not told whether, in the event of the plaintiff's contentions being held good, there would nevertheless be an attempt to procure the passage of the statute through Parliament.
The plaintiff's contentions are mainly that the plaintiff
is a beneficiary under a Quistclose trust in respect of the
Fund; alternatively that there is a constructive trust; and
lastly that the money in question is due as a matter of
quasi-contract. The plaintiff also pleaded that there is a
resulting trust in its favour, but that was not argued in
detail, because it appears that if the other contentions based
on trust law fail, so must the resulting trust case.
All the contentions advanced on the plaintiff's side have in common that the statutes dealing with the Fund must, if the contentions are to succeed, admit of their being pursued. The plaintiff cannot succeed if the relevant statutes themselves comprehensively dispose of the Fund or are so drawn as not to permit a payment out to the plaintiff of what it claims is its share. The plaintiff's case relies on the general law, any rights under which cannot stand against contrary statutory provision.
It appears convenient first to examine this question in order to determine whether, assuming there were for example an express declaration of trust by the Crown in favour of the plaintiff relating to the Fund, recognition of that trust would be consistent with the statutes. Four statutory provisions fall for consideration.
1. It is not necessary for my purposes to set out the relevant provisions at length, as they are to be found in the reasons of the President. Under the Building Societies Act 1886 ("the 1886 Act") at relevant times it was provided that the Fund should consist of contributions by way of compulsory levy on the Permanent Societies registered under the Act, and certain other moneys. The 1886 Act was repealed and replaced by the Building Societies Act 1985 ("the 1985 Act"), whose provisions are, so far as relevant, much the same as those of the 1886 Act. The issue in this case has to do with a sum (about $17m) representing contributions by way of compulsory levy and earnings thereon. Under s.36O of the 1886 Act, a Contingency Fund Committee established by that Act was empowered to settle claims against the Fund made by a liquidator or administrator and sub-s.(2) provided that:
"No person other than a liquidator or an administrator referred to in sub-s.(1) shall be entitled to make a claim against the Contingency Fund or to recover any amount by any action in relation to the Fund".
The counterpart of s. 36O in the 1985 Act is s. 147.
It was not argued that the plaintiff, although not a liquidator or administrator, is prevented from making a claim by s. 147(2) of the 1985 Act. However, that may well be the effect of the provision. Section 147(2) must be read subject to s. 136 of the same Act, which expressly permits payment out of the Fund of certain moneys not claimed by a liquidator or administrator. They are repayment of certain loans and interest (para. (b)), payment of certain expenses (paras. (c) and (d)) and the making of loans to societies in financial difficulty (para. (e)). No implication in s .147(2) is necessary to achieve this result, but merely adherence to the ordinary principle that a statute is read as a whole.
To save the present claims from the prohibition in s.147(2), which on the face of it excludes them, one must, as it appears to me, read the section down so as to cover only claims against the Fund in respect of failed societies, such claims being the subject-matter dealt with in s.147. Because the demurrer must be allowed on other grounds, and because the effect of s.147(2) of the 1985 Act was not argued, it is unnecessary as well as undesirable to reach a conclusion on that point.
2. It was argued for the defendants that, assuming that in the absence of s.6 of the Financial Administration and Audit Act 1977 ("the FAA Act"), the moneys in question could be the subject of a trust in favour of the plaintiff, that section's terms preclude that result. It reads:
"All public moneys and public property are the property of the Crown in right of the State".
The expression "public moneys" is defined in s.5 of the FAA Act so as to include moneys forming part of "a fund of the Trust and Special Funds".
Paragraph 22(j) of the statement of claim alleges that the Contingency Fund is kept in the first defendant's accounts as a "Special and Trust Fund" within the meaning of s.9 of the FAA Act, which reads as follows:
"The special accounts collectively comprising and styled the 'Trust and Special Funds' by The Audit Acts Amendment Act of 1951 and in existence immediately prior to the commencement of this Act shall be preserved, continued in existence and established under this Act and shall constitute the Trust and Special Funds for the purposes of this Act".
It appears to me to follow, and the conclusion was not resisted by counsel for the plaintiff, that the moneys in question are "public moneys" for the purposes of the FAA Act. The question then arises whether the statement that they are "property of the Crown in right of the State" in s.6 prevents its being held that they are subject to a trust in favour of someone other than the Crown.
A narrow view of s. 6 is that it is concerned merely to specify that the legal, as opposed to equitable, interest in "public moneys" is in the Crown. In support of the broader interpretation, the defendants referred to the decision of the High Court in The State of New South Wales v. The Commonwealth (1932) 46 C.L.R. 246. That concerned the effect, on moneys deposited in banks by the New South Wales Government, of a federal statute whose purpose was to apply such moneys compulsorily towards discharge of that Government's liabilities. It was argued that certain of the moneys were held in trust (for example, those in Supreme Court accounts) and that therefore the federal statute could not touch them.
That contention was rejected on the ground that:
"The Crown in administering justice and otherwise in performing its sovereign functions receives moneys from the subject, not as trustee of those specific moneys, but in the exercise of its powers of Government. The subject is entitled to repayment of an equivalent amount of money, and he relies upon the whole credit of the State as his security. The specific money paid is not segregated but loses its identity in the general funds of the Treasury" - per Rich and Dixon JJ. at p.260.
See also per Starke J. at p.268 and per McTiernan J. at p.277. Although the principle of the decision is of general assistance to the defendants, nothing said by the judges appears to me to throw any light upon the construction of the Queensland provisions with which I am concerned. The corresponding New South Wales statute, the Audit Act 1902, had no provision in it to the same effect as s.6 of the FAA Act. The case is not authority for the view that no Crown moneys can ever be subject to a trust in the ordinary sense.
In my opinion, one should not read s.6 as precluding the Crown from declaring itself trustee or otherwise becoming trustee of any public moneys. Section 6 is capable of being given an operation short of having that effect, for example by achieving the result that, whoever holds any moneys, negotiable instruments or securities falling within the definition of "public moneys", such property is to be treated as vested in the Crown. I do not accept that s.6 of the FAA Act defeats the plaintiff.
3. It was also argued for the defendants that s. 10(7) of the FAA Act prevents the payment out of the moneys sought, in the absence of statutory authority. Section 10(7) reads as follows:
"There is to be paid out of each fund of the Trust and Special Funds all expenditure relevant to that fund and authorised to be made by -
(a) this Act; and
(b) an Annual Appropriation Act; and(c) an Appropriation Act other than an Annual Appropriation Act; and
(d) an Act other than an Appropriation Act that appropriates public moneys;
and refunds of moneys paid into that fund and later ascertained not to be so payable".
If the argument for the Bank is correct, then it is entitled, despite this provision, to be paid out of the Fund the money it claims; such a payment would not fall within any of categories (a) to (d), nor would it be a refund of the kind mentioned at the end of the section. The defendants argued that s. 10(7) is exhaustive of the topic with which it deals. On the view of the provision which the Bank would have the Court take, it is difficult to see any logical stopping place short of a conclusion that moneys which, under the general law, would for any reason be payable out of the Fund are payable despite s.10(7); if that is so, then it is unclear that the enactment of s.10(7) achieved anything. In its absence, there could have been no doubt that the payment out of moneys authorised neither by statute nor by the general law would be unlawful.
It should be noted that even if the defendants are right about s.10(7), people who have a cause of action connected with a Trust or Special Fund may be unaffected by it. For example, expenses incurred by those placed in control of the Fund could be sued for and recovered; but the sum due could not be paid out of the Fund. Keeping that in mind, it appears to me that the more natural reading of s.10(7) is to treat it as a comprehensive statement of the authority for disbursement from Trust and Special Funds.
However, that does not defeat the Bank's claim. Section 25 of the FAA Act is so drawn as to enable payment out of any "fund of the public accounts" even where there is no appropriation, on the basis that the payment is charged as "unforeseen expenditure". Although this provision was but briefly alluded to, it appears to me to counter the argument that the Bank cannot get payment out of the Contingency Fund because of the implicit prohibition in s.10(7). It is true that there must be an exercise of discretion under s.25, by the Treasurer and by the Governor in Council, to enable a payment out of the Contingency Fund in discharge of an obligation under the general law of trusts. But the existence of that discretion negates the contention that there can be no right to the payment out of the Contingency Fund which the Bank seeks because such a payment is absolutely forbidden by s.10(7).
4. The next provision which was relied on and requires mention is s.122D of the 1985 Act, which is included in Part VIIA, a group of provisions enabling the conversion of a building society to a public company limited by shares. It was under Part VIIA that the Bank ceased to be a building society on 1 July 1988, as mentioned above. S.122D says:
"The public company shall be entitled to be refunded out of the Contingency Fund the amount of all voluntary and precepted loans made by the building society to the Contingency Fund together with interest thereon at the same time and in the same manner as it would have been entitled had it continued to be a building society".
The argument for the defendant was that this provision set out the total entitlement, of an entity which had converted to a public company under Part VIIA, to an interest in the Contingency Fund.
The Bank's counsel said that s.122D was intended to remove any doubt as to the entitlement of a company such as the Bank to share in the repayment of moneys to societies under s.148(2) of the 1985 Act, which reads as follows:
"Where permanent building societies have invested moneys in the Contingency Fund pursuant to section 43(5) the Contingency Fund Committee may repay to the investing societies the whole or part of such moneys and interest thereon, having regard to the commitments of the Fund as known to the Committee as at the date of payment, but in either case such repayment shall be made as follows:-
(a) firstly to societies that have voluntarily so invested, if such repayment is desired by the societies;
(b) secondly to societies that have
invested by way of precepted loan;
and(c) in a manner that permits all such investments to be repaid proportionately having regard to the moneys available in the Fund".
It is my opinion that, assuming that the Bank would, apart from the enactment of s.122D, have had an interest in the Contingency Fund of the kind now set up, the enactment of that section did not take it away. The language used in s.122D reflects that of s.148(2) insofar as both deal with voluntary and precepted loans and is aptly chosen to achieve the purpose the Bank submits it had; s.122D does not clearly exclude the possibility of such a claim on the Fund as the Bank now asserts.
My conclusion, then, is that the statutory provisions relied on to defeat or prevent the recognition of the Bank's claim on the Contingency Fund do not have that result. A provision which was not relied on, namely s.147(2) of the Act of 1985, may well defeat the Bank's claim, but as I have said the point was not argued and it is unnecessary to express a conclusion about it.
There is a need to consider another question of statutory construction, in view of an argument that was advanced on behalf of the Bank. By reason of the Crown Proceedings Act 1980, the rights of the parties to this litigation must be "as nearly as possible ... the same" as "in a proceeding between subject and subject" - s.9(2). It followed, so the Bank contended, that the special position of the Crown (assuming it has one) in relation to establishment against it of a Quistclose trust or constructive trust must be disregarded.
Counsel for the Bank went further and suggested that s.9(2) of the Crown Proceedings Act defeats any argument, based on provisions such as those discussed above, that payment of moneys out of the Fund to the Bank would be unlawful.
The matter was argued on the assumption that s.9 refers to substantive rights as well as those of a procedural kind, because that has been determined to be the effect of s.64 of the Judiciary Act 1903 (Cth). The point was decided in Maguire v. Simpson (1977) 139 C.L.R. 362; see also Asiatic Steam Navigation Co. Ltd. v. The Commonwealth (1956) 96 C.L.R. 397.
One of the difficulties in applying those decisions to s.9 of the Crown Proceedings Act 1980 No. 2 (Qld.) is the side note or heading "Procedure"; that forms part of the section, under s.35C of the Acts Interpretation Act 1954. A second reason is the broad context in which it appears; Part II, headed "Proceedings By or Against the Crown", contains four provisions which deal, in general, with procedural questions. A third reason is the immediate context, "the rights of parties including rights of appeal", which indicates that the draftsman perhaps had procedural rights in mind. If one were to read s.9 without regard to its history, there would be difficulty in treating it as having the effect which has been attributed to s.64 of the Judiciary Act.
It is instructive to compare ss.8 and 9 of the Crown Proceedings Act 1980 with the provisions they replaced, namely s.5 of the Claims Against Government Act which was enacted in 1866.
Section 5 of the 1866 Act reads as follows:
"Any such petitioner may sue such nominal defendant at law or in equity in any competent court and every such case shall be commenced in the same way and the proceedings and rights of parties therein shall as nearly as possible be the same and judgment and costs shall follow on either side as in an ordinary case between subject and subject at law or in equity".
Sections 8 and 9 of the 1980 Act read:
"8.(1) Subject to this Act and any other Act or law, a claim by or against the Crown may be made and enforced by a proceeding by or against the Crown under the title the 'State of Queensland'.
(2) This section does not apply to a claim by or against a corporation representing the Crown, constituted by or under any Act.
9.(1)A proceeding by or against the Crown -
(a) shall be instituted in the court that would have jurisdiction if the proceeding were between subject and subject;
(b) shall be instituted and proceeded with in accordance with the procedure of the court specifically applicable thereto or, if there is no such procedure, as nearly as possible in accordance with the procedure applicable to a proceeding between subject and subject.
(2) In a proceeding by or against the
Crown -(a) the rights of parties including rights of appeal shall as nearly as possible be the same; and
(b) judgment may be given and costs awarded,
as in a proceeding between subject and
subject".
The older provision is, in its relevant parts, quite close to the language of s.64 of the Judiciary Act 1903, whereas the more recent sections are drawn as if the draftsman thought that s.9(2)(a) had not the substantial effect, relating to the Crown's liability to the subject, which has been attributed to s.64 of the Judiciary Act 1903. On the other hand, the terms of s.9 are not such as to show that the intention was to make a substantial improvement in the Crown's position when sued by a citizen.
In my opinion, the 1980 legislation should be read as having the same effect as that which it replaced, as to the point being discussed. That is, I think the expression "the rights of the parties" in s.9(2)(a) of the Crown Proceedings Act 1980 should be read as including substantive rights and including precisely those substantive rights which would have been covered by the Claims Against Government Act. It is necessary, in a sense, to adopt that view, because otherwise the 1980 Act appears to contain nothing affecting the substantive liability of the Crown and, in particular, no provision to make the Crown liable in tort - that being the effect of the Claims Against Government Act: Firnell v. Bowman (1887) 12 App. Cas. 643, Theodore v. Duncan [1919] A.C. 696 and see Maguire v. Simpson (above) at pp.372, 373 and 378. My conclusion derives some support from the Second Reading Speech, which does not suggest that the Government intended by the legislation to achieve a change in the then substantive law affecting the liability of the Crown. The intention appears to have been merely to alter the method of bringing proceedings against the Crown.
According to the argument of the Bank's counsel, s.9 of the Crown Proceedings Act should, at least in the present case, be read as achieving the result that the Crown as litigant is in no special position and should not be treated as having particular privileges - that is, in determining whether any of the remedies here sought is available, one should simply apply the general law as if the Crown were a private individual.
The question whether that submission is correct depends on the meaning of the words "as nearly as possible" in s.9(2)(a) of the Crown Proceedings Act 1980. That point and a second one mentioned below, are dealt with in the leading authority on provisions of this sort: Commonwealth v. Evans Deakin Industries Limited (1986) 161 C.L.R. 254. The relevant passage as to the meaning of "as completely as possible" is at pp.264 and 265 of the report. I do not quote the passage, which appears to imply that the expression may perhaps exclude the operation of the relevant part of such a statute where there is being performed "a function peculiar to Government" and where a determination of the rights and liabilities of the Government as if it were a subject would be "incompatible with the position of" the Government. The passage to which I refer does not decide these points, but it appears that the trend of authority in the High Court is in favour of a broad view of the notion of impossibility for the purposes of the phrase "as
nearly as possible". Commonwealth v. Miller (1910) 10 C.L.R. 742 at 756, Asiatic Steam Navigation Co. v. The Commonwealth (above) at 417 per Dixon C.J., McTiernan and Williams JJ. (but compare Kitto J. at 448), South Australia v. The Commonwealth (1952) 108 C.L.R. 130 at 140 per Dixon C.J. and Downs v. Williams (1971) 126 C.L.R. 61 at 103 per Gibbs J. "Possible" as construed in these cases, perhaps means much the same as "practicable".
It seems evident that where functions of a purely governmental (as opposed to commercial) kind are in question, the ruler cannot be equated to the subject in proceedings between them, if only because the former issues edicts which the latter must obey. It is impossible to determine the legal relationships between the Government and the Bank, arising out of the making of laws with which the Bank has been compelled to comply, as if the law-maker were not the Government. The present is peculiarly a case in which one cannot treat the rights of the Government in this litigation as being the same as in a proceeding between subject and subject; no subject could ever exact from another subject, by statute, the moneys the subject of this dispute, as the Government has done.
The second point discussed in the Evans Deakin case and presently relevant is the stage at which any rights or liabilities created by the statute, for or against the Government, come into existence. The point was of significance in the Evans Deakin case because it concerned the question whether the Commonwealth is bound in a suit under the Subcontractors' Charges Act 1974 (Q.) as if the Act applied to it. If the Commonwealth is so bound, then it could presumably have relied on the Subcontractors' Charges Act as a ground of resisting, in appropriate circumstances, a contractual demand made on it before suit: see per Brennan J. at p.275. The nature of the majority's view on that question is not a matter which is beyond debate:
"If it is possible to say that once a suit is commenced the Commonwealth will be held liable, it follows that it can also be said, before the suit is commenced, that the events which have happened have created a liability which will be recognized and enforced in legal proceedings. A payment in satisfaction of such a liability will not be unlawful.
It is therefore only a half-truth to say that s. 64 has the effect that upon the commencement of a suit the Commonwealth becomes subject to obligations which did not exist beforehand. The section does not have a retrospective operation. At all times before a suit is commenced, it can be known what the rights of the parties will be once the suit is commenced." (emphasis added).
The first sentence says plainly enough that it can be said before the suit is commenced that "the events which have happened have created a liability", but the last sentence says merely that before the suit is begun one can know what the rights of the parties will be once it has been begun; at first sight, that appears to be a somewhat different proposition.
It is a strange and, one would think, irrational intention
to attribute to the legislature that the rights and obligations
of the Crown, in a given set of facts, should be different when
a suit is brought against it than they were before the suit.
The Commonwealth would have been entitled and indeed obliged to
make payment to the principal contractor under its contract,
even if in the event of suit by the subcontractor it was bound
to be held that the Commonwealth was obliged to keep the money
in response to the subcontractor's claim. The topic just
discussed is one I return to below.
I now go to the principal claim argued on behalf of the plaintiff, namely the suggestion that there was a Quistclose trust. I describe this as the principal claim because the others which were argued - constructive trust and unjust enrichment - depend upon showing unconscionable conduct, a substantial obstacle.
The Quistclose trust case depends essentially on the allegations in paragraphs 18, 19 and 20 of the statement of claim, which are in summary as follows:-
The Government has at all times held the Fund in question with a trust to use it for the purposes indicated in the Act ("the primary trust") and to return any excess of contributions not required for those purposes to the societies which contributed to the Fund a proportion of the amount of their contributions ("the secondary trust").
The primary trust arose by the terms of the Act and the
secondary trust pursuant to an implied agreement.
The implied agreement came about because of s. 26 (sic) of the Financial Institutions (Queensland) Act 1992 ("the FIQ Act") and because the parties intended on the establishment of the Fund that the contributions should be used only for the purposes set out in the building societies legislation.
A Quistclose trust is one in which money is advanced to be used exclusively for a specific purpose, on the failure of which purpose there arises a trust for the payer. Here there was no loan; the money was paid pursuant to statutory obligation. The concept of an exaction of the money from citizens to be used for purposes stated in a statute is a familiar one. It was not argued that in every such instance a trust for the statutory purposes arises. I can see no justification for the intervention of equity at that point;
the statute itself sets out the obligations of the holder of the Fund and equity would hardly impose a trust obligation in the same terms. The position is no easier for the Bank if one applies s.9 of the Crown Proceedings Act. This cannot result in treating the statutory exaction in favour of the Crown as if it were a matter between citizen and citizen. To do so would not be "possible", in the sense properly to be attributed to that word in s.9. Further, compulsory levies are a type of receipt peculiar to Government.
Counsel for the Bank pointed out that the plea contains allegations as to what the parties intended; in essence, these are that the Crown should have no beneficial interest in the Fund and, further, that the Fund should be used only for the statutory purposes. As to the former point, there can be no doubt that the moneys constituting the Fund vested in the Crown in law and in equity; the Bank is unable to postulate any other holder of the beneficial interest than the Crown. As to the latter point, it seems irrelevant to say that the parties intended, when the statute was passed, that the Fund would be used only for the statutory purposes; there is no allegation that they had any intention as to what should occur in the event which happened, namely that one of the societies contributing to the Fund ceased to be a society.
In my opinion, then, the allegations in the pleading do not support the conclusion that there was a primary Quistclose trust for the statutory purposes. It is unnecessary, in the circumstances, to go into the difficulties attending the notion of a primary non-charitable trust for a purpose.
Since there was not the primary trust alleged, the allegation of a secondary trust requires no consideration; its existence is dependent upon there having been a primary trust.
There remains only to deal with the allegation of unconscionable conduct. The argument presented on behalf of the Bank is analogous to that accepted by the High Court in Baumgartner v. Baumgartner (1987) 164 CLR 137. That concerned a failed "joint endeavour", to use the classification adopted in Ford and Lee, Principles of the Law of Trusts, 2nd ed., p.1057. It was there held that one party's assertion, after the relationship failed, that the property in question was his sole property amounted to unconscionable conduct: 149. If one were to ignore the circumstance that here the party alleged to be guilty of unconscionable conduct is the Crown, as counsel for the Bank suggested we should, there might be thought to be something in the argument. But the effect of s. 9 of the Crown Proceedings Act, as it has been construed, is that the rights of the parties are to be considered as if the Crown were a subject only after the suit is begun. There is no possibility of using, before suit, the concept that the Crown must be treated as if it were a subject. The result is, in my view, that the concept of unconscionable conduct based on an assertion of entitlement of an unconscionable kind cannot mesh with the notion that the Crown must be treated as if it were a subject. The institution of a suit can hardly turn what would otherwise have been a proper assertion into an unconscionable one.
Putting aside then considerations arising out of the Crown Proceedings Act, the conduct complained of cannot be characterised as unconscionable. All that has been done is that money has been exacted from the Bank for a particular purpose, but because of the change in the character of the paying entity, i.e. from a building society to a bank, and because of the institution of a new regime for protection of building societies, the Bank's former expectation of benefit from the Fund has gone. There is nothing unconscionable about the Government's treating the Bank as no longer having the same relationship to the Fund as it had when it was a building society, nor anything unconscionable in its instituting a new regime for the protection of the remaining building societies.
I therefore agree that the demurrer should be allowed, the statement of claim struck out, and the action dismissed with costs.
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