Poulton v The Commonwealth

[1953] HCA 101

89 CLR 540

THE COMMONWEALTH AND OTHERS

RESPONDENTS. DEFENDANTS, Constitutional Law (Cth.)-Wool-Acquisition by Commonwealth-Wod commission

-Compensation-Appraisement-Wool grower-Wool dealerTransaction Basis-Sale, or share in "proceeds "-Action by wool dealerDistribution of share-Entitlement of wool dealer-Alienation of share-Right of action for SYDNEY,

tort-Assignability to wool dealer-Federal statute and regulations-Validity July 21-24,

Just terms "-The Constitution (63 &64 Vict. C. 12), S. 51 (xxxi).)-Wool 28-31;

Realization (Distribution of Profits) Act 1948-1952 (No. 87 of 1948-No. 76 Aug. 1, 5, 6;

of 1952), SS. 7 (2) (3) (4), 8 (1) (3), 18, 28, 29-National Security (Wool) Regu- lations (S.R. 1939 No. 108-S.R. 1943 No. 88), regs. 14, 15, 30 (2).

A transaction between P., a wool dealer, and D., three brothers who were wool growers, was recorded in a document dated 4th November 1942, con- SYDNEY,

sisting of a printed form of invoice with handwritten additions. At the Aug. 24-27;

head of the document there appeared the printed words " Bought from," followed by the written words Donlon Bros. of Bara ". There followed in print the name of P. who was described as a licensed dealer in wool, hides and skins. The body of the form contained, in handwriting, particulars accounting for a stated total sum of money. At the foot of the document appeared certain printed words with provision for two signatures, and the signature of P. and then one of the D. brothers. The printed words were: The terms and conditions upon which I have received the above wool from you are that you are not to be liable for any losses that may accrue, and that the wool will be submitted for appraisement either alone or with such other wools as

I think fit. The proceeds are to be retained by me in satisfaction of the amount paid to you and for my services and expenses ". On the date of the document P. received certain wool from D. and thereafter submitted it for appraisement under the National Security (Wool) Regulations. After appraisement P. received and retained the appraised price plus an amount for adjustment to flat rate parity" in accordance with the wool scheme. The wool was listed as participating wool in the appraisement catalogue, and, consequently, a share of each amount to be distributed under the Wool Realization (Distri- bution of Profits) Act 1948-1952 became payable to the person who supplied that wool for appraisement.

89 CLR 541

P. brought an action in the High Court against the Commonwealth, the Australian Wool Realization Commission and D., claiming that he was 1952-1953. entitled, by virtue of the abovementioned transaction, to all amounts payable under the Act in respect of the wool the subject matter of that transaction.

Held, by Fullagar J. and, on appeal, by the Full Court- 1 The document must be construed as a whole, and, notwithstanding the words Bought from ", the transaction evidenced by the document was not a sale of the wool by D. to P. P. therefore, never became the owner of the wool. The wool was supplied for appraisement by D. through the agency of P. and it remained the property of D. until it passed to the Commonwealth on final appraisement under the National Security (Wool) Regulations.

2 The word 'proceeds" in the document comprised all moneys which might at any time become payable in consequence of the supply of the wool for appraisement. P., therefore, under the terms of the document, was entitled, as between himself and D., to all moneys payable in respect of the wool under the Wool Realization (Distribution of Profits) Act 1948-1952.

(3) The effect, however, of SS. 8 and 29 of that Act was to deprive P. of any right which he might otherwise have had to receive any moneys payable under the Act in respect of the wool, and to entitle D. to receive and retain all such moneys.

(4) The Wool Realization (Distribution of Profits) Act 1948-1952, including SS. 8 and 29 thereof, is a valid exercise of the legislative power conferred upon the Parliament by S. 51 (vi.) and (xxix.) of the Constitution.

P. claimed, in the alternative, against the Commonwealth, as money had and received by the Commonwealth to his use or to the use of D., a sum equal to the total amount payable in respect of the wool under the Wool Realization (Distribution of Profits) Act 1948. He contended (1) that the National Security (Wool) Regulations were invalid on the ground that they did not give to the suppliers of wool an enforceable right to share in any profit which might ultimately be realized by the Commonwealth in respect of wool supplied, and therefore purported to provide for the acquisition of property on terms which were not just within the meaning of S. 51 (xxxi.) of the Constitution, (2) that the taking of the wool by the Commonwealth was therefore tortious, (3) that P., as owner of the wool, or alternatively as an equitable assignee from D. of the proceeds of any disposition of the wool, might waive the tort and sue for the amount received by the Commonwealth in respect of the wool, (4) that, there being no direct evidence of any amount having been received by the Commonwealth specifically in respect of that wool, the basis of the distribution under the Wool Realization (Distribution of Profits) Act 1948 should be adopted, and a proportion based on appraised price, of the total profit distributable under that Act, attributed to that wool.

Held by Fullagar J. and by the Full Court-

1The regulations provided just terms of acquisition and were valid. 2In any case, the wool was received by the Commonwealth with the consent of the true owner, D., on the terms of the regulations, and there 89 CLR 542

was no tortious taking. McClintock v. The Commonwealth (1947) 75 C.L.R. 1, applied.

(3) Even if the regulations had been invalid, and there had been a tortious taking by the Commonwealth, D.'s right of action in tort could not be assigned at law or in equity, nor did the abovementioned document assign, or purport to assign, any such right of action to P.

Semble: In any case, P.'s claim must fail, because he had not established that the Commonwealth had received in respect of the particular wool any sum in excess of the amount actually paid by the Commonwealth to P. after appraisement.

No enforceable right was conferred upon any person who supplied wool for appraisement by reg. 30 (2) of the National Security (Wool) Regulations. John Cooke &Co. Pty. Ltd. v. The Commonwealth (1922) 31 C.L.R. 394; (1924) 34 C.L.R. 269, applied.

Meaning of "just terms " in S. 51 (xxxi.) of the Constitution considered. Decision of Fullagar J. affirmed.

APPEAL from Fullagar J.

In an action brought in the High Court by way of writ of summons, of date 19th October 1949, by Malcolm Coote Poulton against the Commonwealth of Australia, the Australian Wool Realization Commission, established under the Wool Realization Act 1945-1950, and as subsequently amended, George Henry Donlon and William Donlon, of Bara, New South Wales, carrying on business as Donlon Bros. who were sued both personally and as executors of the will of Michael Joseph Donlon deceased, and Robert Donald Bakewell on behalf of himself and all other members of organizations affiliated with the Australian Woolgrowers' Council, the amended statement of claim was substantially as follows :-

1. At all material times the plaintiff Malcolm Coote Poulton carried on business in Mudgee, New South Wales, as a licensed dealer in wool, hides and skins under the Wool, Hide and Skin Dealers Act 1935 (N.S.W.) and was a member of the New South Wales Country Wool and Skin Buyers' Association (hereinafter called " the Association ").

2. On 28th September 1939 the Governor-General of the Com- monwealth of Australia acting with the advice of the Federal Executive Council and purporting to act under the powers conferred by the National Security Act 1939 and all other powers him there- unto enabling made and published Statutory Rules No. 108 of 1939 intituled the National Security (Wool) Regulations. These regulations were thereafter amended from time to time but such

89 CLR 543

amendments are not material to any of the issues raised herein. (The regulations are sufficiently set out in the judgments hereunder).

3. On 4th November 1942 the plaintiff as such licensed dealer in wool received from the defendants Michael Joseph Donlon, George Henry Donlon and William Donlon, of Bara, New South Wales (trading as Donlon Bros.) and who are wool growers in that State a large quantity of wool and at the time of the receipt thereof the plaintiff paid to these defendants the sum of £286 15s. 3d. and in consideration thereof and in pursuance of the agreement made between the plaintiff and those defendants the plaintiff and those defendants executed an instrument in the words follow- ing:

"Church Street, Mudgee Phones 276 &48. Bought from Donlon Bros. of Bara.

M. C. Poulton Licensed Dealer in Wool, Hides &Skins. 17 Bales 2 Bags,

Less Wool Tax Less Cartage The terms and conditions upon which I received the above wool from you are that you are not to be liable for any losses that may accrue, and that the wool will be submitted for appraisement either alone or with such other wools as I think fit. The proceeds are to be retained by me in satisfaction of the amount paid to you and for my services and expenses. Signed M. C. Poulton Signed M. Donlon Lamson Paragon Ltd.

89 CLR 544

Thereafter the plaintiff duly delivered the wool to the Central Wool Committee pursuant to the provisions of the regulations and the same was duly appraised and the final appraisement thereof duly completed in the manner prescribed by the regulations.

4. The plaintiff said that by virtue of the execution of that instrument and the agreement herein contained and the payment of the moneys to those defendants the property in and all proceeds of the wool were assigned to the plaintiff by those defendants and alternatively the plaintiff said that by virtue of the matters alleged all proceeds of the wool and all rights to receive it were thereupon assigned by those defendants to the plaintiff.

5. On 4th October 1949 the plaintiff gave notice of the assignment to each of the defendant the Commonwealth of Australia and the defendant the Australian Wool Realization Commission in writing in the words and figures following:

"I act for M. C. Poulton of Church Street Mudgee, a licensed Wool Broker. On 4th November 1942 he received a quantity of wool from Messrs. Donlon Bros. of Bara, Woolgrowers, and at the time of such receipt Messrs. Donlon Bros. executed the following instrument :-

Church Street, Mudgee Phones 276 &48 Bought from Donlon Bros. of Bara.

M. C. Poulton Licensed dealer in Wool, Hides &Skins. 17 Bales 2 Bags

4439 Nett at 151 326 Lox Less Wool Tax Less Cartage The terms and conditions upon which I have received the above wool from you are that you are not to be liable for any losses that

89 CLR 545

may accrue, and that the wool will be submitted for appraisement either alone or with such other wools as I think fit. The proceeds are to be retained by me in satisfaction of the amount paid to you and for my services and expenses. Signed M. C. Poulton Signed M. Donlon Lamson Paragon Ltd.

Following thereon my client paid to Messrs. Donlon Bros. the sum of £286/15/3.

The object and purpose of this letter is to give you notice of the above assignment from Donlon Bros. to my client and to require you to account to my client for all moneys in respect of the realization of the said wool which was thereafter delivered by my client to the Central Wool Committee-including any share in the distribution of surplus profits under the provisions of the Wool Realization (Distribution of Profits) Act 1948.

I shall be glad if you will kindly acknowledge this letter." 6. 7. On 21st December 1948 the Wool Realization (Distribution of Profits) Act 1948 was passed. The wool referred to in par. 4 thereof is participating wool within the meaning of that Act.

8. The defendant, the Australian Wool Realization Commission, was established under the Wool Realization Act 1945-1946 and is ' the Commission' within the meaning of the Wool Realization (Distribution of Profits) Act 1948-1952.

9. The commission has refused and still refuses, purporting to act under the provisions of the Wool Realization (Distribution of Profits) Act to recognize the estate, right, title and interest of the plaintiff in and to the wool and/or his right to share or participate in respect thereof in the distribution of profits under the Act and has refused and still refuses to include the plaintiff in the list of persons entitled to share in distributions under the Act in respect of the wool.

9 (a) The defendants, the Commonwealth of Australia and the Australian Wool Realization Commission, claim and assert that the plaintiff has no claim to or interest in the money payable to the defendants Donlon Brothers under or in pursuance of the Wool Realization (Distribution of Profits) Act 1948-1952 and no enforceable right or claim to require the defendants Donlon Brothers to pay the money or the amount thereof to the plaintiff when the same shall have been paid to the Donlon Brothers.

(b) The defendant, the Australian Wool Realization Commission, with the approval and authority of the defendant Commonwealth

89 CLR 546

threatens and intends to pay to the defendant Donlon Brothers a sum of money being or being equal in amount to a share in the distribution under and in pursuance of the Wool Realization (Distri- bution of Profits) Act in respect of and by reason of the submission to appraisal of the wool referred to in the document set forth in par. 5 thereof and calculated according to the appraised value of the wool SO that the said sum shall be retained by Donlon Brothers to the exclusion of the plaintiff and of any interest or claim of the plaintiff therein or thereto.

(c) The defendants Donlon Brothers threaten and intend to receive that sum of money from the defendant, the Australian Wool Realization Commission, and to retain the same to the exclusion of the plaintiff and of any interest or claim of the plaintiff therein or thereto and those defendants are willing to receive that sum of money in full satisfaction and discharge of any and all claims which those defendants have or may have against any other defendant in respect of the wool its appraisal or sale.

10. The Commonwealth is possessed of large and substantial sums of money being profits arising from the sale of wool received by it under and by virtue of the National Security (Wool) Regulations including the wool of the plaintiff referred to in par. 4 hereof.

11. The plaintiff fears that unless restrained the defendants, the Commonwealth of Australia and the Australian Wool Realization Commission, will proceed to pay to the defendants Donlon Brothers all distributions or shares under the Wool Realization (Distribution of Profits) Act in respect of the wool referred to in par. 4 hereof and the plaintiff will suffer thereby irreparable injury and loss.

12. The share of the plaintiff in respect of any distribution under the Act in respect of the wool exceeds the sum of One pound (£1).

13. The plaintiff claims that the National Security (Wool) Regu- lations are ultra vires the Commonwealth Parliament and are null and void, or, alternatively, that regs. 13 to 30 inclusive thereof are ultra vires the Commonwealth Parliament and are null and void.

14. The plaintiff further claims that the Wool Realization (Distri- bution of Profits) Act 1948-1952, is ultra vires the powers of the Commonwealth Parliament and is null and void.

15. (a) In or about the month of December 1942 the defendants, the Commonwealth of Australia and the Australian Wool Realiza- tion Commission, wrongfully converted to their own use certain property of the plaintiff, viz., the wool referred to in par. 3 above whereby the plaintiff lost the value of the same and the profits he otherwise could and would have made therefrom.

89 CLR 547

(b) Alternatively to sub-par. (a) above the plaintiff sues those defendants for moneys payable by the defendants to the plaintiff for moneys received by the defendants to the use of the plaintiff in respect of the sale by the defendants of the said wool of the plaintiff referred to in par. 3 above.

(c) Alternatively to sub-pars. (a) and (b) above the plaintiff in or about December 1942 sold to those defendants the wool referred to in par. 3 above at a price to be ascertained ratably from the total moneys to be received by the defendants from the United Kingdom in respect of wool sold to the United Kingdom by the Commonwealth between September 1939 and 30th June 1945, in the proportion which the wool of the plaintiff bore to the whole of the wool SO sold by the Commonwealth to the United Kingdom and the said sum has become and is due to be payable by those defendants to the plaintiff and those defendants have refused to pay the same.

The plaintiff claimed :- 1. A declaration that the plaintiff was beneficially entitled as against the defendants, Donlon Brothers, to receive from the defen- dants, the Commonwealth of Australia and the Australian Wool Realization Commission, all moneys in respect of the proceeds of the sale of the wool referred to in par. 4 above and to share in respect thereof in all distributions to be made under the Wool Realization (Distribution of Profits) Act 1948-1952.

1. (a) A declaration that the defendants Donlon Brothers upon receipt of any sum of money under or in pursuance of that Act or otherwise in respect of the wool or by reason of its submission for appraisal or its sale shall be bound to pay the same to the plaintiff for his own use and benefit.

2. (a) A declaration that the plaintiff was entitled to be included in the list of persons to be prepared by the defendant, the Australian Wool Realization Commission, of the persons entitled to share in distributions under the Wool Realization (Distribution of Profits) Act 1948-1952 and

(b) An order directing the defendant, the Australian Wool Realization Commission, to enter the plaintiff's name upon such list in respect of the wool and to enter thereon the appraised value of the wool to which the plaintiff is entitled.

Alternatively the plaintiff claimed :- 3. (a) A declaration that the Wool Realization (Distribution of Profits) Act 1948-1952 was ultra vires the Commonwealth Parliament and was null and void or,

89 CLR 548

(b) alternatively that SS. 8, 13, 17, 18, 19, 20, 27, 28 and 29 thereof were ultra vires the Commonwealth Parliament and were null and void.

The plaintiff claimed the following declarations - 4. (a) that the National Security (Wool) Regulations being Statutory Rules No. 108 of 1939, were ultra vires the Common- wealth Parliament and were null and void;

(b) that the plaintiff was entitled to recover from the Common- wealth the value of the wool referred to in par. 3 above,

1 by regarding that value as the damages payable by the defendants, the Commonwealth and the Australian Wool Realiza- tion Commission, to the plaintiff in respect of the conversion alleged in par. 15 (a) above; (2) alternatively to (1) above, on the plaintiff waiving the said conversion by regarding as the value the amount which those defendants in fact received in respect of the wool as moneys had and received by those defendants to the use of the plaintiff; (3) alternatively to (1) and (2) above, by treating the Commonwealth as the purchaser from the plaintiff of the wool at its true market value, such true market value being the ratable proportion of the total moneys that the Commonwealth in fact received from the United Kingdom for the whole of the wool sold by it to the United Kingdom between September 1939 and 30th June 1945 in the proportion the wool of the plaintiff bore to the whole of that wool SO sold by the Commonwealth to the United Kingdom

(c) an order directing the Commonwealth to pay to the plaintiff the value of that wool,

1by regarding that value as the damages payable by the defendants, the Commonwealth and the Australian Wool Realiza- tion Commission, to the plaintiff in respect of the conversion alleged in par. 15 (a) above; (2) alternatively to (1) above, on the plaintiff waiving the said conversion by regarding as the value the amount which those defendants in fact received in respect of the wool as moneys had and received by those defendants to the use of the plaintiff (3) alternatively to (1) and (2) above, by treating the Commonwealth as the purchaser from the plaintiff of the wool at its true market value, such true market value being the ratable proportion of the total moneys that the Commonwealth in fact received from the United Kingdom for the whole of the wool sold by it to the United Kingdom between September 1939 and 30th June 1945 in the proportion the wool of the plaintiff bore to the whole of that wool SO sold by the Commonwealth to the United Kingdom. 89 CLR 549

5. An injunction restraining the defendants other than Donlon Brothers from paying to those defendants Donlon Brothers any moneys under the said Act or regulations in respect of the wool referred to in par. 4 above and from entering the names of Donlon Brothers in respect of the wool on any lists under that Act as being persons entitled to share in the distributions under that Act.

6. An order providing for the costs of these proceedings. In a statement of particulars furnished by the plaintiff on 14th February 1951, under order of Fullagar J. made 13th November 1950, it was stated (i) that the date and place of supply of the wool referred to in par. 3 of the particulars of claim was: 4th November 1942, district of Bara, 22 miles from Mudgee, the broker who received the wool for appraisement being Messrs. Pitt, Son &Badgery Ltd.; (ii) that the appraised values of the wool (18 bales, weight and markings shown) at the date of appraisement, 11th December 1942, was £316 18s. 2d.; and (iii) that the only agree- ment used was ' the agreement alleged to be contained in the instrument set out in' par. 3 "

The nature of the defences pled on behalf of the various defen- dants sufficiently appears in the judgments hereunder.

G. E. Barwick Q.C., S. Isaacs Q.C. and J. M. Bruxner, for the plaintiff.

W. J. v. Windeyer Q.C., H. A. R. Snelling Q.C. and R. Else- Mitchell, for the defendant the Commonwealth of Australia.

J. B. Tait Q.C. and K. A. Aickin, for the defendant the Australian Wool Realization Commission.

G. Wallace Q.C. and D. J. Benjamin, for the defendant Robert Donald Bakewell.

Cur. adv. vult. The following written judgment was delivered :-

FULLAGAR J. The plaintiff in this action, Malcolm Coote Poulton, was at all material times a dealer in wool. The defendants in the action, as originally framed, were the Commonwealth of Australia, the Australian Wool Realization Commission (a corporation con- stituted under the Wool Realization Act 1945-1950 (Cth.) ) and Michael Joseph Donlon, George Henry Donlon and William Donlon. The three lastnamed defendants were brothers who carried on a business of wool growing in partnership under the name of Donlon

89 CLR 550

Brothers. Michael Joseph Donlon died after the commencement of the action, leaving a will in which his two brothers were named as executors. The plaintiff alleged that in November 1942 he had bought certain wool from Donlon Brothers and submitted that wool for appraisement under the National Security (Wool) Regulations then in force, and he claimed (to state the matter for the moment only in the most general way) that in respect of that wool he was entitled to share in the ' profits '' which are the subject matter of the Wool Realization (Distribution of Profits) Act 1948-1952. The amount directly involved in the case is small, but I was informed that it was in the nature of a "test case" and that it was expected to determine, for a very large number of similar cases in which wool was handled (to use a neutral term) by dealers, whether the share of "profit" attributable to the wool should go to the dealer or to the grower.

When the case was called on for hearing, the solicitor for George Henry Donlon and William Donlon announced that he appeared for the surviving brothers both in their personal capacity and in their capacity as executors of the will of Michael Joseph Donlon. His clients had entered an appearance but had not delivered a defence, and he informed me that they did not propose to take any part in the proceedings. Mr. Wallace of counsel then announced that he appeared for Robert Donald Bakewell, and asked that his client should either be added as a defendant or have leave to intervene as a representative party on behalf of himself and all other members of organizations affiliated with the Australian Wool Growers' Council. It appeared from affidavits filed that many members of those organizations had had their wool handled by dealers. Also it appeared from the pleadings that the argument for the plaintiff would involve or include an attack upon certain provisions of relevant Commonwealth legislation, the validity of which it was in the interest of the members of those organizations generally to support. Having regard to these facts and to the fact that Messrs. Donlon Brothers did not propose to take part in the proceedings, I was of opinion that, although the Commonwealth and the defendant commission were already before me and proposing to contest the plaintiff's claim, I ought to accede to Mr. Wallace's application. I also thought, having regard to the interest of those whom Mr. Bakewell sought to represent in maintaining the validity of the legislation attacked, that it would be preferable to join him as a defendant rather than merely permit him to intervene. Accord- ingly I ordered that he be joined as a defendant in the capacity proposed.

89 CLR 551

It is impossible to understand the plaintiff's claim and the arguments for and against it without an examination of the Wool Purchase Arrangement, which was made in 1939 between the Government of the Commonwealth and the Government of the United Kingdom, the steps which were taken in the Common- wealth to implement it, and the events which led up to the passing of the Wool Realization (Distribution of Profits) Act 1948. The story is told in outline in the judgment of the Court in Ritchie V. Trustees Executors &Agency Co. Ltd. 1 but I think that, for the purposes of the present case, I should set out the position for myself, though I will quote, where convenient, from Ritchie's Case 2. For what follows I have depended partly on documents and partly on the evidence of Mr. Justice Owen of the Supreme Court of New South Wales, who was Chairman of the Central Wool Com- mittee in and between 1942 and 1945. It may be mentioned here that similar Arrangements" with regard to wool were made by the United Kingdom Government with the Governments of New Zealand and South Africa respectively.

The Australian "Wool Purchase Arrangement " was made between the two Governments almost immediately after the commencement of the war in September 1939. It provided that the United Kingdom Government should purchase from the Com- monwealth Government all wool produced in Australia during the period of the Arrangement, except wool required for the purpose of woollen manufacture in Australia. The period of the Arrangement was to be the duration of the war and one full wool year thereafter.

A "wool year" is a year ending on 30th June. The price was to be 10.75 pence sterling per pound of greasy wool, which is the equivalent of 13.4375 pence Australian. This price was arrived at only after an interchange of many cables and a number of inter- views in London, in the course of which the Commonwealth pressed most strongly for a higher price. It was a term of the Arrangement that the United Kingdom Government and the Commonwealth Government should divide equally any profit which might arise from the resale by the United Kingdom Government outside the United Kingdom of wool purchased by it under the Arrangement. It was also a term of the Arrangement that the acquisition of the wool and the handling of the wool to the f.o.b. point should be the responsibility of the Commonwealth Government. For these ser- vices a "handling charge not exceeding three farthings Australian per pound of wool purchased was to be paid by the United Kingdom Government. In fact, the actual sum of three farthings per pound

1(1951) 84 C.L.R. 553, at pp. 569-574. 2(1951) 84 C.L.R. 553. 89 CLR 552

was paid for the first three wool years. It is convenient to mention here that, in the event, the Arrangement applied to the wool of six wool years, i.e., the years 1939-1940 to 1944-1945 inclusive, and the system of appraisement and acquisition which (as will be seen) was set up under it continued during the year 1945-1946. The Arrangement was modified in two respects during that period with regard to the amounts to be paid by the United Kingdom Government. In the first place, the purchase price for the year 1942-1943 and subsequent years was increased to 15.45 pence Australian per pound. In the second place, it having appeared that the actual cost of "handling" was less than three farthings per pound, it was arranged that for the year 1942-1943 and subse- quent years any difference between three farthings per pound and the actual cost of handling should be credited to the United Kingdom Government.

It was necessary, of course, for the Commonwealth Government to take steps in Australia for the implementing of the Wool Purchase Arrangement, and the National Security (Wool) Regulations were accordingly made by the Governor-General under the National Security Act 1939. In fact, these regulations were made on 28th September 1939, a short time before all the details of the Arrange- ment had been settled between the two Governments. By these regulations a Central Wool Committee and State Wool Committees were established, the Central Wool Committee being given all powers and authorities conducive or incidental to the purpose of the Regulations", which was to provide for the carrying out of the Wool Purchase Arrangement ". The general scheme underlying the regulations was that the Commonwealth should purchase all Australian wool, including what might be required for purposes of local manufacture, and should pay for all that wool a price per pound equal to the price per pound payable by the United Kingdom Government for wool sold to that Government under the Wool Purchase Arrangement. That price per pound was a flat rate. On the other hand, the wool to be purchased by the Commonwealth comprised many hundreds of classes of wool of widely differing quality and value, and to pay for all these at a flat rate was out of the question. What had to be done, therefore, was to arrive as nearly as possible at an appropriate price for each class of wool on such a basis that the average price per pound payable by the Commonwealth for all the wool would be equal to the price per pound receivable from the United Kingdom Government for wool sold by the Commonwealth to that Government. This was achieved by means of a system of "appraisement" or valuation, subject

89 CLR 553

to what was called a "table of limits" prepared by highly skilled experts. The plan is explained in Ritchie's Case 1 in a passage which I will quote. "The plan upon which the regulations proceeded was to substitute appraisement for auction as the mode of selling wool and otherwise to adhere as closely as possible to the procedures for the handling and disposal of wool customary in peace-time. Wool was catalogued by the wool-selling broker to whom the grower had sent it and the appraisement was conducted upon the floors of the wool-selling broker's store by three appraisers, one representing the wool-selling broker and the other two (wool buyers in peace-time) representing the Commonwealth. Every appraise- ment was made according to a table of limits which for each wool season or year the Central Wool Committee caused to be pre- pared" 2. The table of limits was constructed for each wool year by a Technical Advisory Committee. It was necessarily based on an anticipation-founded on experience and on information obtained -as to the quantity of the various types which would come forward for appraisement. And the object in view was that the average price per pound which would be paid by the Commonwealth for the whole of the clip of the wool year should approximate as nearly as possible to the flat rate per pound payable to the Commonwealth by the United Kingdom.

It has been necessary to say SO much in order that the regulations may be understood. I now turn to the regulations, and I think it convenient at this stage to set out certain of them which were the subject of argument. Regulation 13 provided that every contract for the sale of wool in force at the commencement of the regulations should be void except in cases where delivery to the buyer had taken place. Regulation 14 provided that no person should sell or buy any wool except in accordance with the regula- tions. Regulation 15 provided that "The sale of wool shall be by appraisement under these Regulations and the property in every parcel of wool submitted for appraisement shall pass to the Com- monwealth when the final appraisement thereof is completed in the manner prescribed by the instructions of the Central Wool Committee governing appraisement ". Regulation provided for the preparation of tables of limits. Regulation 17 provided "In the preparation of such a table of limits regard shall be had to the price payable by the Government of Great Britain to the Govern- ment of the Commonwealth under the arrangement between those Governments and the limits shall be SO fixed as to ensure that the price per pound payable by the Government of Great Britain for

1(1951) 84 C.L.R. 553. 2(1951) 84 C.L.R., at p. 570. 89 CLR 554

the wool of any wool year will not be exceeded by the average price per pound of the total payments made pursuant to the appraise- ments of that wool." Regulation 19 provided that all wool should be submitted for appraisement, and that any person owning or having possession of any wool who did not submit that wool for appraisement should be guilty of an offence. It also authorized the Central Wool Committee to seize and cause to be appraised any wool not submitted for appraisement within the wool year. Regulation 23 dealt with the purchasing from the Commonwealth, with the approval of the Central Wool Committee, of wool for purposes of manufacture within Australia.

There is one other regulation which is of importance in this case. That is reg. 30, which provided 1 All moneys payable by the Government of Great Britain under the arrangement made by that Government with the Commonwealth for acquiring Australian Wool shall be received by the Central Wool Committee, and out of such moneys the Central Wool Committee shall defray all costs, charges and expenses of administering these Regulations, and make the payments for wool to the suppliers. 2 Any moneys which may be received by the Central Wool Committee from the Govern- ment of Great Britain under or in consequence of such arrangement over and above the purchase price payable by such Government thereunder for the wool and any surplus which may arise shall be dealt with as the Central Wool Committee shall in its absolute discretion determine To quote again from Ritchie's Case (1)

It will be seen that sub-reg. (1) covers the flat-rate price payable by the United Kingdom and the amount not exceeding three farthings a pound for expenses. Sub-regulation (2) conferred upon the Central Wool Committee a discretion to determine how the half share of profits payable by the United Kingdom under the Wool Purchase Arrangement should be dealt with and profits or moneys arising otherwise, as, for instance, from wool tops or wool for manufacture for export (2). It was not, of course, known in the beginning whether there would ever be any "profit" or "surplus". But administrative arrangements were made from the beginning by the Central Wool Committee in anticipation of there being ultimately a fund distributable under reg. 30 (2). It was determined that the suppliers of shorn wool (i.e., wool shorn from the living sheep) should share in any such fund, but that the suppliers of skin wool (i.e., wool fellmongered from the skins of dead sheep) should not. Accordingly, for the purposes of each appraisement, wool of the former class was listed in the broker's

1(1951) 84 C.L.R. 553. 2(1951) 84 C.L.R., at p. 572. 89 CLR 555

catalogue as "participating" wool, and wool of the latter class as "non-participating" wool. It will be seen later that this distinction formed the basis of the distribution ultimately provided for by the Wool Realization (Distribution of Profits) Act 1948-1952.

In the case of non-participating wool, payment of the full appraised price was made by the Central Wool Committee within fourteen days after appraisement, and those who had supplied such wool for appraisement received nothing more. In the case of participating wool, payment of ninety per cent (in later years ninety-five per cent) of the appraised price was made within fourteen days of appraisement. The reason for the retention of a percentage of the appraised price was that it could not be known with certainty in advance whether the total of the appraised prices of all the wool appraised in the wool year would average out at a price equal to, or greater than or less than, the flat rate payable by the United Kingdom Government. In actual fact a very remarkable degree of accuracy was attained, and in every year the total of the appraised prices averaged out at a price a little less than the flat rate. Accordingly, after the end of the wool year, when this was ascer- tained, the Central Committee made two further payments con- sisting of the retained percentage of the appraised price (called the "retention money ") and a further percentage to bring the total payment up to "flat rate parity" i.e., approximately to the amount which would have been the appraised price if it had been possible to achieve the object of the appraisement with mathematical accuracy. Because payments were made up to flat rate parity in respect of the whole shorn clip, and because the United Kingdom Government was paying only for SO much of the wool clip as was not required for purposes of manufacture in Australia, the Central Wool Committee required funds over and above what it received from the United Kingdom Government. These funds were derived from the proceeds of the sale of wool for local manufacture, from certain operations under the National Security (Wool Tops) Regu- lations and the National Security (Price of Wool for Manufacture for Export) Regulations, and (before the year 1942-1943) from the surplus amount not expended of the "handling charge " of three farthings per pound. All moneys received in respect of wool were received by the Central Wool Committee, and none were paid into consolidated revenue.

Wool required for purposes of local manufacture was, as has been seen, excluded from the United Kingdom Government's purchase. Wool for this purpose was purchased from the Com- monwealth by local manufacturers. It amounted in the first wool

89 CLR 556

year to about nine per cent of the total clip, but in later years the proportion rose to about fourteen per cent of the total clip. The price to the manufacturer was fixed at first at the appraised price, then at appraised price plus a percentage, and later still at prices fixed by the Prices Commissioner. On wool sold to local manufac- turers the Central Wool Committee incurred a loss amounting to something over £750,000.

The wool purchased by the United Kingdom Government under the Wool Purchase Arrangement was dealt with in one or other of the following ways. Some was shipped from Australia to the United Kingdom. Some was sold by the United Kingdom Govern- ment to buyers in other countries, and shipped from Australia to those other countries. Some was held in Australia for storage or treatment on behalf of the United Kingdom Government, and some was shipped to the United States for storage there in pursuance of arrangements between the Governments of the United Kingdom and the United States. The quantity stored in Australia was very large indeed, and the Central Wool Committee erected some 400 stores averaging over an acre in extent. The wool sent to countries other than the United Kingdom was sold at prices known as " export issue prices" which were determined by the United Kingdom Government. The accounts in respect of such sales were kept in England by the United Kingdom Government, and these included a "distributable profits account". In 1945, however, after the end of the war with Germany, very large quantities of the wool purchased by the United Kingdom Government remained in store in Australia and elsewhere, and it was impossible to determine at that stage whether there would ultimately be any profits to be dealt with in accordance with the Wool Purchase Arrangement. As a result of negotiations conducted in that year, a plan was agreed upon between the Government of the United Kingdom and the Governments of the Commonwealth, South Africa and New Zealand respectively, for the winding up of the wool scheme. One of the main objects of the plan was to dispose of the large stocks of wool held by the United Kingdom Government without unduly disturbing the market and depressing the prices of the current and future wool clips. The plan was called the " 'Disposals Plan", and it is set out in the schedule to the Wool Realization Act 1945-1950 (Cth.). This Act, which received the Royal assent on 11th October 1945, came into force by proclama- tion on 16th November 1945, but the plan took effect as from 1st August 1945.

89 CLR 557

The Act of 1945 constituted and incorporated the Australian Wool Realization Commission, which is a defendant in this action. The personnel of the commission, like that of the Central Wool Committee, was representative of the main interests concerned in the wool industry. Upon the commission were conferred all the powers and functions of the Central Wool Committee under the National Security (Wool) Regulations. The assets of the Central Wool Committee were vested in the commission, and, in effect, for all material purposes, the commission was substituted for, and took the place of, the Central Wool Committee. The National Security (Wool) Regulations were, by S. 11 of the Act, preserved in force for the time being, but on 1st August 1946 regs. 14, 15 and 19 were repealed by Statutory Rule No. 129 of 1946, and, by virtue of S. 2 of the National Security Act 1946, the regulations, as a whole, ceased to have force or effect on 31st December 1946, not being preserved by the Defence (Transitional Provisions) Act 1946.

I do not regard the details of the plan as having vital importance in this case, but I think I should state its effect in outline SO far as it affected Australia. The stock of Australian-grown wool in the ownership of the United Kingdom at 31st July 1945 was transferred to the joint ownership of the United Kingdom Govern- ment and the Commonwealth Government, and was to be held and disposed of by a "Joint Organization", which was to be incorporated as a private company in England with an Australian subsidiary. The Australian subsidiary was the Australian Wool Realization Commission, which was constituted and incorporated by the Act, and which is a defendant in this action. The United Kingdom and the Commonwealth were each to take up fifty per cent of the original capital represented by the opening stock of Australian-grown wool, which opening stock was to be taken into account at its original cost less the amount standing to the credit of the divisible profits account. Payment of the Commonwealth's share of the original capital was to be made in four annual instal- ments, but there was provision for such payment to be made out of Australia's share of current profits, if any. The operating costs of the Joint Organization were to be borne equally by the wool industry and the Joint Organization itself. The contribution of

the industry" was provided for by Acts of the Commonwealth Parliament entitled the Wool (Contributory Charge) Assessment Act 1945-1951, and the Wool (Contributory Charge) Act 1945, both of which received the Royal assent on the same day as the Wool Realization Act 1945-1950. The ultimate balance of profit or loss

89 CLR 558

was to be shared or borne equally by the United Kingdom and the Commonwealth. With regard to the wool year 1945-1946 (described as the "interim period' ") it was agreed that the United Kingdom should purchase the whole clip in the same way as in the six pre- ceding years, but it was to be handled by the Joint Organization, and the Commonwealth was to reimburse to the United Kingdom one half of the cost of SO much of the clip as remained unsold at the end of the wool year. In the following year (1946-1947) the normal system of selling wool by auction in Australia was resumed. Actually in that year the Joint Organization purchased a very substantial quantity of Australian wool at auction sales.

It should be noted here that S. 10 of the Act of 1945 provided that " Any reference in the National Security (Wool) Regulations to the arrangement made between the Government of Great Britain and the Government of the Commonwealth shall include and shall be deemed at all times, on and after the first day of August, One thousand nine hundred and forty-five, to have included a reference to the Disposals Plan ". It may be recalled also that the Court in Ritchie's Case 1 said "The Commonwealth's share in the ultimate profit of the Joint Organization covers the divisible profit under the United Kingdom Wool Purchase Arrangement, or, in other words, the moneys which in reg. 30 2 of the Wool Regulations were referred to, in anticipation, by the description any moneys which may be received by the Central Wool Committee from the Govern- ment of Great Britain under or in consequence of such arrangement over and above the purchase price payable by such Government thereunder for the wool'. The adoption of the Joint Organization Disposals Plan made the description inappropriate, at all events

SO far as it described the moneys as moneys received from the United Kingdom under the Wool Purchase Arrangement. Perhaps the words in consequence remain apt. But in any case substan- tially it is the fund contemplated by that part of reg. 30 (2) " (2).

At the time of the adoption of the Disposals Plan there was, for reasons explained by Mr. Justice Owen in his evidence, no reason to suppose that any profit would result from the operations of the Joint Organization. In fact, however, in the years following the year 1945-1946 the Joint Organization made large profits from Australian-grown wool. These profits were, of course, due in large measure to the phenomenal unforeseen rise in world prices for wool. The Commonwealth's actual and expectant share in the profits of the Joint Organization were the subject of the Wool Realization (Distribution of Profits) Act 1948-1952. The provisions of this Act

1(1951) 84 C.L.R. 553. 2(1951) 84 C.L.R., at p. 575. 89 CLR 559

dealt also with moneys received by the Commonwealth from the United Kingdom Government in pursuance of an arrangement which had been made for the sharing of profits arising from the disposal of sheepskins acquired under the National Security (Sheepskins) Regulations. "The profits in connection with sheep- skins, a comparatively minor matter, are thus treated, as might be expected, as an accession to the wool profits" (Ritchie's Case 1 ). The "profit fund dealt with by the Act of 1948 is, as has been noted, properly regarded as the fund contemplated by reg. 30 (2) of the Wool Regulations. But the passing of the Act of 1948 means that Parliament is not leaving the fund to be dealt with as the Central Wool Committee may in its absolute discretion determine" The Wool Regulations have ceased to be in force, and Parliament is dealing by direct enactment with the distribution of the 'profit fund' The Act prescribes the persons who are to share in distri- butions, provides the necessary machinery for distribution, and contains certain ancillary or incidental provisions. Some of its provisions are, of course, of vital importance in the present case, and it will be convenient to state them at this stage.

The word "dealer" is defined by S. 4 as meaning, in relation to any wool, a person, not being a broker or a person who owned the sheep from which the wool was produced, who submitted the wool for appraisement in the course of a business of dealing in wool or of acting as an agent in the submission of wool for appraise- ment ". Sub-section (1) of S. 7 provides that, subject to the Act, an amount equal to each declared amount of profit shall be distri- buted by the Australian Wool Realization Commission in accordance with the Act. Sub-section (2) provides that "There shall be payable by the Commission, out of each amount to be distributed under this Act, in relation to any participating wool, an amount which bears to the amount to be distributed the same proportion as the appraised value of that wool bears to the total of the appraised values of all participating wool". (The expression "participating wool" has already been explained.) Sub-section (3) provides that "Subject to this Act, an amount payable under this Act in relation to any participating wool shall be payable to the person who supplied the wool for appraisement ". Sub-section (1) of S. 8 provides: For the purposes of this Act, wool which was submitted by a dealer for appraisement shall be deemed to have been supplied for appraisement-(a) where only one dealer has dealt with the wool-(i) if that dealer submitted the wool as agent for another person-by that person; or (ii) if that dealer submitted, or purported

1(1951) 84 C.L.R., at p. 575. 89 CLR 560

to submit, the wool on his own behalf-by the person from whom he obtained the wool; or (b) where more than one dealer has dealt with the wool-by the person for whom the first such dealer to deal with the wool acted as agent, or by the person from whom that dealer obtained the wool, as the case may be ". Sub-section (2) provides that sub-s. (1) shall not apply in relation to wool which was owned by a dealer at any time before 28th September 1939. Sub-section (3) provides that, notwithstanding the terms of any contract (whether made before or after the commencement of the Act), a dealer shall not be entitled to recover from another person the whole or any part of any moneys paid to that other person under the Act. It will be seen that, in the definition of " dealer and also in S. 7 (3), and S. 8 (2) a distinction is drawn between "supplying" wool for appraisement and "submitting" wool for appraisement. In effect, for the purposes of S. 7 (3), though subject to S. 8 (2), a "dealer" is not to be regarded as a person who "supplied" wool for appraisement. Section 28 provides: " No action or proceedings shall lie against the Commission or the Com- monwealth for the recovery of any moneys claimed to be payable to any person under this Act, or of damages arising out of anything done or omitted to be done by the Commission in good faith in the performance of its functions under this Act" Section 29 provides 'Subject to this Act and the regulations, a share in a distribution under this Act, or the possibility of such a share, shall be, and be deemed at all times to have been, absolutely inalienable prior to actual receipt of the share, whether by means of, or in consequence of, sale, assignment, charge, execution or otherwise"

The plaintiff, as has been said, was at all material times a dealer in wool. In normal times, although the vast majority of the wool grown by the wool growers of Australia (some hundred thousand in number) is consigned by the grower direct to one of the big wool-selling houses, where it is sold on behalf of the growers by auction, there is a certain percentage of growers-mostly growers on a small scale-whose wool is handled by dealers. There are said to be some five hundred dealers in Australia. The practice is for the dealer to buy the wool outright from the grower. Commonly he will buy the whole clip of the particular grower at an average price per pound greasy. He then himself (perhaps after some re-grading or re-packing) consigns the wool to one of the wool- selling brokers, who sells it by auction in the ordinary way and accounts for the proceeds to him and not to the grower. The dealer's gross profit is, of course, the difference between what he has paid to the grower and what he receives from the broker. One

89 CLR 561

advantage to the small grower is said to be that he receives immed- iate payment, although the terms on which wool is sold by brokers, and the practice of the wool trade, ensure very prompt payment where wool is consigned by grower direct to broker. Usually, if not invariably, the dealer carries on business in a country town, and deals in other commodities in addition to wool, for example, sheep- skins and rabbit skins.

The somewhat anomalous position of the dealer was one which had to be considered by the Central Wool Committee both in connection with the purchase of Australian wool by the United Kingdom Government in the war of 1914-1918, and in connection with the similar purchase in the war which commenced in 1939. In both cases the general policy of the administration was that all shorn wool should be purchased by the Commonwealth from the grower, and it was contemplated that the grower of any such wool should be the person who would share in an ultimate distribution of profit if any such distribution should take place. In the earlier war the general policy was effectuated by provisions of a more negative character, and the central provision of the War Precautions (Wool) Regulations was reg. 10 (1), which provided that no person should sell any wool except through or to or with the consent of the Central Wool Committee or otherwise in accord- ance with the regulations. In the later war more direct and positive provisions were adopted, and the National Security (Wool) Regula- tions not merely avoided all contracts for the sale of wool (except where delivery had taken place) and prohibited any future sale or purchase of wool except in accordance with the regulations, but affirmatively required all wool to be submitted for appraisement during the wool year in which it was produced. The practical result was, of course, the same in each case, and, SO far as the dealer was concerned, a strict application of either set of regulations must have had the effect of simply putting him out of business SO far as his business related to wool. It was not desired to produce this effect, and in the earlier war a system was adopted whereby the Central Wool Committee consented under reg. 10 of the War Pre- cautions Regulations to certain very limited purchases of wool by dealers. In these cases the dealer became the owner of the wool, and himself, as owner, "supplied" it for appraisement.

This method of meeting the situation, however, was never regarded as satisfactory, one reason doubtless being that it repre- sented a departure from general policy. There were probably other reasons also. Accordingly, in the later war, a system of " permits" which appears to have had no actual legal authority or sanction,

89 CLR 562

was instituted. In October 1939, the Central Wool Committee

forwarded a circular to dealers, which was in the following terms "Under the National Security (Wool) Regulations, Clause 14 pro- vides: 'No person shall sell or buy or contract to sell or buy any wool except in accordance with these Regulations'. The Central Wool Committee has borne in mind the desirability of maintaining as far as possible, consistently with the Regulations, existing practices, and early in its meetings considered the position. of wool dealing having regard to Clause 14. The Committee resolved to issue to Wool Dealers a permit to allow them to continue to receive wool from growers and other owners on terms and conditions which, while consistent with the Regulations, will enable dealers who obtain permits to continue the substance of their business. A condition of the permit is that the dealer will give an undertaking in the following terms :- (1) All wool received will be submitted for appraisement in the store or stores of an approved Wool Selling Broker. (2) The dealer will keep true and correct records of all transactions, pursuant to which he received wool, sufficient to enable a proper distribution amongst the growers and other owners of such wool of all payments which may follow the appraised price of such wool. (3) The dealer will upon notice in writing from the Central Wool Committee under the hand of the Secretary produce such records to the Central Wool Committee or its Executive Member. (4) The dealer will fully and faithfully account in respect of the proceeds of such wool to the Growers or other owners from whom he receives such wool in accordance with the terms and conditions upon which he shall have obtained and received such wool from them There is no restriction upon dealing in sheep- skins"

The plaintiff applied for a "permit", and a permit was issued to him on or about 9th November 1939. The document was headed (under the names of the Commonwealth of Australia and the Central Wool Committee) "Permit to submit Wool for Appraise- ment as Agents It stated that the plaintiff, having given an undertaking to the Central Wool Committee to perform and observe the conditions of the permit, was thereby "permitted to receive wool from Woolgrowers and other owners and submit it for appraise- ment on their account". The conditions are then set out in the same terms as in the October circular. The permit was forwarded to the plaintiff with a letter, which said, inter alia: "This permit

does not override Regulation 14, which provides that no person shall sell or buy any wool

except in accordance with these Regulations ". The reference in the circular and in the

89 CLR 563

permit to "other owners " of wool (i.e., owners of shorn wool other than growers) is explained by the fact that some wool would have been sold and delivered by growers to purchasers before the regulations came into force, and these transactions were not affected by the general avoidance of contracts for the sale of wool effected by reg. 13.

The transaction on which the plaintiff bases his claim in the present case took place on 4th November 1942. On that date he received from Donlon Brothers seventeen bales of fleece wool and some other wool, and he paid to Donlon Brothers a net sum of £286 15s. 3d. The transaction was recorded in a document (Exhibit A3) which it is necessary to set out in full. It is as follows :-

Church Street, Mudgee. Phones 276 &48

4 Nov. 1942. Bought from Donlon Bros. of Bara.

M. C. Poulton Licensed Dealer in Wool, Hides &Skins 17 Bales

Less Wool Tax Less Cartage The terms and conditions upon which I received the above wool from you are that you are not to be liable for any losses that may accrue, and that the wool will be submitted for appraisement either alone or with such other wools as I think fit. The proceeds are to be retained by me in satisfaction of the amount paid to you and for my services and expenses. Signed M. C. Poulton Signed M. J. Donlon."

It should be mentioned here that at a much later date, viz., on 4th October 1949, the plaintiff's solicitor gave notice to the Commonwealth and to the defendant commission of Exhibit A3

89 CLR 564

by letters which set out the document in full and stated that the plaintiff had paid to Donlon Brothers the sum of £286 15s. 3d. The letter proceeded "The object and purpose of this letter is to give you notice of the above assignment from Donlon Brothers to my client, and to require you to account to my client for all moneys in respect of the realisation of the said wool-which was thereafter delivered by my client to the Central Wool Committee -including any share in the distribution of surplus profits under the provisions of the Wool Realization (Distribution of Profits) Act These letters were not, I think, put in evidence, but they were set out in full in the statement of claim and their sending and receipt were admitted by the Commonwealth and the commission respectively in their defences.

The plaintiff appears to have repacked some of the wool, and the bales were branded DB/Ilford. It was then consigned, together with a considerable quantity of other wool, to Messrs. Pitt, Son and Badgery, wool-selling brokers of Sydney, for appraisement. It was appraised at prices totalling £316 18s. 2d. The total of the appraised prices of this and all other wool consigned by the plaintiff and appraised at this appraisement was paid, less the five per cent retention money and less the broker's charges (which amounted to approximately £1 per bale) to the plaintiff. In due course he received also the five per cent retention money and the amount payable by way of flat rate adjustment (eleven per cent in this case). The total amount received by him in respect of Donlon Brothers' wool would thus appear to have been about £365.

It will be convenient to deal now with the question of the con- struction of the document of 4th November 1942. Actually two questions of construction arise. The first is whether the transaction evidenced by the document was a sale of Donlon Brothers' wool to the plaintiff, SO that the property therein passed to the plaintiff. And the second (which is, I think, only of practical importance if the first is answered in the negative) is whether the word pro- ceeds' includes any share to which Donlon Brothers might become entitled in any profit arising from the Wool Purchase Arrangement between the two Governments.

In the fourth place, even if the proceeds derived by the Common- wealth from the Donlons' wool were recoverable by the plaintiff, there is no evidence to justify the conclusion that the Donlons' wool contributed to the wool disposals profit an amount equal to the share of that profit which is payable under the Act in relation to it. Apparently the wool was not sold in Australia, but was consigned abroad. For all that appears, however, the ship in which it was consigned may have been lost on the voyage; or it may have been otherwise destroyed by enemy action or it may have been sold for a disproportionately low price; or it may not have been sold at all, but may have been used in England for the manufacture of uniforms. The truth is that there is no possibility, at least SO far as the evidence suggests, of finding what the Donlons' wool produced or whether it produced anything at all. It does not even appear that there was at any stage such an intermixture of the Donlons' wool with the wool submitted by other persons as

1(1947) 75 C.L.R. 1. 89 CLR 604

to make it material to consider the law applicable in the class of cases referred to by Lord Moulton in Sandeman &Sons v. Tyzack &Branfoot Steamship Co. Ltd., 1.

But in any event, the argument advanced in support of the submission that the regulations were void as not affording just terms of acquisition is completely lacking in substance. Before Fullagar J., a great deal of evidence, oral and documentary, was adduced to show that the price realized by the Australian Govern- ment for the wool acquired under the regulations gave the growers as favourable a return for their wool as could reasonably have been obtained, and that the manner in which the appraisement system operated to distribute the flat rate price amongst the wool growers in accordance with relative values as expertly determined on the basis of a table of limits accurately prepared by persons of great knowledge and experience, was as fair as any that could have been devised. But we do not need to review this evidence in any detail, or to add to the comments which Fullagar J. has made upon it: for, with the whole history of the matter laid open for examina- tion, and with every possible ground of criticism of the regulations available to be relied upon, in the end the attack has been pressed at one point only. It commences with the statement, indeed the admission as the argument regards it, which is contained in reg. 2, that the purpose of the regulations was to provide for the carrying out of the Arrangement made between the Government of Great Britain and the Government of the Commonwealth for acquiring, in connection with the war, all wool produced in Australia, with certain exceptions. Thus, it was said, the acquisition of wool was provided for by the regulations for the sole purpose of servicing the Wool Purchase Arrangement. The ultimate objective was recognized as being the successful prosecution of the war, but the method adopted, counsel insisted, was neither more nor less than the compulsory acquisition of wool for the purpose of reselling it to the United Kingdom Government under the Arrangement, subject to the exception of SO much as might be required for local manufacture. The Arrangement entitled the Australian Govern- ment to receive a flat rate price, a payment to cover handling charges, and one-half of any profit which should result to the United Kingdom Government from the sale to other countries of any of the wool not required for Britain's own needs. Thus, in relation to all the wool acquired except such of it as was needed for local manufacture, the acquisition by the Commonwealth was for

1(1913) A.C. 680, at pp. 694-695. 89 CLR 605

the sole purpose of getting in exchange for it, without incurring any risk of loss, a net sum consisting of the flat rate price plus the one-half share of profits resulting from disposals by the United Kingdom. For such an acquisition, it was contended, terms could not be just which failed to entitle the dispossessed owners, as of right, to have divided amongst them or applied for their benefit, if not in ratable proportion to the appraised values of their respective parcels of wool, at least in some reasonable manner, whatever moneys the Commonwealth might actually receive in respect of its half share of the United Kingdom's profit on external sales. And the final step in the argument was to point to reg. 30 2 and adopt the statement of the effect of the regulations which appears in the Court's judgment in Ritchie v. Trustees Executors &Agency Co. Ltd. 1: "No payment to the supplier of wool, beyond, at all events, appraised value (whether appraised value simpliciter or adjusted to flat rate is not material) was required by the regulations all else remained a matter of administration' (2). Thus, it was said, the suppliers of the wool were given no right to participate in the profit, and that circumstance suffices to make the terms of acquisi- tion unjust. The mere chance of participation in consequence of an administrative decision given in exercise of a discretion does not make them just.

The argument concedes that there may be cases in which terms of acquisition are just notwithstanding that the Commonwealth intends to dispose of the property by a transaction which may yield a profit but it maintains that this cannot be SO where the proposed transaction is one in which the Commonwealth runs no risk of loss. The point that is made seems to be that in such a case the role of the Commonwealth is substantially that of a mere conduit pipe, the acquisition simply creating a detour by which the property passes from the owner to a waiting purchaser instead of passing between them by means of a direct sale as it might if the acquisition had not occurred. In a case in which the position may fairly be described in these terms, it may well be considered that there would be injustice in the Commonwealth's retaining for itself any part of the price which the owner could have obtained for himself if the acquisition had not prevented him from doing SO. But the situation which we have to consider is not of this kind at all. The wool growers were not in a position to make a bargain as advantageous as that which the Commonwealth Govern- ment made. Indeed they were not in a position to market their

2(1951) 84 C.L.R., at p. 577. 1(1951) 84 C.L.R. 553. 89 CLR 606

wool at all for the whole apparatus by which the Australian wool clip had been disposed of in peacetime conditions had collapsed with the outbreak of war. The terms which the Commonwealth Government secured by the Wool Disposals Arrangement were such as could not have been obtained in the prevailing circumstances, except by means of inter-Government negotiations on the highest political level, dealing with the country's entire output of wool for the whole period of the war and conducted on the footing that the Commonwealth, in the exercise of its war-time powers, would establish a highly-specialized organization for the handling of the wool, invest that organization by means of legislation with adequate powers for its purposes, ensure that the whole of the wool produced in Australia during the war would come to the organization's hands, and make available to it the men it needed of the appropriate qualifications and experience, the material equipment necessary for handling and storage purposes and the like, the requisite facilities for transport to the seaboard, and the necessary amount of shipping space. It is quite absurd to suggest that in this situation the demands of justice could not be satisfied by anything short of a legal right conferred upon the wool growers to have passed on to them, not only the agreed flat rate price, but also any moneys the Commonwealth might receive from the United Kingdom Government as its half-share of any ultimate disposal profits. Whether justice required that as much should be assured to the wool growers as was in fact provided for them by the regulations may be left an open question. What we have to consider is whether, in relation to the Commonwealth's share of any profit that might arise from sales to other countries, there was any necessity to do more than the regulations did, namely, to exclude that profit from the Commonwealth's consolidated revenue and commit its applica- tion to the discretionary judgment of the Central Wool Committee, which consisted in the main of persons drawn from the wool industry. By SO doing the regulations created a high degree of probability that the profit would be applied for the benefit of those engaged in the industry, in some manner regarded by the committee as appropriate to the circumstances as they should turn out to exist. Those circumstances, of course, could not be foreseen, and they admitted of SO much variation that upon a practical view of the matter it was almost inevitable that there should be allowed to some responsible body the latitude of judgment with which the committee was in fact entrusted. A decision as to what was the best and fairest course to adopt would have to be made when the time came, after considering, inter alia, how much there was to

89 CLR 607

dispose of and what had happened to the industry in the period that had elapsed. It is quite a hopeless proposition to maintain that because reg. 30 (2) left this matter in the realm of adminis- trative discretion the acquisition was upon terms which were not just.

In the result we are of opinion that the judgment of Fullagar J. was right and should be affirmed.

The appeal will be dismissed with costs.

Appeal dismissed with costs. Solicitor for the appellant, A. W. M. Dickinson. Solicitor for the respondentsCommonwealth of Australia and the Australian Wool Realization Commission, D. D. Bell, Crown Solicitor for the Commonwealth.

Solicitor for the respondents Donlon Bros., G. D. Bonamy. Solicitors for the respondent Bakewell, Whiting &Byrne, Mel- bourne, by Pritchard, Ferguson and Vine Hall.