O'Neill v O'Connell
72 CLR 114(1945) 19 ALJ 227
(Judgment by: Dixon J)
O'Neill
vO'Connell
Judges:
Starke J
Dixon JWilliams J
Legislative References:
Judiciary Act 1903-1940 - 38A; 40A
Rules Publication Act 1903-1939 - 6A(1)
Case References:
cf Ex parte Walsh and Johnson, Re Yates - 37 CLR 36; [1926] ALR 77
George Hudson Ltd v Australian Timber Workers' Union (1923) - 32 CLR 413; 30 ALR 19
re Cousins, Alexander v Cross - (1885) 30 Ch D 203
Skelton v Younghouse - [1942] AC 571
Sharp v Union Trustee Company (1944) - 69 CLR 539
London and South-Western Railway Company v Gomm - (1882) 20 Ch D 562
Given v Massey (1892) - 31 LR Ir 126
Re Wilson, Wilson v Wilson - [1908] 1 Ch 839
Larsen v Sylvester and Co - [1908] AC 295
Thorman v Dowgate Steamship Co Ltd - [1910] 1 KB 410
cf Robertson v Deputy Federal Commissioner of Land Tax - 65 CLR 338; [1942] ALR 237
re Cousins - (1885) 30 Ch D 203
Wright v Morgan - [1926] AC 788
Radnor v Shafto - (1805) 11 Ves 448; 32 ER 1160
Brooke v Garrod - (1857) 2 De G
&
J 62; 44 ER 911
cf Attorney-General v Wax Chandlers Company - (1873) LR 6 HL 1
Messenger v Andrews - (1828) 4 Russ 478; 38 ER 885
re Drew - [1919] VLR 600; 25 ALR 400
R v Maryborough Licensing court (1919) - 27 CLR 249
Pirrie v McFarlane (1925) - 36 CLR 176; 31 ALR 367
Ex parte Walsh and Johnson (1925) - 37 CLR 130
Commonwealth v Kreglinger (1926) - 37 CLR 420; [1926] ALR 180
James v South Australia (1927) - 40 CLR 333; [1927] ALR 334
R v Gates, Ex parte Maling (1928) - 41 CLR 519
R v Carter, Ex parte Kisch (1934) - 52 CLR 224; [1935] ALR 125
Ffrost v Stevenson (1937) - 58 CLR 577; [1937] ALR 533
Hopper v Egg and Egg Pulp Marketing Board (1939) - 61 CLR 673; [1939] ALR 251
Joyce v Australasian United Steam Navigation Company (1939) - 62 CLR 160; [1939] ALR 442
R v Bevan (1942) - [1942] ALR 170
Oppenheimer v Minister of Transport - [1942] 1 KB 242
Re Cant's Estate - (1859) 4 De G
&
J 503
re Kerry - (1889) WN 3
Re Armstrong's Will Trusts, Graham v Armstrong - [1943] 1 Ch 400
Commissioner of Taxes (Queensland) v Camphin - [1937] ALR 401
Trustees Executors and Agency Co Ltd v The Federal Commissioner of Taxation - 69 CLR 270; [1944] ALR 319
Re Busby, Busby v Busby - (1930) 30 SR (NSW) 399
Ex parte Hardy (1861) - 30 Beav 206
Re Davison and Torrens - (1866) 17 Ir Ch 7
Re Wilson - [1908] 1 Ch 839
Lord Advocate v Meiklam - (1860) 22 S C 1427
Judgment date: 11 April 1946
Judgment by:
Dixon J
Upon this appeal the respondent has not contested the correctness of the view adopted in the Supreme Court and accepted before the Chief Justice of this court, that the option which the codicil confers upon the appellant to purchase the land is independent of the option to purchase the business, and may be exercised by the appellant although his election is against purchasing the business.
The option to purchase the land at £6500 does not appear to me to be limited to a mere right of preemption if and when the trustees convert the real estate. Such a right gives but a prior opportunity of becoming the purchaser at the time when a power of conversion comes to be exercised or a duty to convert is to be fulfilled.
The manner in which the option in the present case is expressed makes it plain that it was intended to confer upon the appellant an immediate right, if he should so elect, to become the owner of the land at the fixed price of £6500. Such a provision imparts to the donee of the option a beneficial right in reference to or an interest in the land. Substantially the same result might be produced by a devise of the land conditional upon the devisee paying the sum named. A not very different result might be produced by a direction to the executors or trustees to propose a contract of sale to the intended donee of the option upon terms and conditions stated in the will or to be settled in some manner indicated by the will.
But in form the disposition now in question stands between a conditional devise and a direction to propose a contract. It gives an immediate, though innominate, beneficial interest, one of the many miscellaneous rights and interests which under the wide power of testamentary disposition allowed by English law a testator may create.
In discussing whether the similarly framed option in In re Cousins , (1885) 30 Ch D 203 at p 213, was transmissible or was exercisable only by the donee, Cotton, LJ, refers to the argument that it is property, and therefore devolves on death as other property. After remarking that the assumption that all property must last after a man's death is a fallacy, as is shown by the example of a life interest, His Lordship says -- "The real question is, although this is property , is it such property as can be made valuable at any time after the son's death?"
It is now settled that there is no rule that primá facie such an option is personal to the donee and is not exercisable by his executors, administrators or assigns -- Skelton v Younghouse , [1942] AC 571. The reasons given by their Lordships in Skelton's Case all show that the donee of the option takes on the testator's death an immediate beneficial interest in property. This is well illustrated by the reservation which, in view of the terms employed by Lord Dunedin, in Wright v Morgan , [1926] AC 788 at pp 795-6, Lord Maugham thought fit to make concerning the question whether, before the exercise of an option of purchase contained in a will, the interest of the donee of the option in the property is to be considered vested or contingent, scil . contingent on his electing to take the estate or interest affected by the option. See further, Radnor v Shafto , (1805) 11 Ves. 448, 32 ER 1160; Brooke v Garrod , (1857) 2 De G. & J 62, 44 ER 911.
The donee of the option, by electing to take the property at the price fixed or upon the terms indicated by the will, incurs an equitable duty to perform the condition upon which, under the provisions of the will, he becomes entitled to the property -- cf. Attorney-General v Wax Chandlers Company , (1873) LR 6 H.L. 1 at p 19; Messenger v Andrews , (1828) 4 Russ 478 , 38 ER 885. The obligation is independent of contract.
The exercise of a testamentary option by the donee makes absolute his immediate right to the property, except in so far as the will makes payment of the price or the performance of any other obligation laid upon him an essential condition. His position becomes, of course, very similar to that of a purchaser. Indeed, questions have been raised as to how far, in connection with what may be called verification of title, rules implied upon an open contract of sale are applicable as between him and the executors or trustees of the will. But, though it has been said that there "must be taken to be" the elements of contract, the relation does not rest upon contract. The executors' obligation arises from the terms of the will, not from contractual promises made by them in exchange for promises made by the donee of the option. Of such promises there are none on either side. If a will, upon its proper interpretation, confers upon the donee of an option a right, upon exercising his option, to call upon the executors to give him a contract for the better evidencing or definition of his rights, a possible case where there are long terms of purchase, the execution of the contract may place the donee of the option on the actual footing of a contractual purchaser in all respects. But until the contract is entered into, the rights of the executors and the beneficiary exercising the option do not arise ex contractu , but depend upon the provisions of the will and the doctrines of equity operating upon the will. Considering the matter apart from the effect of the National Security (Economic Organisation) Regulations, it appears to me that on the death of the testator the appellant became entitled to the option as an interest in or beneficial right in relation to the land. By his notices exercising the option he became entitled to the land, subject to paying the purchase money and upon payment to call for a transfer.
In these circumstances, even if the provisions of the will, its being brought into operation by the death of the testator, and the giving of the notices, or any of these matters, amounted to a contravention of reg 6 of the Economic Organisation Regulations, the case would appear to me to be covered by reg 10 (1). That regulation expressly provides that where any transaction is entered into in contravention of the Part containing reg 6, the transaction shall not thereby be invalidated, and the rights, powers and remedies of any person thereunder shall be the same as if the Regulations had not been made.
As the notice or notices communicating the appellant's election fixed the rights, I cannot see why, if the facts fall within the prohibitions of reg 6 at all, the completion of the acquisition of those rights should not fall within the protective provision of reg 10, as a transaction entered into. The policy of that regulation is plainly to prevent an attempt to create or impart contractual or proprietary rights being considered illegal and void because the attempt infringed the Regulations contained in Part III. or Part VI. To achieve the aim of the Economic Organisation Regulations, it doubtless appeared sufficient to penalise dealings in land without the Treasurer's consent. To annihilate the dealings themselves was evidently regarded as a further step which it was not necessary to take. It is true that in the subsequent reg 10B the policy was not followed to its logical conclusion. But reg 10 stands as the general rule, and reg 10B affects only registration of transfers and other assurances.
I should therefore be of opinion that, even if reg 6 did apply to the case, the appellant had become beneficially entitled to the land subject to payment of the price. But I do not think that the case does fall within the operation of reg 6. My reason is that I think that the regulation has no application to the devolution of property on death or the acquisition of rights under the dispositions of a will on the death of a testator, and I do not think that it applies to the exercise of such rights or the enjoyment of property so devolving. In none of their changing forms do the Regulations appear to me ever to have contemplated interference with testamentary dispositions, and neither the policy which they embody nor the economic control they aim at demand that they should do so.
Exclusive reliance upon the reprint of regulations as amended made pursuant to s 6A (1) of the Rules Publication Act 1903-1939 sometimes, in a matter of interpretation, deprives the court of the advantage of seeing how the regulations were developed by amendment and why the amendments were made. Strictly speaking, s 6A (1) does no more than authorise the printing in a conglutinated form of regulations made as separate pieces of subordinate legislation. It does not relieve the court of the duty of construing the regulations on the footing that they do consist of separate legislative acts.
It is not often that there is either need of or advantage in looking at the more authentic materials from which the Government Printer has reconstructed his convenient and perhaps more intelligible text. But this case happens, I think, to be such a one. Statutory r 1942, No 76, in which the Economic Organisation Regulations began, shows no intention at all of going beyond dispositions and transactions inter vivos . reg 6 thereof says that a person must not sell, transfer, convey or otherwise divest himself of an estate or interest in land. Statutory r 1942, No 110, replaces Part III. of those Regulations with a new Part III. containing a more extended catalogue of the transactions which could not lawfully be entered upon without the Treasurer's consent. But it still dealt with the subject from the point of view of the vendor, transferror or disponor. The regulation also introduced a parallel provision dealing with shares, stock and debentures. Regulation 6 (1) provided that a person should not, without consent, ( a ) sell land, ( b ) grant an option for the purchase of land, ( c ) grant a lease (subject to an exception), ( d ) assign a lease (subject to an exception), ( e ) "otherwise dispose of land, except by way of gift, by will or in exercise of a power of appointment under a will." reg 7, in relation to shares, etc., ended with the like general provision against otherwise disposing of them except by way of gift, by will, or in the exercise of a power of appointment under a will.
It is plain that the draftsman of this regulation considered that the use of the wide and indefinite words "dispose of" made it desirable that he should expressly except gifts and dispositions by will. He was drafting a regulation imposing upon the vendors or disponors of property in land a prohibition against imparting property or contracting to do so without the Treasurer's consent. The person penalised was not the person actively acquiring property, but the person actively selling or otherwise disposing of it. To devise property by will or to exercise a testamentary power is to take active measures for its disposition, to make what on death would become an assurance of the property. It was therefore desirable to make an exception of testamentary dispositions. But by SR 1942, No 425, the policy of laying the prohibition on the vendor or disponor of land and penalising him was changed, and the purchaser or disponee was made the object of the prohibition and of the penal sanctions. The change of policy was restricted to land, and reg 7, dealing with shares, stocks and debentures, was left unaltered in this respect. Regulation 6 (1) provided that a person should not, without the consent of the Treasury, ( a ) purchase any land, ( b ) take an option for the purchase of any land, ( c ) take any lease of land, ( d ) take a transfer or assignment of any land, or ( e ) otherwise acquire any land. It will be seen that the corresponding but converse expressions are used. The change necessitated the removal of the exceptions to a separate sub-regulation. But it is clear, as it seems to me, that the prohibition is still laid on active transactions. To be guilty of a contravention it would be necessary to do something as an active agent. To become by the death of another his devisee, legatee, or beneficiary would not naturally be treated as falling within the prohibition -- "A person shall not without consent acquire." The exceptions, now set out in the second sub-regulation of the regulation, cover the acquisition of land by way of gift and exclude it from the prohibition. To acquire a legal estate by way of gift involves becoming party to a transfer or assurance, "an active acquisition." In deliberately omitting the rest of the former exception, namely, the words "by will or in the exercise of a power of appointment," it is impossible to believe that the draftsman meant to drag these forms of "acquisition" under the prohibition. The explanation almost certainly is that he considered them to be illogical and unnecessary inasmuch as they were not included in the prohibition.
That this is the explanation is confirmed (1) by the retention of these exceptions in the case of shares, etc., where the prohibition is on the vendor or disponor, (2) by the circumstance that the Treasurer's consent is required before the "acquisition." and although a will operates on death eo instanti to impart a beneficial interest, and prior consent is out of the question; (3) by the references to proposed transactions in all the provisions for obtaining consent -- subregs (4) and (6); (4) by the inclusion in the same amending Statutory Rule of a new reg 8, which provided that nothing in the Part should prevent ( d ) the vesting in the personal representative of a deceased person in his capacity as such, of any property or any interest in any property; and ( e ) any transaction which vests any property or any interest in property, in any trustee of the deceased person.
I am therefore of opinion that the Regulations do not cover the testamentary creation of interests.
It almost necessarily follows that they are not meant to penalise the exercise or enjoyment of the rights or interests given. There are no expressions in reg 6 apt to cover the giving by the appellant of the notices of his election, and it was not, in my opinion, a contravention of the Regulations. I am therefore of opinion that the appeal should be allowed.
This originating summons was removed into the High Court by the operation of s 38A and s 40A of the Judiciary Act. It had come before Gavan Duffy, J, in the Supreme Court, and he had adopted views which brought the case within the application of the Regulations, and at the same time left the now appellant without the benefit of reg 10. That meant that His Honour was necessarily confronted with the question whether the Regulations were valid or invalid, a question involving directly or indirectly a question as to the limits inter se of the constitutional powers of the Commonwealth and of the States. Upon the narrowest view that has been taken of the application of the words "involving," in s 38A, and "there arises," in s 40A, the consequence was that the "cause" or "matter" fell within those provisions and was removed into this court -- see and compare: In re Drew , [1919] VLR 600 , 25 ALR 400 ; R v Maryborough Licensing court , (1919) 27 CLR 249 ; George Hudson Ltd v Australian Timber Workers' Union , (1923) 32 CLR 413 , 428 et seq , 30 ALR 13 , 19; Pirrie v McFarlane , (1925) 36 CLR 176 , 178-180 , 192-8 , 223-5 , 31 ALR 367 , 373, 385; Ex parte Walsh and Johnson , (1925) 37 CLR 130 ; [1926] ALR 46; Commonwealth v Kreglinger , (1926) 37 CLR 420 , 421 , 422 , 423 , 430 ; [1926] ALR 180, 184; James v South Australia , (1927) 40 CLR 333 ; [1927] ALR 334; R v Gates, Ex parte Maling , (1928) 41 CLR 519 ; R v Carter, Ex parte Kisch , (1934) 52 CLR 224 ; [1935] ALR 125; Ffrost v Stevenson , (1937) 58 CLR 577 at p 617, [1937] ALR 533 , 566; Hopper v Egg and Egg Pulp Marketing Board , (1939) 61 CLR 673 , 677 , 681 ; [1939] ALR 251, 253, 255; Joyce v Australasian United Steam Navigation Company , (1939) 62 CLR 160 ; [1939] ALR 442; R v Bevan , (1942) 66 CLR at pp 465, 486, [1942] ALR 170 , 174. But once the "cause" is lawfully removed here, then the determination of the cause lies within the jurisdiction of this court, which, unless it exercises the power conferred by s 42 or exercises its discretion to remit the whole or any part of it, may dispose of the matters in controversy, and give what judgment and make what order appears right upon the facts and the law.
Accordingly, I think we should allow the appeal and answer the questions in the originating summons:
1. Yes, that of 24th August, 1945, was effective.
2. No
3. Yes.