New South Wales v Bardolph

[1934] HCA 74

52 CLR 455

THE STATE OF NEW SOUTH WALES BARDOLPH

RESPONDENT. PLAINTIFF, Constitutional Law-Crown contract-Industrial undertaking-Validity of contract

-Necessity for express parliamentary authority-Executive power-Power to contractPayment-Parliamentary appropriation-Special Deposits (Indus- trial Undertakings) Act 1912-1930 (N.S.W.) (No. 22 of 1912-No. 40 of 1930), sec. 3*-The Constitution (63 &64 Vict. C. 12), sec. 75 (IV.)-Judiciary Act 1903-1933 (No. 6 of 1903-No. 65 of 1933), secs. 64-66.*

The Tourist Bureau of New South Wales is a department of the Public Service of that State under the control of the Chief Secretary, who is the responsible Minister. It is an industrial undertaking within the meaning of the Special * The Special Deposits (Industrial

a party, the rights of parties shall as Undertakings) Act 1912-1930 (N.S.W.)

nearly as possible be the same, and Aug. 10, provides :- sec. 2: "The Colonial

judgment may be given and costs Nov. 30, 1934. Treasurer shall cause special deposit

awarded on either side, as in a suit accounts to be opened in the Treasury

between subject and subject." By to which shall be paid all moneys re-

sec. 65 No execution or attachment, ceived from all sources in the course of

or process in the nature thereof, shall be the management of

issued against the property or revenues industrial undertaking that the

a State in any such suit; Governor may specify by notification

but when any judgment is given against in the Gazette." By sec. 3 (1): 'There

a State, the Registrar shall shall be paid out of any such account

give to the party in whose favour the any expenditure of or in relation to the

judgment is given a certificate in the industrial undertaking to which it

form of the Schedule to this Act, or relates, including charges for manage-

to a like effect." By sec. 66 On ment, maintenance, working expenses,

receipt of the certificate of a judgment and interest on capital at the current rate for loan money payable by the Government." The Judiciary Act

satisfy the judgment out of moneys 1903-1933 provides sec. 64 In

legally available." any suit to which a State is

52 CLR 456

Deposits (Industrial Undertakings) Act 1912-1930. An incident of its work is continual advertising. It is the duty of an officer of the Premier's department to arrange for advertisements relating to the various Government departments. On the authority of the Premier "as a matter of Government policy," this officer entered into a contract with the plaintiff, a resident of South Australia, for the weekly insertion in a newspaper owned by the latter, of advertisements relating to the Tourist Bureau. The contract, which was for a period which affected more than one financial year, was not expressly authorized by the Legislature, nor was it sanctioned or approved by any Order in Council or Executive minute In the Supply Acts and Appropriation Acts for the financial years affected provision was made under the heading "Government adver- tising" for the expenditure of sums much larger in amount than the amount involved in the contract. Shortly after the making of the contract a change of Government took place and the new Administration refused to use OF pay for any further advertising space in the newspaper. Notwithstanding this the plaintiff continued to insert the advertisements, and, at the end of the period named in the contract, brought an action in the High Court under sec, 58 of the Judiciary Act 1903-1933 against the State of New South Wales for the recovery of the total unpaid amount of the agreed advertising rates. Evatt J. held (a) that the contract was validly entered into by responsible Ministers of the Crown and was not inchoate or suspended pending the time when moneys had been made available by Parliament to carry out the contract, (b) that it was enforceable against the State of New South Wales subject to the Parlia- ment's making moneys available to the Executive to discharge liabilities under the contract, and (c) that, upon an examination of the statutes passed by Parliament, it appeared that Parliament had already made available sufficient moneys to discharge all liabilities under the contract either (i) by virtue of the Audit Act (N.S.W.), various Supply Acts and an Appropriation Act or (ii) under sec. 3 of the Special Deposits (Industrial Undertakings) Act.

Held, on appeal to the Full Court, that the contract was a contract of the Crown and, subject to the provision by Parliament of sufficient moneys for its performance, was binding on the Crown: Although the contract must be regarded as containing an implied condition that payments under it by the Crown should be made only out of moneys lawfully available for the purpose under parliamentary appropriation, that condition did not go to the validity of the contract, and under the Judiciary Act the contract might be sued on whether or not sufficient moneys had been SO appropriated.

Per Evatt J. :-(1) The provision in sec. 45 of the Constitution Act (N.S.W.) making the Consolidated Revenue Fund subject to be appropriated "to such specific purposes as may be prescribed by any Act in that behalf" is a flexible part of the Constitution and subsequent Supply and Appropriation Acts must be given effect to according to their tenor despite their generality in appro- priating portions of the Consolidated Revenue Fund. McCawley v. The King,

52 CLR 457

52 C.L.R.]

OF AUSTRALIA. (1920) A.C. 691; 28 C.L.R. 106, considered. (2) In order to satisfy the rule that liabilities under a Crown contract may be discharged by the Executive only out of moneys granted by Parliament for the purpose, it is not necessary that a detailed or specific reference to the particular contract should be dis- coverable in the Act of Parliament, or that Parliament's attention should have been directed to the particular payment to the particular contractor. And it is not necessary that there should be an Appropriation Act specifying the supplies granted by Parliament. The dissolution or prorogation of Parlia- ment without an Appropriation Act does not of itself nullify any prior grants of money by Parliament to the Crown in the form of Supply Acts which, in their modern form, are also " "Appropriation" " Acts so far as they operate and extend. (3) It is a sufficient compliance with the constitutional rule in Church- ward v. The Queen, (1865) L.R. 1 Q.B. 173, if the payments necessary to dis- charge the Crown's liability may be referred to a parliamentary grant covering the class of service to which the contract relates and there is a fund established from which payments may lawfully be made to the contractor by the Executive. (4) The absence of a sufficient parliamentary grant to make payments under the contract does not invalidate a contract made by the Crown in the State of New South Wales. In that State the executive authority of the King is not limited by reference to subject matter and the Crown has a general authority and capacity to enter into contracts. (5) Sec. 3 of the Special Deposits (Indus- trial Undertakings) Act operates as a continuing and permanent appropriation of the receipts of an undertaking to the purposes of meeting its working expenses, including any necessary advertising expenses.

Churchward v. The Queen, (1865) L.R. 1 Q.B. 173, R. v. Fisher, (1903) A.C. 158; (1901) 26 V.L.R. 781, Commercial Cable Co. v. Government of New Found- land, (1916) 2 A.C. 610, Auckland Harbour Board v. The King, (1924) A.C. 318, and The Commonwealth v. Colonial Ammunition Co., (1924) 34 C.L.R. 198,

APPEAL from Evatt J.

An action was brought in the High Court by Kenneth Edward Bardolph, a resident of Adelaide, South Australia, against the State of New South Wales in which he claimed the sum of £1,114 10s. as money due to him by the defendant under a contract, and an extension thereof, entered into between them in respect to the insertion each week from 27th May 1932 to 31st March 1933 of certain advertisements in the Labor Weekly, a newspaper owned by the plaintiff and circulating in New South Wales. The advertise- ments related to the Government Tourist Bureau. The defendant pleaded (a) that the contract and the agreement for the extension thereof had not been authorized or ratified by the Parliament of

52 CLR 458

the State of New South Wales and were made without any authority in law, and consequently they were not binding on the defendant (b) that, alternatively, by reason of the facts shown in (a) and also by reason of the fact that the contract and the agreement for the extension thereof purported to impose an obligation to pay moneys out of the revenue of the defendant State, the defendant was not liable to make any payment in respect thereto; (c) that if the agreement which purported to extend the contract was a valid agreement it was validly cancelled by the defendant on 17th May 1932, and the defendant had not utilized the advertising space as alleged in accordance with the terms of any agreement binding on the defendant. The action came on for hearing before Evatt J.

Further material facts appear in the judgments hereunder. Watt K.C. (with him Evatt and Thomas), for the plaintiff. Flannery K.C. and Jordan K.C. (with them Nicholas), for the defendant.

EVATT J. delivered the following written judgment :- In this action the plaintiff claims that there is owing to him from the State of New South Wales the sum of £1,114 10s. in respect of advertisements inserted by the plaintiff in a newspaper called the Labor Weekly. The newspaper circulated in New South Wales. Its owner, the plaintiff, was at all material times a resident of South Australia.

The case comes before this Court under sec. 75 (IV.) of the Constitution, which vests original jurisdiction in this Court in all "matters between States, or between residents of different States or between a State and a resident of another State." (See also Judiciary Act 1903-1933, secs. 58, 64.)

The actual decision of the Full Court of this Court in The Commonwealth v. New South Wales 1, is that sec. 75 (III.) of the

1(1923) 32 C.L.R. 200. 52 CLR 459

Constitution enables an action for tort to be brought by the Com- monwealth against a State without the consent of that State. But the reasoning of the Court extends equally to sec. 75 (IV.). Thus Knox C.J. said 1 :-

"This power is conferred by the Constitution itself on this Court to take cognizance of this matter. Any legislation by Parliament directed to conferring this power would, therefore, be as superfluous as legislation by Parliament to restrict the limits of the jurisdiction would be ineffective". And Isaacs, Rich and Starke JJ. said 2 :-

"The cause of action, as a tort in its inherent nature, would as between subject and subject be justiciable in a competent Court. It therefore falls within the meaning of the word 'matters' in sec. 75 of the Commonwealth And they added later 3 :-----

Obviously the matter was one to be dealt with by the Constitution, which created mutual rights and obligations between Commonwealth and States and foresaw the necessity of some tribunal, not the judicial organ of any one State exclusively, to determine or finally determine possible disputes between Commonwealth and States, and between different States, and between States and residents of other States. As to these the Constitution at once enacted sec. 75 as a self-executing provision in the terms mentioned. The words 'in all matters' are the widest that can be used to signify the subject matter of the Court's jurisdiction in the specified cases. 'Matters' read with the context and in relation to judicial power' are limited by the inherent sense of matters which a Court of law can properly determine, that is, by some legal standard." Isaacs, Rich and Starke JJ. also pointed out that the word, i.e.,

matters," must

"include all claims for infringements of legal rights of every kind-all claims referable to a legal standard of right. The word would, without question, include a claim for breach of contract" 4. The case therefore establishes that in the present action against the State of New South Wales by the plaintiff, a resident in another State, the question for the Court to determine is whether a breach of contract has been proved. (See Daly v. Victoria 5; Judiciary Act, secs. 58 and 64.)

At this stage two points should be mentioned. I assume in favour of the defendant State that it is not, by sec. 75 (IV.), or by secs. 58 and 64 of the Judiciary Act, placed in precisely the same

1(1923) 32 C.L.R., at pp. 206, 207. 2(1923) 32 C.L.R., at p. 207. 3(1923) 32 C.L.R., at pp. 211, 212. 4(1923) 32 C.L.R., at p. 213. 5(1920) 28 C.L.R. 395. 52 CLR 460

position as a subject who is sued for breach of contract, SO that it is entitled to invoke any constitutional immunity from liability other than the general liability for breach of contract implied by the Constitution or imposed by the Judiciary Act. This assumption may find support in sec. 106 of the Constitution and in the opinions expressed in the case of Australian Railways Union v. Victorian Railways Commissioners 1.

I also assume in favour of the defendant State that the governing law to be applied in ascertaining and measuring the obligation of the contract is that of the State of New South Wales. It may be

I express no opinion on the point-that the express stipulation in the first contract is sufficient to ensure such a reference to the law of South Australia as will exclude the application of that part of the constitutional law of New South Wales which is invoked by the defendant. On the other hand, much is to be said in favour of the view that the constitutional doctrine in question applies whether or not the governing law of the contract is that of South Australia. At any rate, I assume in favour of the defendant that the doctrine is applicable.

The first advertising agreement which the plaintiff made with the defendant is embodied in a document dated 1st April, 1931. It provided for 5,000 inches of advertising space to be inserted in his newspaper between 2nd April, 1931, and April, 1932. The total moneys payable thereunder were to amount to £1,000. But the full 5,000 inches was not used during such period of twelve months, only 3,900 inches of advertisement being inserted. Payments to the plaintiff for the space used were made regularly by the govern- ment officers, including those whose duty it was to see that the payments were authorized by Parliament. When the first contract period was about to end the plaintiff interviewed Mr. Harpur, who was Superintendent of Advertising and had the management of all the Crown's advertising. The plaintiff pointed out that 1,100 inches had not been inserted during the year. He suggested an arrangement under which (a) 3,900 inches would be inserted over the next ensuing twelve months, and (b) the 1,100 inches available

1(1930) 44 C.L.R. 319. 52 CLR 461

under the previous contract would be used at the rate of 45 inches per weekly insertion over a period commencing at once and ending about the end of October, 1932.

The plaintiff's proposal was accepted and the arrangement as to the 3,900 inches was embodied in a written document signed by Mr. Harpur as Editor of Publications and Superintendent of Adver- tising. It requested the Labor Weekly to have advertisements "re Government Tourist Bureau or other matter" inserted in its columns between 1st April, 1932, and 11th April, 1933, the minimum space per week to be 75 inches and the rate being 5s. 6d.

The full arrangement of April, 1932, was put into effect; adver- tisements were inserted and payment made regularly until 17th May, 1932, when the Under Secretary of the Premier's Department informed the plaintiff that he was directed by the Premier to inform him "that it is not intended to utilize any further space in your paper for Government advertising." Upon inquiry at the Premier's office the plaintiff was informed that this unilateral termination of the running agreements was taken upon the direct responsibility of the new Ministers of the Crown, who replaced the previous adminis- tration which had held office under Mr. Lang as Premier. The plaintiff refused to accept the breach. It may here be noted that the bona fides of the agreement with the plaintiff has not been impugned in any way in these proceedings.

Refusing to accept the breach, the plaintiff treated the agreements as still on foot and duly inserted advertisements throughout the agreed period in accordance with the standing copy which had been supplied to him by the Government Tourist Bureau through Mr. Harpur, the instruction having been that the last copy was to stand until the Government desired fresh copy to be inserted. To the manner or form of the advertisements no objection was raised by the Government either whilst they were being inserted or during the present hearing, where the State took its stand upon legal con- siderations of a technical character. That the Government was quite aware of the form of the advertisements inserted by the plaintiff appears from a letter dated 1st November, 1932, from the Under Secretary of the Premier's Department to a body called the Sane

52 CLR 462

A. Democracy League, which seems to have complained that Govern-

ment advertisements were being inserted in a Labour newspaper. The same knowledge on the part of the Government is shown by the letter dated 1st June, 1932.

The first question which arises is whether the plaintiff has shown that the agreement entered into in April, 1932, was authorized by the then Ministers of the Crown, that is, whether Mr. Harpur had sufficient authority on behalf of the Crown to enter into the transac- tion in question. In my opinion, this question admits of only one answer. The insertion of advertisements for Government trading concerns such as the Tourist Bureau, and also for ordinary adminis- tration purposes, was essential to the proper functioning of the Executive Government of the State of New South Wales. This is shown by the long-continued practice of Parliament's voting moneys for advertising services and by the setting up of an officer like Mr. Harpur to act as a permanent official for dealing exclusively with all Government advertising. Not only was the insertion of Tourist Bureau advertisements within the ordinary scope of administration; in the present case it is abundantly clear that the responsible Ministers required that the transactions should be entered into and did SO " as a matter of Government policy." The actual directions to Mr. Harpur proceeded from the secretary of the Premier, Mr. Lang, one of whose Cabinet colleagues was Mr. Gosling, the Chief Secretary, to whose responsibility in the first instance the industrial under- taking known as the Tourist Bureau was committed. No objection was raised to the admissibility in evidence of conversations between the permanent Under Secretary, Mr. Hay, and the Premier, the Premier's private secretary and Mr. Harpur and these conversa- tions prove a direct chain of authority from the first Minister of the Crown as representing the Cabinet to Mr. Harpur, who made the final and formal arrangements with the plaintiff. There was no statutory or other authority which required such transactions to be documented or evidenced by Order in Council or in any other special manner.

The suggested defence that the contract was not authorized by the Government completely fails. It is only right to add that,

52 CLR 463

although raised in the pleadings, this defence was not seriously pressed at the hearing.

The main, indeed the only real defence relied upon by the State of New South Wales, was that Parliament did not make public moneys available for the express purpose of paying the plaintiff for his advertising services. The defence is, of course, quite unmeritorious, and its success might tend to establish a dangerous precedent in the future. But it raises an interesting question of law, the examination of which shows that the repudiation of subsisting agreements by a new administration can seldom be ventured upon with success.

The facts in relation to the relevant grants of public money by Parliament are somewhat complicated. The two financial years to be considered are 1931-1932 and 1932-1933 for, as I have already explained, the agreements sued on by the plaintiff, although made in April, 1932, stipulated for the performance of advertising services not only during the then current financial year, but the succeeding financial year also. I now deal with the financial year 1931-1932. The Supply Act (No. 5) (No. 46 of 1931) was assented to on 6th October, 1931. It recited a resolution of the Assembly to grant to the Crown a sum mentioned in the statute and then proceeded, in the ordinary form, to make good the grant by authorizing the issue and application out of the Consolidated Revenue Fund of the specified sum ' to be expended at the rates which are shown on the estimates for the financial year ending thirtieth day of June, One thousand nine hundred and thirty-two, as laid upon the table of the House, to defray the expenses of the various departments and services of the State during the months of October and November or following month of the financial year ending thirtieth day of June, One thousand nine hundred and thirty-two, subject to the rate of any reduction that may hereafter be made in the expenditure of the year 1931-1932."

It will be observed that this temporary Supply Act referred to the estimates as laid upon the table of the House. Those estimates are in evidence. At page 35, one of the enumerated functions of the Department" of the Premier is No. 7, "Government Advertising and issue of Government Publications," and No. 8, "Publicity for

52 CLR 464

all Departments." At page 41 the annual estimate for "Govern- mental Advertising" is £6,600.

The next Supply Act was Act No. 58 of 1931. In form it followed the Supply Act already mentioned. It authorized expenditure for December, January and February at the rate shown on the estimates referred to above. This Supply Act was followed by one passed on 7th March, 1932 (Act No. 1 of 1932). By this Act authority was given to issue moneys from the Consolidated Revenue Fund to make good supplies voted for the months of March and April, 1932. Act No. 8 of 1932 followed the same form as the three previous temporary Supply Acts, and authorized expenditure in respect of the month of May, 1932. These four Acts were based upon the current estimates for 1931-1932.

Finally, Act No. 11 of 1932 authorized the application of certain sums out of the Consolidated Revenue Fund to make good grants in respect of the month of June, 1932. In this case, however, the money was authorized to be expended at the rates shown in the estimates for the previous financial year, that is, 1930-1931, which had been embodied in the usual Appropriation Act. The appro- priation for the year 1930-1931 for the Government Advertising (Premier's Department service) was £9,900.

The ordinary Appropriation Act was not passed in respect of the year 1931-1932. I do not suggest that either administration was at fault in the matter, but, in any event, responsibility must be borne both by the Lang and Stevens administrations, the former holding office for about ten months of the financial year, and the latter for about two months.

It will be observed that the five Supply Acts for 1931-1932 granted supplies for the Government services for only nine months of the financial year. In respect of the first three months, sec. 33 of the Audit Act provides that if, before the close of any financial year, no Act is passed granting and appropriating moneys out of the Consolidated Revenue Fund to meet the requirements for the next succeeding financial year, the Treasurer may pay moneys in order to meet current and accruing requirements, subject to certain conditions. Under these conditions the authority of the Treasurer

52 CLR 465

ceases upon the passing of the Appropriation Act for the next succeed- ing financial year, and does not, in any event, extend beyond the first three months of that year. Further, when the Appropriation Act is passed, all payments are to be treated as made out of the supply granted by the Appropriation Act under the respective divisions and heads of services. Further, the authorized rates of payment are to be based upon the Appropriation Act of the immediately preceding financial year " in respect of all salaries

contracts, supplies, services

and other recurrent charges.'

Sec. 33 (1) (d) also provides that, when the estimates of expen- diture for the year are presented to Parliament and the rate of expenditure in such estimates is in any case lower for any service than that authorized by the previous Appropriation Act, the payments under the authority of sec. 33 shall not exceed the lower

It appears that the estimates for the year 1931-1932 were laid before the Assembly on 27th August 1931. The event mentioned in sec. 33 (1) (d) having happened, the result in respect of Govern- ment advertising was to limit the authority to make advertising payments to the rate of £6,600 per year, instead of £9,900 per year, which was the appropriation in respect of 1930-1931. It would appear doubtful whether sec. 33 (1) (d) operates in respect of that portion of the months of July, August and September which have elapsed before the estimates are presented to Parliament. I shall assume that there is a retroactive operation SO that, in respect of the Government advertising service for the whole financial year 1931-1932, eleven months out of the twelve should be treated upon the basis of an annual vote of £6,600 per annum, in accordance with the current estimates, only the last month, June, 1932, being treated upon the basis of an annual vote of £9,900. The net result is that the total supply which Parliament made available during the year for Government advertising can be reckoned as amounting to eleven-twelfths of £6,600, plus one-twelfth of £9,900, that is, £6,875 in all.

It appears from the statement prepared by Mr. Kelly, Chief Accountant at the Treasury, that if payment had been made to the

52 CLR 466

plaintiff in respect of the advertisements inserted before the end of the financial year, 30th June, 1932, but not paid for, the total expenditure for the service would only have amounted to £4,595 18s., a figure considerably lower than the assumed minimum supply voted by Parliament, that is, £6,875. At the same time it may be noted that upon the hypothesis mentioned, the statement erroneously treats the total supply available in respect of 1931-1932 as £7,700, for such figure does not apply the condition mentioned in sec. 33 1 (d) of the Audit Act and discussed above.

Before referring to what took place in the financial year 1932- 1933, it is convenient to consider the legal position as it existed on and in respect of 30th June, 1932. It was argued for the State that it was a condition of the contracts with the plaintiff that all payments of money thereunder should be authorized by Act of Parliament, and it was said that no person can successfully sue the State of New South Wales in the absence of a precise or specific Parliamentary allocation of public moneys for the purpose of making payments under the contracts. It was further contended that, even in an Appropriation Act, the constitutional condition of such contracts is not fulfilled unless it can be shown that Parliament's intention was directed to the particular payment to the particular

Certainly, the New South Wales Constitution Act does contemplate that subject to the payments to be made in pursuance of the Constitution Act itself, the Consolidated Revenue Fund should be subject to be appropriated to such "specific purposes " as may be prescribed by any Act in that behalf (sec. 45). But this section is necessarily subject to the terms of any subsequent Act passed by Parliament, this part of the Constitution of New South Wales being of a flexible character. For the principle of McCawley v. The King

1is that, in dealing with public moneys or indeed any other subject not governed by a special method of law-making, Parliament is not bound to adhere to the letter or spirit of sec. 45, but is, on the contrary, empowered to make any provision it thinks fit, whether consistent or not with sec. 45. 52 CLR 467

Whilst the validity of the various Supply Acts for 1931-1932 have not, and cannot, be impugned, the question still remains whether their terms are sufficient to enable the plaintiff to satisfy the constitutional doctrine invoked by the defendant to defeat his present claim.

In the well-known case of Churchward v. The Queen 1, Shee J., in a passage often cited, adopted the principle that, in the case of a contract by a subject with the Crown, there should be implied a condition that the providing of funds by Parliament is a condition precedent to the Crown's liability to pay moneys which would otherwise be payable under the contract. In that case the actual promise was to pay a sum out of the moneys to be provided by Parliament' (see Churchward v. The Queen 2 ); SO that the judgment of Shee J. went beyond the actual point necessary to determine the case. Churchward's Case 3 was decided upon demurrer, the third plea alleging that " no moneys were ever provided by Parliament for the payment to the suppliant for, or out of which the suppliant could be paid for the performance of the said contract, for any part of the said period subsequent to the 20th June, 1863, or for the payment to the suppliant for, and in respect of, or out of which the suppliant could be paid or compensated for, in respect of any damages sustained by the suppliant by reason of any of the breaches of the said contract committed subsequent to the said 20th of June, 1863 " 4. (I italicize certain words.)

Further, the Appropriation Acts referred to in that case expressly provided that Churchward's claim was to be excluded from the large sum of money (£950,000) thereby voted for the general purposes of providing and maintaining the Post Office Packet Service.

The judgment of Shee J. has always been accepted as determining the general constitutional principle. But it should be added that Cockburn C.J. said 5:

"I agree that, if there had been no question as to the fund being supplied by Parliament, if the condition to pay had been absolute, or if there had been a fund applicable to the purpose, and this difficulty did not stand in the peti- tioner's way, and he had been throughout ready and willing to perform this

1(1865) L.R. 1 Q.B. 173, at pp. 2(1865) L.R. 1 Q.B., at p. 174. 3(1865) L.R. 1 Q.B. 173 ; 122 E.R. 209, 210; 122 E.R. 1391. 4(1865) L.R. 1 Q.B. at p. 183. 5(1865) L.R. 1 Q.B., at p. 201. 52 CLR 468

contract, and had been prevented and hindered from rendering these services by the default of the Lords of the Admiralty, then he would have been in a position to enforce his right to remuneration." It appears clear that the first part of this passage has not been acted upon by the Courts in the cases subsequently determined, and that, even where the contract to pay is in terms "absolute" and the contract fails to state that the fund has to be supplied by Parliament," the Crown is still entitled to rely upon the implied condition mentioned by Shee J.

The second part of Cockburn's C.J. statement, that, if there is a fund "applicable to the purpose " of meeting claims under the contract, the contractor may enforce his right to remuneration, has never, SO far as I know, been questioned. Moreover, its correct- ness was assumed by the terms of the Crown's third plea in Church- ward's Case 1 which denies that moneys were ever provided by Parliament "out of which the suppliant could be paid for the performance of the said contract."

Mr. Flannery, for the Crown, relied upon Commonwealth v. Colonial Ammunition Co. 2. In that case 3 Isaacs and Rich JJ. discussed the general object of parliamentary supply and appropriation under the system of responsible government. But it is clear that the discussion was entered upon in order to show that the mere inclusion in an Appropriation Act of a general reference to some Government service cannot be relied upon in order to work a legalization or validation of every contract which related to such service, but which has been rendered invalid by the non-observance of the conditions of a prior statute. In the Colonial Ammunition Case (2) the contract should, in accordance with sec. 63 of the Defence Act, have been authorized either mediately or immediately by Order in Council 4. There being no Order in Council, reliance was placed upon certain Appropriation Acts. But Isaacs and Rich JJ. rejected the argument, stating (3) :-

"The object of Parliament in such a case is financial, not regulative. In doing that, it is not concerned with general legislation, and is acting wholly alio intuitu (see May's Parliamentary Practice, 10th ed., p. 562). It thereby neither betters nor worsens transactions in which the Executive engages within

1(1865) L.R. Q.B. 173 ; 122 E.R. 1391. 2(1924) 34 C.L.R. 198. 3(1924) 34 C.L.R., at pp. 222, 225. 4(1924) 34 C.L.R., at p. 220. 52 CLR 469

its constitutional domain, except SO far as the declared willingness of Parlia- ment that public moneys should be applied and that specified funds should be appropriated for such a purpose is a necessary legal condition of the transac- tion. It does not annihilate all other legal conditions." From this it appears that the learned Judges considered that the somewhat general appropriation there relied upon was sufficient to satisfy one "necessary legal condition of the transaction," though not all other legal conditions. The condition which was satisfied is, of course, the condition referred to by Shee J. in Churchward's Case 1, and here invoked by the defendant.

That this is a correct view of the Colonial Ammunition Case 2 is shown by the judgment of Isaacs J. in The Commonwealth V. Colonial Combing, Spinning and Weaving Co. (Wooltops Case) 3, where it is stated that Parliament may sanction the expenditure of public money payable under contracts with the Crown " either by direct legislation or by appropriation of funds."

I quite agree that neither the reference in the Colonial Ammunition Case (2) nor the passage mentioned in the Wooltops Case (3) is directed to determining the question, what degree of authorization or reference in an Act is to be deemed sufficient to comply with the constitutional condition mentioned by Shee J. in Churchward's Case

1. But at the very least the cases do not qualify in any way the observation of Cockburn C.J. 4, to which I have referred. In Commercial Cable Co. v. Government of Newfoundland 5 Viscount Haldane said " For all grants of public money, either direct or by way of prospective remission of duties imposed by statute, must be in the discretion of the Legis- lature, and where the system is that of responsible government, there is no contract unless that discretion can be taken to have been exercised in some sufficient fashion." This general principle adopts the main principle of Churchward V. The Queen 1, though expressing it somewhat differently. However, the statement affords no guidance as to what will, under any particular circumstances, constitute a "sufficient" expression of the exercise of the Legislature's discretion to grant or withhold public moneys. 4(1865) L.R. 1 Q.B., at p. 201. 5(1916) 2 A.C. 610, at p. 617. 1(1865) L.R. 1 Q.B. 173 122 E.R. 2(1924) 34 C.L.R. 198. 3(1922) 31 C.L.R. 421, at p. 451. 52 CLR 470

In Auckland Harbour Board v. The King 1 the facts were somewhat analogous to those in the Colonial Ammunition Case 2.

A New Zealand statute had provided that the sum in respect of which the Auckland Harbour Board petitioned against the Govern- ment of New Zealand was payable to the Board by the Government, but only subject to a condition described in the statute. This condition was not, in fact, satisfied, and the Board then sought to rely upon a subsequent Appropriation Act, in which Parliament granted public moneys in general terms for railway purposes. This was said to be capable of dispensing with the non-fulfilment of the condition of liability expressly laid down in the prior statute. But it was held by the Privy Council that it had no such operation. Chapman J. said 3, when the case was before the New Zealand Supreme Court

" ' As to the effect of the parliamentary appropriation--a question on which we have not had the advantage of hearing argument-I cannot conceive that this covers or was intended by Parliament to cover the mistake that has been made. There is a general vote for opened lines in the North Island, but that refers to lawful expenditure. A specific mention of this sum would, of course, have ended all controversy, but here there is nothing to show that Parliament expressed its will with reference to what was otherwise an unauthorized pay. Hosking J. said 4: 'It appears to me to be clear that, although moneys are appropriated by Parliament in anticipation for particular purposes, no part of them can be disbursed by the officers of the Crown until that part has become payable according to the law governing its payment."

These opinions of Chapman and Hosking JJ. seem to have met with the approval of the Privy Council 5.

The opinion expressed by Chapman J. was that a specific mention of the sum in dispute "would, of course, have ended all controversy," but, as the grant was general, it could not be regarded as an authoriza- tion of expenditure otherwise unlawful because it did not sufficiently appear that the condition of the earlier statute had been waived by Parliament.

1(1924) A.C. 318. 2(1924) 34 C.L.R. 198. 3(1919) N.Z.L.R. 419, at pp. 434, 435. 4(1919) N.Z.L.R., at p. 443. 5(1924) A.C., at p. 327. 52 CLR 471

It is abundantly clear, I think, that the Auckland Harbour Board Case 1 does not justify the theory that, where there is nothing unlawful in a contract entered into by the Crown, and that contract is authorized by responsible Ministers, and made by them in the ordinary course of administering the affairs of Government, a detailed reference to the particular contract must be found in the statutory grant in order to satisfy the constitutional condition laid down in Churchward's Case 2.

Incidentally it should be noted that the Auckland Harbour Board Case (1) shows that payments made from the Consolidated Revenue Fund in the absence of a "sufficient" parliamentary authority may be recovered back by the Government if they can be traced. In these circumstances, it would be an extraordinary if not disastrous doctrine if the law is, as the Crown contends, that not a single contract made by the Crown with a subject is enforceable against the Crown, and every payment made thereunder is recoverable back from the subject, unless a clear reference to payments under the particular contract is contained in an Act of Parliament. This doctrine would reduce almost to a nullity the responsibility of Ministers for the ordinary course of governmental administration, and would compel Parliament to devote all its time and attention to administrative, as distinct from legislative, duties. The position may be illustrated.

It has been the practice of the Government to enter into advertising contracts, the performance of which extends or may extend into more than one financial year, apart altogether from the innumerable contracts for single insertion advertisements in newspapers and periodicals. For instance, on 1st June, 1932, the Government entered into a contract with the proprietor of the Sydney Morning Herald, and accepted a heavy liability for advertisements covering the month of June in the financial year 1931-1932, and eleven months during the following financial year. Payments were made to the proprietor from time to time in accordance with the contract. But no reference whatever was made to this particular contract in any Act of Parliament. If the argument for the State is right, this money is recoverable back from the proprietor, although the

1(1924) A.C. 318. 2(1865) L.R. Q.B. 173. 52 CLR 472

contract has been fully performed on the part of the newspaper. Contracts of a like character were admitted in evidence in order to show the practice of the Government in relation to the Government advertising business of the State and in order to measure the precise surplus or deficiency in the Parliamentary grants for advertising. But the contracts also show that it has never been the practice for Parliament itself to consider with particularity that large number of contracts, payments under all of which are made in reliance upon the general Parliamentary grant for Government advertising.

Further illustrations suggest themselves. During the course of argument I mentioned the expenditure on books in the library attached to the Attorney-General's Department. This expenditure has been covered only by a general vote for the library. It would be preposterous if Parliament should have to address its attention to each contract for the purchase of books for this library and determine, with fitting solemnity, what firm or company should supply each book or each parcel of books.

Again, as was stated in evidence, the Crown enters into many transactions under which it becomes lessee of premises. Rent thus becomes payable by the Crown weekly, monthly or yearly. But it has never been the practice that leases should be submitted to Parliament for approval, or that the individual lessors should be mentioned by name or other description in some portion of the Supply or Appropriation Act.

From convincing illustration, one may turn to the discussion of learned writers. Thus Durell in his work on Parliamentary Grants says :-

It is not its (i.e. Parliament's) duty to decide upon matters of administra- tion itself, but to take care that the persons who have to decide them are the proper persons, and are honestly and intelligently chosen. Deliberation, and not despatch, is the duty of the House of Commons.' Again, € when a popular body knows what it is fit for and what it is unfit for, it will more and more understand that it is not its business to administer, but that it is its business to see that the administration is done by proper persons, and to keep them to their duties.' The working of constitutional government necessitates the delegation of certain powers to every department. If such powers are exer- cised with the knowledge of Parliament and subject to its control, they can be more advantageously discharged by the responsible Minister or his department, which has the special or local knowledge, than by direct parliamentary action" (p. 20).

52 CLR 473

Durell adds, with reference to the "course of expenditure" The control of Parliament over the course of expenditure is limited to its control over the Executive; and SO long as the Govern- ment possesses the confidence of the House, no active exercise of control would take place except in case of suspected illegality " (p. 21).

Maitland, in his Constitutional History of England (1908), pp. 445, 446, says :-

But statute does not say to the queen, 'You shall spend so much on your embassies, so much on your navy.' Rather its language is: Here is money for this purpose and for that spend it if you please we trust the discretion of your advisers: the account of the expenditure will be presented to us and votes of censure may follow.' This, however, applies only to expenditure within the limits laid down by the Act; here are two and a quarter millions for war-like stores, £100,000 for the royal parks, one hundred guineas for expenses connected with the observation of the transit of Venus; if more is drawn out for any of these purposes, some one will have committed a crime, indeed in all probability several persons will have conspired to commit a crime." It may be added that one of the grants which Maitland (at p. 385) describes as appropriated with great minuteness" includes " £2,902,900 for the payment of seamen and marines, £964,400 for their victuals and clothing, £11,477 for the maintenance of the British Museum and the Natural History Museum, £2,100,000 for public education, £1,000 as a gratuity for the widow of a certain distinguished public servant."

Later (at p. 445), he describes an appropriation as pretty minute" which includes £1,639,300 for the expense of dockyards and naval yards at home and abroad," and £50,000 " for Her Majesty's foreign and other secret service."

Durell fully discusses the legal position, and concludes :-

'If, as is the case, Parliament grants to the Crown a certain sum for a certain service in a given year, without any more definite appropriation in the terms of the grant, it is legally competent to the Executive to expend that sum at discretion in the year upon that service. That is to say, since the parlia- mentary enactment deals with the vote only, the Government is not legally bound to adhere to the details submitted to Parliament, provided the expendi- ture is restricted to the four corners of the vote.' Morally, however, the Government must adhere to those details as far as is consistent with the interests of the public service, since its good faith is pledged by the details given to Parliament, and the Comptroller and Auditor-General would correctly bring divergencies to notice. This being so, it follows that if Parliament wishes to definitely prohibit the use of a vote for a service which would be covered by

52 CLR 474

the terms of the resolution granting the vote, even though no mention is made of it in the details of the estimates, the resolution must contain a special proviso to that effect. By this means only can Parliament ensure that a particular service is not carried out, for then there would be no funds which could legally be applied to it. In the absence of such a proviso there would be no technical incorrectness in charging the expenditure against the vote, even though the service were for a purpose for which Parliament had not wished to provide. This point is admitted by the Treasury, which points out that, even if the amount of a vote is reduced in supply, there is no guarantee that expenditure will not take place upon the object in respect of which such reduction is made (pp. 296, 297).

A case in which the views of Maitland and Durell, though not referred to, seem to be applied to their full extent, is the decision of the Full Court of New South Wales in Commonwealth of Australia v. Kidman 1. In that case it was held that a contract between the Commonwealth of Australia and the then respondent had been recognized as valid by certain Appropriation Acts of the Commonwealth Parliament. These Acts authorized the payment of moneys in respect to "Commonwealth Shipbuilding " and the "construction of ships." The Court held that as payments under the contract were made, or could be presumed to have been made, under the Appropriation Acts in question, it was impossible for the Court to treat the contract as being invalid.

Without necessarily following Durell to the full extent of his argument, I am satisfied that, in the absence of some controlling statutory provision, contracts are enforceable against the Crown if (a) the contract is entered into in the ordinary or necessary course of Government administration, (b) it is authorized by the responsible Ministers of the Crown, and (c) the payments which the contractor is seeking to recover are covered by or referable to a parliamentary grant for the class of service to which the contract relates. In my opinion, moreover, the failure of the plaintiff to prove (c) does not affect the validity of the contract in the sense that the Crown is regarded as stripped of its authority or capacity to enter into the contract. Under a constitution like that of New South Wales where the legislative and executive authority is not limited by reference to subject matter, the general capacity of the Crown to enter into a contract should be regarded from the same point of

1(1923) 23 S.R. (N.S.W.) 590. 52 CLR 475

view as the capacity of the King would be by the Courts of common law. No doubt the King had special powers, privileges, immunities and prerogatives. But he never seems to have been regarded as being less powerful to enter into contracts than one of his subjects. The enforcement of such contracts is to be distinguished from their inherent validity.

It appears that no Appropriation Act eo nomine was enacted for the year 1931-1932. We have seen that the responsibility for this omission lies upon the two governments which held office during that financial year. It was suggested that the absence of an Appropriation Act is fatal to the plaintiff's claim.

In my opinion, the English practice of Parliament's covering expenditure early in the financial year by passing Consolidated Fund Acts and subsequently appropriating the same amounts retrospec- tively in the Appropriation Act, has caused some misconception as to the precise legal situation in New South Wales. As to the English practice, Durell says :-

All grants in supply are strictly appropriated to the service of the financial year in which provision is made, and no issues can be made from the consoli- dated fund on account of unspent grants in one year for use, even temporarily, in the following year. Unless, therefore, the services are to be brought to a standstill, it is absolutely essential that provision for carrying them on should be made before 1st April. The Treasury, moreover, has no power to authorize issues out of the consolidated fund except under statute. It is therefore necessary to pass before 1st April, a Consolidated Fund Bill which empowers the Treasury to issue out of the consolidated fund, for the service of the depart- ments for whose use the grants are voted, such sums as they require, in antici- pation of the statutory sanction to be conferred by the Appropriation Act. Similar Bills may also be required between 1st April and the date on which the Appropriation Act is passed, if the supply made available by the first one becomes exhausted" (pp. 29, 30). And he adds :-

'When all the estimates of the year have been voted, the Appropriation Bill is brought in. The passing of this gives final and full legal sanction to the votes on account which have previously been passed, by appropriating them to their respective services. The issues out of the consolidated fund are legalized by the passing of Consolidated Fund Bills, but these bills give no legal effect to the votes as such. If a prorogation or a dissolution takes place before the Appropriation Act is passed, all the grants made are nullified and would require to be re-voted in the next session before a legal appropriation could ensue. It is therefore necessary that before a dissolution takes place, all grants on account should be legalized by an Appropriation Act " (p. 35).

52 CLR 476

Why should a dissolution or a prorogation nullify a grant on account ? Hearn in The Government of England (1886), p. 370, points out that these grants on account are towards making good the services voted in the present session " And he adds

"the word 'vote' is a term of art and implies that the resolution thereby announced ends with the current session. Hence if, as has sometimes hap pened, the session terminates without an Appropriation Act, there remains nothing upon which the Ways and Means Act can operate. They are not repealed, and payments already made under them are valid, but as they are limited to 'services voted in that session, and as these votes no longer exist, the grants become inoperative, and must be re-voted when Parliament has again assembled " (p. 370). For this proposition of law, Hearn relies in the main upon the case of Alcock v. Fergie 1, where the Supreme Court of Victoria held that an Act of Parliament, No. 322, ceased to have any operation at the end of the session during which it was passed SO that a contract subsequently made by the Executive Government of Victoria could not be treated as referable to the moneys granted in the Act in question. It was said 2

" 'But to render any part of the consolidated revenue legally available for and applicable to the payment of the amount of this judgment, Parliament must have voted and actually appropriated the money for the purpose; and this must have been effected either by a general, or a special, Appropriation Act; or the moneys comprised in what is known as a Supply Bill must have been applied to the particular purpose during the operation of the measure. It is admitted that no general Appropriation Act has passed, and that the session terminated before the contract was made. The operation of the Supply Bill therefore lapsed." Turning to the form of the so-called Supply Bill, No. 322, it provided that " there shall and may be issued out of the consolidated revenue and applied from time to time to such services as shall then have been voted by the Legislative Assembly of Victoria in this present session of Parliament, any sums of money not exceeding £300,000" 3.

This was a very curious form of wording, and it was quite capable of being regarded as meaning that unless, at the time of payment out of the consolidated revenue, there was existing a resolution of the Assembly covering or referring to the services, no payment should

1(1867) 4 W.W. &a'B. (L.) 285. 2(1867) 4 W.W. &a'B. (L.), at p. 316. 3(1867) 4 W.W. &a'B. (L.), at pp. 306, 307. 52 CLR 477

be made. And, as Hearn points out or implies, a mere resolution of one House of Parliament ceases to have any living force or effect after a prorogation or dissolution. In striking contrast to the Victorian Act No. 322, which was dealt with in Alcock v. Fergie (4), is the Victorian Act No. 327, sec. 2 of that Act providing: "There shall and may be issued out of the consolidated revenue and applied for or towards making good the supply granted to Her Majesty for the service of the year one thousand eight hundred and sixty-eight the sum of one million pounds."

This latter provision is more in keeping with the form of the English Consolidated Fund Acts, for, although it makes a reference to the grant of supply to the Crown, it makes no reference, either expressly or impliedly, to the existence of Assembly resolutions at the time of payment out of revenue for the services of the Crown.

The English practice is referred to by Durell in the passage already cited. The form of the Consolidated Fund Acts is that the Treasurer may issue out of the consolidated fund and apply towards making good the supply granted to the Crown for the services of the year, a certain sum of money. Later when the Appropriation Act is passed (that is in England), it always contains a section appropriating, as from the date of their original passing, the sums granted in the Consolidated Fund Acts towards the services and purposes expressed for the first time in the Schedule to the Appropriation Act.

It is quite clear that Durell's reference at page 35, quoted above, that grants contained in the Consolidated Fund Acts are nullified upon prorogation or dissolution, whilst certainly emphasizing the usual constitutional practice, contains a legal opinion of very doubtful import. The authority quoted by Durell is May, who says (13th ed. (1924), p. 499) :-

The grants on account caused by a dissolution should be legalized by an Appropriation Act, passed before Parliament is dissolved, appropriating in detail all the supply voted in the expiring session in the manner used at the close of an ordinary session and the amount of supply left unvoted is dealt with by the succeeding Parliament. The prorogation or dissolution of Parlia- ment without an Appropriation Act is a constitutional irregularity, as thereby all the grants of the Commons are nullified, and the sums must be voted again in the next session, before a legal appropriation can be effected. This course

52 CLR 478

was followed on the two occasions when Parliament was dissolved, no Appro- priation Act having been passed. On the occasion of the dissolution of 1820, the Commons did not pass a Bill to effect the due appropriation of certain temporary supplies a course which drew from the Lords a remonstrance, which that House recorded on its journal." It is also true, as May noted, that the Commons in 1784 resolved that persons who acted on supply grants not covered by an Appro- priation Act would be guilty of a high crime and misdemeanour, but this resolution of the House of Commons was only intended, as most historians agree, to deter Pitt from securing from George III. a dissolution of Parliament. In spite of the threat, Pitt acted on supply grants, and Parliament was dissolved without an Appropria tion Act. The statement in Alcock v. Fergie 1 attributed to counsel, of whom Hearn himself was one, that Pitt, trusting to obtain a majority in the new House of Commons, looked to an indemnity from the future Parliament, and duly obtained it, is quite incorrect. The contrary is not only asserted, but commented upon by the standard authorities. For instance, Tomline says: "Nor was any Bill of indemnity passed, or even called for, by those who had in the old Parliament declared that it would be necessary in case of a dissolution" (Memoirs of the Life of the Rt. Hon. William Pitt (1822), vol. I., p. 507). And Stanhope emphasizes the same fact, and comments Thus worthless was the resolution which the late House of Commons had carried on this subject. So completely had all the threats antecedent to the dissolution fallen to the ground' (Life of the Rt. Hon. William Pitt (1861), vol. I., p. 224).

It may also be noted that the Acts under which Pitt acted were two, one granting to the Crown certain excise duties, and the other a land tax (24 Geo. III., sess. 1, cc. 1 and 4). These Acts bear little resemblance to the modern Consolidated Fund Acts, which are concerned not at all with authorizing the imposition of taxation, but only with the provision of a key to enable the Executive to unlock the Treasury SO as to meet the exigencies of the public service. It is, of course, true that by 24 Geo. III., sess. 2, c. 44, the moneys arising from the excise duties and land tax were duly appropriated But no inference can or should be drawn that any illegality would

1(1867) 4 W.W. &a'B. (L.), at p. 296. 52 CLR 479

have been committed merely by reason of the absence of an Appro- priation Act. May's note on the subject seems to have been affected, to some extent at least, by the original Whig tradition that the danger to be guarded against was actually misappropriation by the Crown of moneys intended to be allocated to a specific purpose.

In truth, the modern Supply Acts, such as those passed in New South Wales during the financial year 1931-1932, are not merely Supply Acts but also Appropriation Acts SO far as they operate and extend. The constitutional practice is that such Acts are subsequently embodied in one Appropriation Act which deals with the whole financial year. In this sense the Appropriation Act replaces them, and they cease to govern the situation. But it must be taken that the New South Wales Parliament deliberately chose to dispense with an Appropriation Act in respect of the year 1931- 1932, and to rest content with the Supply Acts which, with the Audit Act, covered the full twelve months' supply. The possibility of variation or replacement by an Appropriation Act never having eventuated, one is necessarily referred back to the Supply Acts and the Audit Act themselves. In such circumstances all that a Court of law can do is to attend to their terms and give them full force and effect. Doing this, the result is a distinct authorization to the Executive to pay moneys from the Consolidated Revenue Fund (the only fund now in question) upon the basis of the estimates referred to in the Acts, the fund being made available in order to defray the expenses of the Crown in the various departments and services during the months specified in the Acts. It is not possible to treat the Supply Act and the Audit Act as ceasing to operate because prorogation or dissolution took place in May, 1932, and no Appropriation Act in the usual form has ever been passed. Of course the authorization to pay extends only to the various months of the year 1931-1932, and ceased to have effect on 30th June, 1932. But this is also the case when the Appropriation Act is passed in the usual way.

The actual point of Alcock v. Fergie 1 concerned the effective recovering of moneys payable originally under a contract entered into after the session had closed, and said to be irrecoverable in any

1(1867) 4 W.W. &a'B. (L.) 285. 52 CLR 480

event because, at the time of suit, no moneys were legally available for the purpose of payment. An important part of the reasoning in Alcock v. Fergie 1 was subsequently rejected by Madden C.J., in his illuminating judgment in Fisher v. The Queen 2. Madden C.J. said, referring to the earlier judgment of Stawell C.J -

" But his Honor says that 'a specific appropriation must be of a specific sum for a specific definite object which Parliament can estimate, and in con sideration of which it is prepared to forego its privilege of an annual appropria- tion after full discussion.' But is this SO ? Parliament has equal authority to make special appropriations, which may be definite or indefinite in amount as it pleases. If it can arrive safely at a specific amount, and yet a special appropriation is desirable to protect the public interest by preventing delay in payments, and by making them certain, there is nothing ultra vires or even unwise in providing that when moneys of a definite kind, not at present ascer. tainable, can be and shall be ascertained later, the consolidated revenue shall be specially appropriated to meet them. Of course Parliament would not commit the ascertainment of such payments to any but highly responsible persons, whose judgment could be in any case final." The judgment of Madden C.J. on this point seems to bear the general approval of the Privy Council in R. v. Fisher 3 In my opinion, it is absolutely correct. Appropriation of public funds by Act of Parliament may take many and varied forms, SO long as no overriding constitutional provision exists to control the method of appropriation. Two illustrations may be given.

In the year 1878 the law officers of the Crown in England advised that the moneys necessary to defray the costs, charges and expenses incident to the collection, management and receipt of the public revenue of Victoria were already appropriated by sec. 45 of the Constitution Statute, 18 &19 Vict. C. 55, SO that there was no neces- sity for any further grant or appropriation of the moneys by the Parliament of Victoria (Todd, Parliamentary Government in the British Colonies (1894), pp. 219, 734).

A further illustration is given by Anson, who says

"In times of emergency, such as war actual or threatened, recourse may be had to a vote of credit. In such a case the Crown asks for a grant of money in general terms, it being impossible at the moment to furnish (as in an ordinary estimate) a detailed statement of the manner in which it will be spent: and Parliament, by acceding to the request, in effect places the money at the disposal of the Executive to be spent at the discretion of the latter on any object within the terms of the vote " (5th ed. (1922), vol. I., p. 289).

1(1867) 4 W.W. &a'B. (L.) 285. 2(1901) 26 V.L.R. 781, at p. 800. 3(1903) A.C. 158, at p. 167. 52 CLR 481

Hearn, who was closely associated with the Victorian Upper House, did not fail to suggest that a Legislative Council may have

legitimate grievance against the representative Assembly in cases where the ordinary constitutional practice of passing an Appropriation Act is departed from by the Crown's advisers and the Assembly to which they are responsible. But such irregularity cannot affect the strict legal position.

In the present case, the position as it existed on 30th June, 1932, was that (a) the Crown had made contracts with the plaintiff, and (b) moneys had been made legally available by the Supply Acts, including that of June, 1932. It is admitted that the advertising service vote, if otherwise sufficient to satisfy the rule in Churchward's Case 1, covered the service called for by the contracts with the plaintiff. On 30th June, therefore, there was (a) an existing contract, (b) a sufficient compliance with the rule in Churchward's Case (1), (c) a proved performance by the plaintiff of the contract on his part, (d) proved non-payment for this service for five weeks at £29 12s. 6d. per week, that is, £148 2s. 6d. in all.

It cannot be too strongly emphasized at all points of this case that the plaintiff's contracts were not with the Ministers individually or collectively, but with the Crown. As Viscount Cave said in Attorney-General v. Great Southern and Western Railway Co. of Ireland 2 :-

"My Lords, the liability to pay the costs of replacement undertaken by the agreements of March, 1917, and September, 1918, was of course a liability of the British Crown, which on maturity would fall to be discharged out of moneys to be provided for that purpose by the Parliament of the United Kingdom. The nature and incidence of a debt SO incurred has been authoritatively described in such cases as Churchward v. The Queen (1), and is not open question. This being so, the transfer by the Act of 1919 and the Order of 1920 of the powers and liabilities of the Board of Trade in relation to railways to the Minister of Transport is of little importance in this case. The contingent liability to pay for replacing the rails remained after that transfer a liability of the Crown, the only change being in the Minister entrusted with the duty of advising the Crown upon the matter." The Crown is represented in New South Wales by the Governor, who is always in office, and is the supreme head of the Executive Government. The honour of the Crown demands that, subject to

1(1865) L.R. 1 Q.B. 173. 2(1925) A.C. 754, at pp. 763, 764. 52 CLR 482

OF A. Parliament's having made one or more funds available, all contracts

for the Crown's departments and services should be honoured. The position on 30th June, 1932, having been examined, what was the position existing on 1st July, 1932, the first day of the financial year 1932-1933 ? In my opinion, it was plainly this, that the plaintiff's contract with the Crown was still on foot. The plaintiff did not accept the implied offer to rescind contained in the letter of cancellation or repudiation forwarded to him during the month of May. The condition that payments thereunder depended upon moneys being made legally available by Parliament still subsisted, but the contract was not inchoate or suspended but existing. (See the argument before the Privy Council in Kidman v. The Common- wealth 1.) (See also per Higgins J. in Kidman v. The Common- wealth 2.)

The only question, therefore, is whether in respect to the year 1932-1933 also the condition of Churchward's Case 3 was satisfied. Two points arise. The first is whether sufficient moneys had been made available for the provision of advertising services to enable the officers of the Crown to pay the plaintiff from that source. The second is whether the Court should draw the inference that, because a particular Ministry desired to avoid paying the plaintiff in respect of his services, the Court should infer that the moneys if legally "available " otherwise, were at least not "available" to pay him.

Dealing with the first question, Mr. Kelly prepared a statement which, in respect of the year 1932-1933, assumed that £94 18s. 8d. came to hand week by week for the Government's advertising services. Upon this basis the account runs into debit as early as 1st September, 1932. But there are two reasons why this statement cannot be acted upon for the purpose of the present case. For one thing, it includes in its expenditure moneys paid in relation to the Crown's trading concerns which were not treated as part of the advertising grant to the Department of the Premier. Payments to provide advertising for the purpose of such trading concerns were made by the Premier's Department in the first instance, though subsequent recoupment was obtained from the funds of the appro-

1(1926) A.L.R. 1, at p. 2. 2(1925) 37 C.L.R. 233, at p. 248. 3(1865) L.R. 1 Q.B. 173. 52 CLR 483

priate trading concern.

Therefore, although the statement shows the vote in debit on 1st September, 1932, this is a nominal debit, and a true debit would have been reached only about April of the year 1933.

Moreover, it is not accurate to assume a weekly incoming of a proportion of the yearly appropriation for advertising. It appears from the estimates for the financial year 1932-1933 that, for the service of advertising, the sum of £4,950 was voted by Parliament. This vote was included in a very much more general vote contained in the Appropriation Act. We find that, upon the passing of the Appropriation Act on 8th November, 1932, the sum of £4,950 was then made available by Parliament for the purposes of the service of advertising. Upon that date (8th November) the plaintiff had become entitled to be paid about £700 in all under his two contracts, having completed one contract on or about 28th October, 1932. The other contract was not completed until 31st March, 1933, when the total liability of the State to him in accordance with the contract amounted to £1,114 10s. So far as the financial year 1932-1933 was concerned, about £550 was the total liability incurred by the Crown to the plaintiff on 8th November, when the Appropriation Act became law. On 31st March, 1933, the total sum of £1,114 10s. now sued for, was owing to the plaintiff, but £148 2s. 6d. has to be deducted to obtain the sum referable to 1932-1933, the total sum covering, as we have seen, services rendered in the previous financial year.

In order to secure a judgment declaring the Crown's liability, a person who has a subsisting contract with the Crown satisfies the constitutional doctrine laid down in Churchward's Case 1 in respect of payments accruing during the financial year when he completes the performance of his contract if, at the time of such completion, there exists in respect of such financial year sufficient moneys in the vote for the relevant service to enable the payments in question to be lawfully made. I also think that the plaintiff is entitled to say that the constitutional doctrine was satisfied in respect of all payments falling due between 1st July, 1932, and the date of his completing his contract if, at the date of

1(1865) L.R. I Q.B. 173. 52 CLR 484

the passing of the Appropriation Act (8th November, 1932), enough moneys to pay him in full could have been lawfully paid or set aside to pay him from moneys then remaining from the parliamentary grant in respect of advertising. From a close consideration of the figures and evidence, I draw the inferences of fact that (a) on 8th November, 1932, sufficient moneys were available to pay him what was then owing to him in respect of services rendered in the year 1932-1933, and (b) sufficient moneys from the same grant were also available to pay him in full on 31st March, when he finally completed the performance of his contracts.

In such a case as this I do not think any question of 'priority " really arises. And I do not agree for a moment that the plaintiff should be deemed bound to wait for payment until the end of the financial year, until the Government completes payment under all advertising contracts whether or not such contracts were entered into after the time when the plaintiff made his contracts, or after the time when he performed all his services under the contracts, or after the passing of the Appropriation Act in November, 1932.

I am rather inclined to think that the proper date to which the plaintiff is entitled to be referred, is, not the actual time when the Appropriation Act was passed in November, 1932, but 1st July, 1932, the commencement of the financial year. If that be so, an immediate call upon the vote of £4,950 for 1933 could have been made in order to make payments to the plaintiff and those others (including the Sydney Morning Herald proprietor) who had contracts with the Crown extending from the previous financial year into the financial year beginning on 1st July, 1932. And the vote of £4,950, was, I also find, amply sufficient to make payments under all other contracts current on 1st July, 1932, as well as the plaintiff's

The second point made by Mr. Flannery remains to be considered. What inference is to be drawn from the fact that in 1932 the Crown's advisers stated their intention not to pay the plaintiff ? It should be inferred, SO it is said, that, in the sum of £4,950 which the Crown asked for and received, by way of grant from Parliament for adver- tising services, there could hardly have been included the very amounts which the Ministers intended to avoid paying to the plaintiff.

52 CLR 485

This argument might be very formidable if the matter rested upon mere inference, ignoring the separate and distinct position of the Crown and its Ministers for the time being. It seems to me that a Court of justice is not entitled to find from a mere expression of intention of the Ministers to repudiate a contract with a subject, that intention being expressed to the subject and not to Parliament, that the Crown may successfully argue as follows Our Ministers desired to repudiate. They said nothing to Parliament about the matter. But be pleased to infer 1 that Parliament supported our Ministers' desire to repudiate, and (2) that upon the statutory grant of money for advertising services a special exception should be engrafted excluding payments under the contract repudiated by Ministers."

The true test is, I think, whether the Ministers could have retraced their steps (say) in December, 1932, or March, 1933, and paid the plaintiff. In my opinion, they, or other Ministers, could lawfully have paid the plaintiff, assuming, as is conceded throughout, that there is nothing in the class of services contemplated by the Premier's Department advertising vote which would exclude the services called for by the contracts with the plaintiff.

The above reasoning shows that the plaintiff is entitled to succeed in the argument based on Churchward's Case (1). And the same conclusion may be reached in a much more direct method. By the Special Deposits (Industrial Undertakings) Act 1912, provision was made by the New South Wales Parliament for the constitution of special deposit accounts in the Treasury and for the receipt and pay- ment of moneys relating to certain industrial undertakings of the Government, such as the State Brick Works and Metal Quarries. The Act applied to any other industrial undertaking which the Governor specified by notification in the Gazette. In the case of the Tourist Bureau of New South Wales, which is an important trading concern, this power was exercised by the Governor, and it is admitted that its exercise was valid, SO that the Tourist Bureau is to be regarded as an industrial undertaking for the purpose of the statute in question.

1(1865) L.R. 1 Q.B. 173. 52 CLR 486

The scheme of 1912 was to enable the concerns in question to acquire such a degree of autonomy as would enable their business to be carried on to the best advantage and without the necessity of annual parliamentary appropriation or grant of moneys in order to defray the running expenses of the business. It was contemplated that the receipts of such undertaking from all sources would be paid into the special account at the Treasury. From this account, sec. 3 provides that "there shall be paid

any expenditure of or in relation to the industrial undertaking to which it relates, including charges for management, maintenance, working expenses and interest on capital." Subsequent amendments to the Act were all designed to the same end, power, for instance, being given in 1916 by Act No. 77 for the Minister to carry trading balances to reserve account.

It is clear from secs. 5, 6, and 7 of the Act of 1912 that the control and direction of the industrial undertaking was committed to the responsible Minister of the Crown. In relation to the Tourist Bureau, the responsible Minister was the Chief Secretary of New South Wales, which office was, in April, 1932, filled by Mr. Gosling of the Lang Ministry. I have already pointed out that it was from Mr. Lang himself that the authority proceeded to Mr. Harpur to enter into the contracts with the plaintiff. This was done, as Mr. Hay, the Under Secretary explained in evidence, as a matter of Government policy, and to this policy Mr. Gosling was as much a party, and accepted as much responsibility, as the Premier himself. Of course, as is well known, the Special Deposits (Industrial Under- takings) Act does not exclude the constitutional practice of collective Ministerial responsibility for the control of the undertakings. On the contrary, it requires it, and ensures it by making it perfectly clear that the responsibility for its control rests with the appropriate Minister of the Crown.

This position was quite well understood in New South Wales. For instance, the permanent officer who was managing the Tourist Bureau at the relevant dates, after stating that he furnished the copy for advertising in the plaintiff's newspaper, said :-

"Q. What is your procedure with regard to advertisements for your Bureau ? A. We ask the Superintendent of Advertising in the Premier's Department to arrange any contracts that we desire.

52 CLR 487

Q. What about payment ? A. The payment comes from the Tourist Bureau Working Account, Special Deposit Account.

Q. In the first instance ? A. No, we recoup the Premier's Department for original payments.

Q. Does it rest with the Premier's Department whether your advertisement will be published or not ? A. Yes. The Premier's Department could, by Ministerial direction, restrict me from advertising any further.

Q. That is what you take to be your position ? A. Yes. His Honor Q. The Tourist Bureau is not an independent body ? A. It is in a measure. It is a State industrial undertaking, but it is always subject to

Mr. Watt: Q. I think you work under the Chief Secretary's Department, but your advertising is done by the Premier's Department ? A. Yes, by Ministerial minute we submit our advertising requirements to the Premier's Department." From this it appears clearly that the responsibility of the Chief Secretary as the "responsible" Minister of the Crown was, in accordance with the doctrine of collective ministerial responsibility, shared with the Premier and the other members of the Cabinet.

No doubt, in respect of ordinary routine administration, directions would not be given by the Cabinet either to the permanent officer managing the industrial concern or to any other public servant such as Mr. Harpur, whose duty it became to assist the concern in certain parts of its administration. But, even then, ministerial and executive responsibility could never be surrendered by the Ministry, all the assets and receipts of the undertaking being assets and receipts of the Crown, all its liabilities and expenses being the liabilities and expenses of the Crown, and the executive Government being always responsible to Parliament for the whole course of administration of the undertaking.

In the case of the contracts with the plaintiff, however, for reasons with which we need not be concerned, the executive Government, including the Premier and Chief Secretary, authorized and required advertising contracts to be made with the plaintiff, it being intended both by the plaintiff and the Tourist Bureau that advertisements should appear in the newspaper throughout the agreed period.

This being so, the Ministry, including the Chief Secretary, duly authorized the expenditure of money " in relation to the industrial undertaking," and sec. 3 of the Act of 1912 commands that such

52 CLR 488

A. expenditure shall be paid out of the special account opened in the

Treasury, the account being kept SO that the receipts of the under- taking shall always be available as a separate fund for the purpose of meeting all expenditure by or in relation to the undertaking. The statute deliberately avoids the necessity either for the receipts being paid into the Consolidated Revenue Fund, or an annual grant of moneys by Parliament out of the Consolidated Revenue Fund to meet working expenses. Sec. 3 may be said to operate as a con- tinuing and permanent appropriation for the purposes therein specified.

1(1916) 2 A.C. 610, at p. 617. 2(1924) A.C. 318. 3(1924) A.C., at pp. 326, 327. 52 CLR 523

or other Act which altered these terms. If, as must therefore be taken to be the case, it remained operative, the authority given by Parliament is merely the conditional appropriation provided in sec. 7, for a condition which was not fulfilled. The payment was accord- ingly an illegal one, which no merely executive ratification, even with the concurrence of the Controller and Auditor-General, could divest of its illegal character" 1.

While these two judgments illustrate, as Viscount Haldane says, that principle of parliamentary control on the expenditure of public funds, the judgments do not assert, as I understand them, that the Crown or its constitutional agent, in exercising its lawful executive functions, is incapable of imposing on the Crown any obligation ex contractu to pay money unless Parliament has provided money specifically for the contract or approves of its terms; otherwise the judgments could not have become the basis of the observations in Attorney-General v. Great Southern and Western Railway Co. of Ireland 2, in which the learned Lord described the restricted nature of the liability imposed on the Crown by a contract involving pecuniary liabilities for which no parliamentary appropriation has been made. HisLordship's observations were as follows In the present case Parliament transferred the duty of producing the fund out of which the liability in question, when it accrued, should be met to the Irish Parliament. It thereby declared its intention not itself to provide the money required out of its own consolidated fund. It does not matter whether the liability was in terms transferred to the Irish Government. By its very character it would cease when it became operative to be a liability of the British Consolidated Fund and become one of the Irish Legislature Central Fund, if they chose to so provide. I think that this appeal ought, therefore, to succeed. It is important that we should lay down clearly the restricted nature of the liability in modern times of the Crown under its contracts. It seems to me that what I believe to be the true character of this liability makes beside the point the bulk of the reasoning in the judgments under appeal in this case. For the true view of any liability there was I take to be that it was a liability

1(1924) A.C., at p. 326. 2(1925) A.C., at pp. 773, 774. 52 CLR 524

in rem which ceased to be operative when the res was transferred ' 1. Indeed the assumption on which the judgment proceeds is

NEW SOUTH that there was a contractual bond between the Crown and the

respondent. The problem was to ascertain the nature of the liability arising under it. The assumption made was expressed thus: "My Lords, the case of the respondents is that the Board of Trade and the Ministry of Transport under authority from the Crown established a contract between the Crown itself and the respondents which still subsists, the creation of the Irish Government notwith- standing. I will assume for the purposes of my observations that this was SO. But what is the nature of the remedy on this footing made available against the Crown ? " 2.

There is no rule of the constitution of New South Wales similar to that which regulated the making of the contract in Commercial Cable Co. v. Government of Newfoundland 3, whereby the present contract is rendered devoid of any legal effect because its terms were not distinctly approved by Parliament; nor does it appear that the Parliament of New South Wales at any material time gave such a particular authority for the payment of public moneys for a specified consideration that it would, as in the case of Auckland Harbour Board v. The King 4, be inconsistent with such expression of the legislative will with respect to the disbursement of public moneys for the Government, to promise that public moneys would be paid to the respondent for the publica- tion of the advertisements stipulated in the contracts now in suit.

Churchward v. The Queen 5 is the last of the judgments referred to by Viscount Haldane as illustrating the principles which he proceeded to state in Attorney-General v. Great Southern and Western Railway Co. of Ireland 6. It may be observed that the same authority was also approved by the Judicial Committee in Mackay v. Attorney- General for British Columbia 7 in which the judgment was also delivered by Lord Haldane. It contains this statement The character of any constitution which follows, as that of British Columbia does, the type of responsible government in the British Empire, requires

1(1925) A.C., at pp. 733, 774. 2(1925) A.C., at p. 771. 3(1916) 2 A.C. 610. 4(1924) A.C. 318. 5(1865) L.R. I Q.B. 173. 6(1925) A.C., at p. 773. 7(1922) 1 A.C. 457. 52 CLR 525

that the Sovereign or his representative should act on the advice of Ministers responsible to the Parliament, that is to say, should not act individually, but constitutionally. A contract which involves the provision of funds by Parliament requires, if it is to possess legal validity, that Parliament should have authorized it, either directly, or under the provisions of a statute. It follows that in the present case, no such contract would have been made, unless sec. 3 authorized it. If authority be wanted for this proposition it will be found in Churchward v. The Queen 1, and in the decision of this Board in Commercial Cable Co. v. Government of Newfoundland 2. The vital preliminary question is, therefore, one of fact; was an order or resolution passed by the Lieutenant-Governor in Council authorizing the contract ? " 3. In that case no contractual obli- gation resulted from the acts of the Executive because of the statutory restrictions which fenced its power of contracting. The reference to Churchward v. The Queen (1) in this judgment must be taken to be to the pronouncement of Shee J., for Cockburn C.J. in giving judgment made statements of a different import. He said " I am very far, indeed, from saying, if by express terms, the Lords of the Admiralty had engaged, whether Parliament found the funds or not, to employ Mr. Churchward to perform all these services, that then, whatever might be the inconvenience that might arise, such a contract would not have been binding; and I am very far from saying that in such a case a petition of right would not lie, where a public officer or the head of a department makes such a contract on the part of the Crown, and then afterwards breaks it. We are not called upon to decide that in the present case, and I should be sorry to think that we should be driven to come to an opposite conclusion" 4. He also said :- I agree that, if there had been no question as to the fund being supplied by Parliament, if the condition to pay had been absolute, or if there had been a fund applicable to the purpose, and this difficulty did not stand in the petitioner's way, and he had been throughout ready and willing to perform this contract, and had been prevented and hindered from rendering these services by the default of the Lords of the Admiralty,

1(1865) L.R. 1 Q.B. 173. 2(1916) 2 A.C. 610. 3(1922) A.C. at p. 461. 4(1865) L.R. 1 Q.B., at pp. 200-201. 52 CLR 526

then he would have been in a position to enforce his right to

remuneration. But then his petition and his ground of complaint must have assumed a wholly different shape. He must then have alleged a performance, or a readiness to perform on his part, and a right to receive remuneration" 1. It will be seen that Cockburn C.J. was not troubled by the consideration to which he adverted, that Parliament may refuse to provide funds to enable the Govern- ment to pay, but Isaacs C.J., (then Isaacs J.) in his judgment in The Commonwealth v. Colonial Combing, Spinning and Weaving Co. 2 regarded that consideration of great importance. He said :- There emerges from this the general understanding that Parliament is not to be fettered in its discretion as to public expenditure by anything the Executive may do. Parlia- mentary discretion would be severely fettered if the Executive could make a compact binding the Crown in law to pay away portion of the public funds and leaving to Parliament the alternative of assenting to the payment or disavowing a public obligation. That would be seriously weakening the control by Parliament over the public Treasury." In that case, the question, now material to be men- tioned, reserved for the consideration of the Full Court, was as follows :----- Was it within the legal power of the Commonwealth Executive Government apart from any Act of the Parliament or regulation thereunder to make or ratify at the times the same were respectively made or ratified any and which of the following agree- ments" 3. The agreements were then mentioned. Knox C.J. and Gavan Duffy J., as he then was, said :-" In our opinion the answer to this question depends on the meaning of sec. 61 of the Constitution, which is as follows 61. The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Common- wealth 4. They reached the following conclusion It is clear that none of these agreements is made in maintenance of the Constitution, and in our opinion it is equally clear that none is made in execution of the Constitution, because none of them is prescribed

1(1865) L.R. 1 Q.B., at p. 201. 2(1922) 31 C.L.R. 421, at p. 450. 3(1922) 31 C.L.R., at p. 430. 4(1922) 31 C.L.R., at p. 431. 52 CLR 527

or even authorized by the Constitution itself, and execution of the Constitution means the doing of something immediately prescribed or authorized by the Constitution without the intervention of Federal legislation. It is true that sec. 64 of the Constitution directs that the sovereign through his Ministers shall administer such departments of State as the Governor-General in Council may establish, and they would probably be authorized to make such contracts on behalf of the Commonwealth as might from time to time be necessary in the course of such administration: but it is not pretended that the contract now in question comes within that category" 1. This statement condemns the agreements because it was beyond the powers of the Executive Government as defined by the express terms of the Constitution of the Commonwealth to enter into them. But Isaacs J. condemned the arguments also on the ground that the Executive Government exceeded the limitations imposed upon it by constitu- tional practice. He said :- " In other words, the constitutional practice that the Crown's discretion to make contracts involving the expenditure of public money would not be entrusted to Ministers unless Parliament had sanctioned it, either by direct legislation or by appropriation of funds, had, like many other general customs of the country, acquired such consistency and notoriety that, stating it in legal terms, everyone must be deemed to have notice of it, and consequently no Court can regard any contract as valid which violates that practice. It is that same rule of law which is restated in Mackay's Case 2 " 3.

The contract in the present case depends upon the authority of the Crown to do what is necessary for or incidental to the conduct and management of an undertaking which it lawfully carried on with the advice of its Ministers. The contract is not rendered wholly invalid because of the operation of any express parliamentary or legislative restriction on the authority of the Government to make it or to spend revenue on the objects specified by the contract. But, although there is no such restriction, the Crown is subject to a constitutional incapacity to resort to the revenue without legislative authority to discharge the liabilities which it assumed to incur.

1(1922) 31 C.L.R., at p. 432. 2(1922) 1 A.C. 457. 3(1922) 31 C.L.R., at p. 451. 52 CLR 528

The effect on the contract of that incapacity is stated by Shee J in Churchward v. The Queen 1, the third case referred to by Viscount Haldane as illustrating the constitutional principle which determines what conditions are to be implied in the obligation resulting from the Crown's 'ordinary contracts." The Lords Commissioners of the Admiralty, on behalf of the Crown, had engaged to pay the suppliant in that case, a subsidy of £18,000 per annum out of funds to be provided by Parliament for that purpose in consideration that he would provide and maintain certain services including steam vessels whereby the mail could be conveyed. The suppliant claimed redress for the breach of an implied covenant on the part of the Crown to employ him to carry the mails. The covenant which he sought to imply would not have had as one of its terms, that the liability was to be satisfied out of funds to be provided by Parliament. Indeed that was one of the reasons given for deciding that the covenant in the terms alleged by the suppliant should not be implied. The pronouncement of Shee J., which was approved by the Judicial Committee in Mackay v. Attorney-General for British Columbia 2, and by the House of Lords in Attorney-General v. Great Southern and Western Railway Co. of Ireland 3, is in these terms I should have thought that the condition which clogs this covenant, though not expressed, must, on account of the notorious inability of the Crown to contract unconditionally for such money payments in consideration of such services, have been implied in favour of the Crown

The condition of parliamentary provision is usually notified to Government contractors, for services of a continuing character, by covenants like the one before us. When not so notified, the occurrence of the alleged inconvenience--unch are known to be the justice and honour of Parliament-is too improbable to induce any of the Queen's subject to forego when the opportunity offers the advantages of a good Government contract. It was beyond the power of the commissioners, as the suppliant must have known, to contract on behalf of the Crown, on any terms but those by which the covenant is restricted and fenced. I am of opinion that the providing of funds by Parliament is a condition precedent

1(1865) L.R. Q.B. 173. 2(1922) 1 A.C. 457. 3(1925) A.C. 754. 52 CLR 529

52 C.L.R.]

OF AUSTRALIA. to it attaching. The most important department of the public service, however negligently or inefficiently conducted, would be above control of Parliament were it otherwise" (Churchward v. The Queen 1 ). Before making this pronouncement Shee J. stated the considerations which guided him in formulating this conception of the obligation arising from a contractual promise of the Crown, whether the promise is unconditional, or conditional upon Parliament providing the money out of which it may be discharged. He said

As a matter of ordinary law, between subject and subject, a covenant

SO guarded would be held to be binding on the covenantor only in the event of his being supplied with funds from the source which the con- tract had indicated. The cases cited by the Attorney-General, Gurney V. Rawlins 2, Dawson v. Wrench 3 and Hallett v. Dowdall 4, are on this point." This conception is clearly suggested by Baron Parke's observations in Gurney v. Rawlins 5, "The defendants undertake by an instrument under seal that this sum of money shall be paid, if the funds prove adequate; therefore it is equivalent to a covenant to pay if J.S. go to Rome." It appears therefore that the exigency of binding constitutional practice fashions the promise of the Crown into a promise to pay out of moneys lawfully available under parlia- mentary appropriation for the discharge of the promise. The contract under which the respondent claims to be paid is one of the

ordinary contracts " of the Crown-the conception introduced by Viscount Haldane in the passage which has been quoted in his judgment in Attorney-General v. Great Southern and Western Railway Co. of Ireland 6, and, as such, means that the Crown would pay out of funds " which Parliament may or may not provide." In Australian Railways Union v. Victorian Railways Commissioners 7 Isaacs C.J. said :-" It is true that every contract with any respon- sible Government of His Majesty, whether it be one of a mercantile character or one of service, is subject to the condition that before payment is made out of the Public Consolidated Fund Parliament must appropriate the necessary sum.

But subject to that condition,

1(1865) L.R. I Q.B., at pp. 209, 2(1836) 2 M. &W. 87 ; 150 E.R. 150 E.R., at p. 682. 3(1849) 3 Ex. 359 154 E.R. 883. 4(1852) 18 Q.B. 2 ; 118 E.R. 1. 5(1836) 2 M. &W., at p. 90 ; 6(1925) A.C. 754. 7(1930) 44 C.L.R. 319, at p. 353. 52 CLR 530

unless some competent statute properly construed makes the appro- priation a condition precedent, a contract by the Government otherwise within its authority is binding." Without appropriation, therefore, there may be a contract, but, unless there is an appropria- tion, the Crown's liability to pay does not attach. In New South Wales v. The Commonwealth 1, Rich and Dixon JJ. said "-" But under the Constitution of each of the States the pecuniary obligations of the States cannot be answered out of the consolidated revenue except under parliamentary appropriation. The general doctrine is that all obligations to pay money undertaken by the Crown are subject to the implied condition that the funds necessary to satisfy the obligation shall be appropriated by Parliament."

Evatt J. found that in the two relevant financial years funds were available under parliamentary appropriation out of which the Government was at liberty to pay the respondent for the publication of the advertisements at the stipulated rates. I agree with that finding. To prove the fulfilment of the condition precedent to the Crown's liability ex contractu to pay these moneys to the respondent, it is not necessary to show that the Appropriation Acts contain a specific provision of funds to meet this particular contract. The Appropriation Acts passed by Parliament placed money at the disposal of the Government for "Government Advertising." There was, as Evatt J. found, sufficient money available to the Government when the contract was entered into, to answer the pecuniary obliga- tions of the Crown under it for the remainder of that financial year, and the amount appropriated by Parliament for that service in the next financial year was sufficient to discharge all liabilities in respect of it for that year. There was no restriction against the application of such money to this contract. In The Common- wealth v. Colonial Ammunition Co. 2 Isaacs and Rich JJ. said: "The object of supply and appropriation is simply to furnish the Crown with authority and opportunity to obtain the money it desires for the government of the country." No attack is made on the good faith of Ministers in entering into the contract. The condition implied in the obligation which the contract imposed on

1(1932) 46 C.L.R. 155, at pp. 175, 176. 2(1924) 34 C.L.R. 198, at p- 222. 52 CLR 531

52 C.L.R.]

OF AUSTRALIA. the Crown was, in my opinion, satisfied by a sufficient appropriation of moneys by Parliament, whereby moneys were supplied to the Government out of which it could, consistently with parliamentary control over expenditure, discharge that obligation. The respondent is therefore entitled to judgment for the amount claimed. Sec. 65 of the Judiciary Act provides: "No execution or attach- ment, or process in the nature thereof, shall be issued against the property or revenues of the Commonwealth or a State in any such suit; but when any judgment is given against the Commonwealth or a State, the Registrar shall give to the party in whose favour the judgment is given a certificate in the form of the Schedule to this Act, or to a like effect." Sec. 66 of the same Act says On receipt of the certificate of a judgment against the Commonwealth or a State the Treasurer of the Commonwealth or of the State as the case may be shall satisfy the judgment out of moneys legally avail- able." The form of certificate of judgment is, SO far as material, as follows " I hereby certify that A.B. day of

obtain a judgment of the High Court in his favour, and that by such judgment the sum of £

was awarded to him." The remedy thereby given a successful plaintiff does not purport to override the right of the Parliament of the State to control the disbursement of the revenue; and, if there is no money available under parliamentary appropriation to pay the judgment, its satis- faction must await the pleasure of the Parliament. "It never has been contended, and I do not suggest that it ever could be properly contended, that anyone but the State Parliament could appropriate the King's State revenue (Australian Railways Union v. Victorian Railways Commissioners 1, per Isaacs C.J.).

The arrangement which was made between the Premier's Depart- ment and the Government Tourist Bureau for the payment of moneys due under the contract out of the funds provided by Parlia- ment for the services of the Premier's Department, answering to the description 'Government Advertising," was a matter of internal arrangement between Ministers. But sec. 3 of the Special Deposits (Industrial Undertakings) Act 1912-1930, provides :- " There shall be paid out of any such account any expenditure of or in relation to

1(1930) 44 C.L.R., at p. 352. 52 CLR 532

A. the industrial undertaking to which it relates, including charges for

management, maintenance, working expenses, and interest on capital at the current rate for loan money payable by the Government." Thus, in SO far as the contract was for advertising the services of the Tourist Bureau, the moneys payable thereunder were lawfully payable as an expense of the undertaking out of the special account established under sec. 3 of the above-named Act, whereby the moneys in the account were appropriated and lawfully applicable to pay for such advertising. Ostensibly the contract was not one for which Parliament "may or may not provide funds but one for which moneys were appropriated by statute. I agree with Evatt J. in the conclusion that this statute avoided the necessity of the receipts of the Government Tourist Bureau being paid into consolidated revenue or of an annual grant by Parliament out of the consolidated revenue to meet working expenses, and that sec. 3 operates as a continuing appropriation for the purposes therein specified.

In my opinion the judgment of Evatt J. should be affirmed and the appeal dismissed.

Appeal dismissed with costs. Solicitor for the appellant, J. E. Clark, Crown Solicitor for New South Wales.

Solicitor for the respondent, Abram Landa.