factory-Indemnity in respect of agreement with employees-Enecutive act of Commonwealth-Necessity for Order in CouncilValidation of agreement by MELBOURNE,

Parliament-Effect of Appropriation Act-Defence Act 1903-1918 (No. 20 of Oct. 19, 22,

1903-No. 47 of 1918), secs. 4, 63-The Constitution (63 &64 Vict. c. 12), 23, 1923;

secs. 53, 54, 62, 63. Mar. 21.

The respondent company, which carried on an ammunition factory, had been in negotiation with the Department of Defence of the Commonwealth in respect of the taking over by the Commonwealth of the business and the leasing by it of the land and premises used in connection therewith, and certain heads of agreement had been drawn up. A letter was written by the Secretary of

34 CLR 199

Defence to the respondent in the following terms :- 44 The principal heads of agreement, as understood by this Department to have been agreed to by representatives of both parties, are set out hereunder company to use its best endeavours to secure, and the Commonwealth to engage, the services of the skilled staff at present employed by the company." To this letter the respondent replied confirming the heads of agreement, and stating that it was prepared to execute the agreement in due course, and that,

regarding clause 8 of the heads of agreement, we have to inform you that the following members of the staff are under engagement to this company for the following terms (included among those named was A, who was said to be assistant manager under engagement for a period of ten years). "These are all the service agreements entered into by the company, and it is understood that the Department will take over the company's obligations thereunder." In reply the Secretary of Defence wrote asking the respondent to furnish, for the information of the Department, copies of the agreements standing between the company and the members of the staff referred to therein. The Commonwealth entered into possession of the land and premises, carried on the factory and employed A therein, but terminated his employment before the period of his engagement with the respondent had expired.

Held, that, on the construction of the correspondence, the Commonwealth was not under any obligation to the respondent to take over, or to indemnify the respondent in respect of, the service agreement between the respondent and A, who on the evidence was one of the skilled staff of the respondent within the meaning of clause 8 of the heads of agreement.

Per Isaacs and Rich JJ. :-(1) Before any administrative act can be justified under sec. 63 of the Defence Act 1903-1918 there must be an Order in Council authorizing it mediately or immediately. (2) An Appropriation Act of the Commonwealth Parliament appropriating money towards payment in respect of an agreement made by the Executive Government on behalf of the Common- wealth, and which without parliamentary…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading The Commonwealth v Colonial Ammunition Co Ltd

Details

AGLC: The Commonwealth v Colonial Ammunition Co Ltd [1924] HCA 5
Case: [1924] HCA 5
Decision Date: 21 March 1924

CaseChat Overview and Summary

The Commonwealth of Australia appealed to the High Court of Australia from a decision of the Supreme Court of Victoria. The dispute concerned an alleged agreement between the Commonwealth and the Colonial Ammunition Co Ltd for the Commonwealth to take over the company's ammunition factory. The company claimed the Commonwealth had agreed to assume its obligations under certain service agreements with its staff, including A. J. Cartwright, and sought an order for the Commonwealth to perform this obligation and indemnify the company against any claims by Cartwright.

The legal issues before the High Court were whether a binding agreement had been concluded between the parties, and if so, whether the Commonwealth had undertaken to assume the company's obligations under the service agreements, particularly that of A. J. Cartwright. The court was also required to consider the validity of such an undertaking, including whether it required an Order in Council and if it was validated by parliamentary appropriation.

The High Court, in allowing the appeal, found that the correspondence between the parties did not establish a concluded agreement for the Commonwealth to take over the company's obligations under the service agreements. While the correspondence indicated an agreement for the Commonwealth to engage the services of the skilled staff, it did not create an obligation to assume the company's existing contractual liabilities to those employees. The court held that the statement in the company's letter, suggesting the Department would take over obligations, was not a clear proposal for a radical alteration of the heads of agreement but rather an understanding of how clause 8 of those heads of agreement would be performed in relation to engaged staff. Furthermore, Isaacs and Rich JJ. noted that an Appropriation Act does not validate an agreement made by the Executive Government without prior parliamentary authority, and that any administrative act under section 63 of the Defence Act requires an Order in Council.

Consequently, the High Court reversed the decision of the Supreme Court of Victoria, holding that the Commonwealth was not under any obligation to the respondent company to take over, or indemnify the respondent in respect of, the service agreement between the respondent and A. J. Cartwright.

Orders