Chaff and Hay Acquisition Committee v J A Hemphill and Sons Pty Ltd

[1947] HCA 20

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(Decision by: Williams J)

Chaff and Hay Acquisition Committee
vJ A Hemphill and Sons Pty Ltd

Court:

Judges: Latham CJ
Starke J
McTiernan J

Williams J

Hearing date: 2 May 1947, 5 May 1947
Judgment date: 12 June 1947

Melbourne

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Decision by:
Williams J

The preamble to the Chaff and Hay (Acquisition) Act 1944 (S.A.) stated that a drought was then prevailing in South Australia, and that it was expedient that extraordinary provision should be made for ensuring that there would be sufficient supplies of chaff and hay available for the use of persons requiring the same. The Act then proceeded to constitute a committee to be called the Chaff and Hay Acquisition Committee, which was to consist of four mem-bers to be appointed by the Governor upon the nomination of the Minister of the Crown administering the Act, and to provide that the committee should be deemed to be an instrumentality of the Crown.

The Act empowered the committee, until 30th September 1945, subject to certain limitations, to purchase or acquire by compulsory acquisition any chaff or hay or standing crop which was capable of being harvested as hay within South Australia. The chaff, hay or standing crop so purchased or acquired was to vest absolutely in the committee, and subject to any disposition by the committee under the Act, to remain the property of the committee for the pur-pose of the Act. Where the chaff, hay or standing crop was acquired by compulsory purchase, the rights of the owner and other persons interested therein were to be converted into claims for compensation; the amount of compensa-tion, if not settled by agreement, to be determined in an action for compensation against the committee. The Act empowered the committee, until 30th September 1945, to purchase chaff or hay outside the State of South Australia. The Act empowered the committee to sell chaff or hay to any purchaser. The Act authorized any member of the committee to act as the agent of the committee for certain purposes, and the committee to appoint persons to act as its agents for these purposes. The Governor was empowered to make regulations for a number of purposes includ-ing, inter alia, regulations for the protection of the property of the committee and for the acquisition of plant and machinery, and facilities for the storage of chaff and hay required by the committee.

The committee was therefore empowered to purchase or otherwise acquire chaff and hay for a short period. But the committee might have to continue in existence for a considerable period in order to obtain payment from the persons to whom it sold the chaff and hay. The Act does not expressly incorporate the committee or provide for a common seal. It is not therefore a corporation in the strict sense. But it can contract to buy and sell chaff and hay as a corpo-rate body, and the chaff and hay and other property which it acquires for the purposes of the Act becomes the prop-erty of the committee as a corporate body.

Section 14 of the Act is in the following terms:-"(1) All legal proceedings by the committee with respect to any mat-ter arising out of this Act shall be commenced in the name of the committee and all proceedings against the commit-tee or any member of the committee with respect to any such matter shall be instituted against the committee in the name of the committee. (2) The Treasurer of the State shall, from the moneys appropriated for the purpose of this Act, satisfy all orders made by any court against the committee in any such legal proceedings. (3) No matter or thing done or suffered by the committee or by any member thereof, bona fide in the execution of this Act, or the exercise or discharge, or intended exercise or discharge, of any of its or his powers or duties, shall subject any member of the committee to any liability in respect thereof."

The committee is therefore not only empowered to contract and hold property as a corporate body, but it is also em-powered to sue or be sued as a corporate body with respect to any matters arising out of the Act. And its individual members are protected against liability for all matters and things done or suffered by the committee or any member thereof in the bona-fide execution of the Act, or the exercise or discharge of any of its or his powers or duties. Thus the effect of the Act is to create for certain purposes an artificial corporate entity which is separate and distinct from its individual members.

The crucial question is whether the committee can be sued in an action brought in the courts of New South Wales in respect of a matter arising out of the Act, namely for money alleged to be owing by the committee to the appellant, upon a contract for the purchase of hay made in New South Wales. The question first arose upon a chamber sum-mons to set aside the writ in the action. Owen J., who heard the application, thought that it was reasonable to assume that s. 14 was enacted for the purpose of relieving claimants in actions for compensation from the necessity of going through the somewhat cumbersome procedure of presenting petitions of right under the South Australian Supreme Court Act 1935-1944, Part V., and of allowing the committee to take proceedings in its own name in the South Aus-tralian courts which otherwise could have only been taken by the Attorney-General. He held that s. 14 was intended to be procedural only, and limited in its application to actions brought in the courts of South Australia, and set aside the writ.

There was an appeal to the Full Supreme Court of New South Wales, which by a majority (Jordan C.J. and Street J., Davidson J. dissenting) allowed the appeal, set aside the order of Owen J., and dismissed the summons with costs. The appeal to this Court is by special leave from the order of the Full Supreme Court.

I agree with the opinion of the majority of that Court. The effect of the Act is, in my opinion, to form the committee into a separate corporate body from that of its members for the purposes of the Act. It has the corporate powers al-ready mentioned. Persons who sell chaff or hay to the committee sell their goods to the corporate body. It is to the corporate body that they must look for payment. The members of the committee are not liable as individuals for the chaff or hay purchased by the committee. The vendors of the chaff and hay are liable to the committee and not to the individual members for any breach of contract on their part.

For the purposes of private international law, South Australia is a foreign country in the courts of New South Wales. In Russian Commercial and Industrial Bank v. Comptoir D'Escompte de Mulhouse ^[30] , Lord Wrenbury said:-"There is no question but that according to private international law and according to the comity of nations a foreign corporation is for many purposes recognized as a corporation here. It may sue and be sued here in its corporate name" ^[31] . There is no reason that I can see why this principle should not extend to the recognition as a juristic body of an artificial entity created under foreign law which has some, but not all, of the capacities of a corporation ac-cording to English law. This view is supported by the dictum of Phillimore L.J. in Von Hellfeld v. Rechnitzer and Mayer Frères & Co. ^[32] . Quasi-corporations, as such bodies are often called, are well known in English law: See Grant, The Law of Corporations, (1850) pp. 600 et seq.; Halsbury, Laws of England, 2nd ed., vol. 8, p. 6, note (r). In my opinion the Chaff and Hay Acquisition Committee is a statutory entity created by the law of South Australia which should be recognized in the courts of New South Wales as a foreign quasi-corporation, having the corporate powers conferred upon it by the Act.

It is a quasi-corporation which is an instrumentality, that is to say an agent, of the Crown in right of the State of South Australia. It was contended that the existence of this agency shows that the provisions of s. 14 must be proce-dural only, because the legislature of South Australia could not have intended to surrender the sovereign rights and immunities to which such Crown would otherwise be entitled under international law in a foreign State. It was con-tended that if the committee could be sued at all in the courts of New South Wales, it would be the individual mem-bers and not the committee as a corporate being which would be liable, so that the proper defendants would be the individuals and not the committee.

I cannot agree with these contentions. It is clear of course that questions of procedure are determined by the lex fori (in this case the law of New South Wales). But the provisions of s. 14 (3) have nothing to do with procedure. As the learned author of Cheshire, Private International Law, says:-"If the effect by that law (that is the foreign law) is to relieve the party whom it is desired to cite as defendant in England of all liability entirely, it is a rule of substance binding on an English Court, even though, had the transaction been governed throughout by English law, the liabil-ity of the defendant would have been undeniable. A foreign rule must not be labelled as procedural, and therefore as inapplicable to English proceedings, if the result will be to impose a liability that does not exist by the proper law of the transaction" (Cheshire, Private International Law, 2nd ed. (1938), p. 649). The learned author relies for this proposition on General Steam Navigation Co. v. Guillou ^[33] , where, as he says, the third plea clearly alleged a de-nial of liability on the part of the defendant by French law, and the judicial difference of opinion was not upon whether this would have been a good plea if the defendant was not liable under this law, but upon whether he was or was not so liable.

Further it is clear from the decision of the Court of Appeal in Minister of Supply v. British Thomson-Houston Co. Ltd. ^[34] (followed in Minister of Health v. Bellotti ^[35] ) that the committee is not made a mere agent of the Crown by the provision that it is deemed to be an instrumentality of the Crown. In the British Thomson-Houston Case ^[36] , Goddard L.J. said (of a section in The War Department Stores Act 1867 (Imp.), similar to s. 14 (1) of the Chaff and Hay (Acquisition) Act):-"It is said that this section relates only to procedure and neither confers nor alters rights or causes of action... The object of this section seems to me to confer on the minister a cause of action which otherwise would be only in his principal, and thus to enable him to sue as though he were the principal" ^[37] . And:-"There have been several statutes, some earlier, some later, than the Act we are now considering, containing a similar provision, and it is only reasonable to suppose that the object was a simplification of the law and the provision of an alternative remedy to information on the one side and petition of right on the other. This is effected by clothing the minister with the rights and obligations of a principal, so that he can enforce rights and remedies by the ordinary process of litigation, and at the same time enables the subject to sue him as though he were himself a contracting party and not the agent of the Crown" ^[38] . The provisions of the Act as a whole, and particularly s. 14, clearly indicate an inten-tion on the part of the legislature that the committee should contract and hold property, and sue and be sued as a principal. The arguments for the appellant based on the earlier decision of the Court of Appeal in Mackenzie-Kennedy v. Air Council ^[39] , are fully answered by the judgments of the same Court in the British Thomson-Houston Case ^[40] .

There is nothing strange that I can see in attributing to the legislature of South Australia an intention to make the revenues of that State liable to satisfy the orders of the courts outside South Australia made with respect to any mat-ters arising out of the Act. The committee was empowered to purchase chaff and hay outside South Australia, and therefore to acquire legal rights and incur legal liabilities as a principal beyond its borders. The committee might want to sue in the courts of other countries to enforce such rights. Presumably the legislature of South Australia might reasonably consider itself under an obligation to pay the costs of such an action if unsuccessful. Presumably a vendor of chaff and hay in another State might be unwilling to sell his goods to the committee except for cash, if it was incapable of being sued where the debt was incurred. The presumption would be, I should think, that the legisla-ture of South Australia would intend to create a body capable of suing and being sued wherever it was authorized to carry on business, whether within or without South Australia. In my opinion, this is the true effect of the Act. The provision that members of the committee are not to be liable except for mala-fide acts is not procedural only. It is part of the constitution of the quasi-corporation, and a matter of substance binding in comity upon the courts of a foreign State.

For these reasons I would dismiss the appeal.