A-G (Cth) v Schmidt [No 2] [1962] HCA 55

High Court of Australia Kitto J. A-G (Cth) v Schmidt [No 2] [1962] HCA 55

Cur. adv. vult.

Nov. 9 Kitto J. delivered the following written judgment:—

I have heard argument on a preliminary question as to the construction of s. 13D of the Trading with the Enemy Act 1939-1957 Cth, a section that was inserted in the Act by the Trading with the Enemy Act 1952. Sub-section (1) of that section confers jurisdiction on the High Court to order the payment or transfer to the Controller of Enemy Property of certain moneys, investments, books or accounts. The moneys and investments referred to are all moneys and all investments representing moneys for the time being standing to the credit of the High Court of Australia Suitors' Fund as a result of payments into Court by controllers appointed by the High Court under the Act; and the proceeding before me relates to moneys and investments of that description. By sub-s. (3) of s. 13D an application to the High Court for an order under sub-s. (1) shall be made by the Attorney-General, and the proceeding is an application by that officer. Sub-section (2) contains the provision which I have now to construe. It commences with the words "Notwithstanding anything contained in the last preceding section", i.e. s. 13C, a section which, subject to s. 13D, vests in the Controller of Enemy Property (inter alia) all moneys and investments of the character I have mentioned. With that introduction, sub-s. (2) provides that in proceedings arising under s. 13D the High Court may by order give directions of four kinds, described in four paragraphs. Only pars. (a) and (c) need be considered. Paragraph (a) enables the Court to direct the retention in Court, or the application as directed by the Court, of moneys or investments which, in the opinion of the Court, should be retained or applied for the purposes of meeting "just claims"; and par. (c) enables the Court to direct that the payment of moneys or transfer of investments to the Controller of Enemy Property be subject to such conditions as it thinks fit.

Before the enactment of s. 13D there was and there still is in the Act a provision contained in s. 13A (inserted by an Act of 1947) that the powers conferred on the High Court by s. 13—namely powers in certain circumstances to appoint a controller of a person, firm, or corporation with powers of a wide description—shall be deemed to include, and to have included at all times since the commencement of the principal Act of 1939, power to authorize payments for the sustenance and maintenance of certain classes of persons and their dependants. This provision has been treated, in the case to which the present application relates and I believe in other cases also, as enabling the Court, notwithstanding that the controller appointed by it has completed his duties, has duly accounted for all moneys that have come to his hands as such controller, has paid the balance into Court and has been discharged from his office, to direct periodical payments to be made out of the moneys in Court for the sustenance and maintenance of a dependant of a person in respect of whom the controller was appointed. The question now before me is whether, in the present application by the Attorney-General for payment out to the Controller of Enemy Property, the Court is given power by par. (a) or par. (c) of s. 13D (2) to give a direction entitling such a dependant to periodical payments of the same character for the future.

The contention that the Court has such a power has been rested in argument primarily upon par. (a), and it has been put in two ways. In the first place it is said that "just claims" is an expression wide enough to include the moral claim of a dependant to an allowance on compassionate grounds; and in the second place it is said that the power under s. 13A to authorize payments for sustenance or maintenance remains exercisable notwithstanding the discharge of the Court's controller, and that if an order be made under that power in favour of a dependant that dependant will have a "just claim" however narrowly that expression should be interpreted. The first of these submissions I must reject because in my opinion the expression "just claims" should be understood, in the absence of a controlling context, as referring only to demands which are justified on legal grounds—rights to payments or to property "not by the caprice of the Judge, but according to sufficient legal reasons or on settled legal principles": Beddow v. Beddow [1] . The second submission also I must reject, being of opinion that even if the power of the Court under s. 13A is still exercisable in such circumstances as those of the present case, an order made in exercise of it could not do more than authorize payments: it could not give any right to payments, and for that reason if for no other it could not create a "just claim".

1. (1878) 9 Ch. D. 89, at p. 93.

I find more difficulty with the power given by par. (c) of s. 13D (2). I am asked to direct under that paragraph that the payment and transfer to be made to the Controller of Enemy Property be subject to a condition that periodical payments for sustenance or maintenance to dependants be made until the further order of the Court. Counsel for the Attorney-General denies that the power is wide enough to enable this to be done, submitting that the generality of the expression "such conditions as it (the Court) thinks fit" is to be understood as limited by considerations derived from the legislation read in the light of the Agreement on Reparation from Germany of 1945 and the Rules for Accounting for External Assets of 1947, which were before the Full Court when it upheld the validity of ss. 13C and 13D in Attorney-General for the Commonwealth v. Schmidt [2]

1. (1961) 105 C.L.R. 361.

The power to impose conditions is discretionary, but since it is a power conferred upon a Court its exercise must be according to a judicial and not an arbitrary discretion. It is not a power to distribute largesse. Its limits must be found in the purposes of the legislation and particularly in the purposes appearing from ss. 13E, 13F and 15A of the Act and reg. 18 of the National Security (Enemy Property) Regulations as in force by virtue of s. 15A. Section 13E requires that moneys received by the Controller of Enemy Property in pursuance of an order made under s. 13D shall be paid into the Enemy Subjects Trust Account referred to in the Regulations. Out of moneys standing to the credit of that Account representing what I may shortly describe as Japanese property, s. 13F provides for the payment of such "debts and claims" as the Controller in his discretion considers should be paid thereout; and subject to that those moneys are to be disposed of in the manner provided. There is no similar provision in the Act with respect to German property (and I am concerned in this case with German property), the reason being that whereas a Treaty of Peace has been concluded with Japan none has been concluded with Germany. In respect of German property, specific power is given to the Executive by s. 15A (3) (a) to amend existing regulations for carrying out or giving effect to Article six of the Agreement on Reparation from Germany. The existing regulations were made under the National Security and are in force by virtue of s. 15A (1) of the Trading with the Enemy Act. By reg. 18, the Controller is empowered to authorize payment to a person of the whole or part of any moneys paid into the Trust Account if he is satisfied that they ought to be paid to that person. Article 6 of Part I of the Agreement on Reparation from Germany provides that every signatory Government shall, under such procedures as it may choose, hold or dispose of German enemy assets within its jurisdiction in manner designed to preclude their return to German ownership or control, and shall charge against its reparation share such assets "net of accrued taxes, liens, expenses of administration, other in rem charges against specific items, and legitimate contract claims against the German former owners of such assets".

With these matters in mind, three observations may be made. The first is that if the Legislature had intended to give the High Court power to award compassionate payments to dependants when ordering a payment of moneys or transfer of investments from the Suitor's Fund of the Court to the Controller of Enemy Property, it surely would have followed the precedent of s. 13A and made express provision to that effect. The second is that the provision made by s. 13F for the ultimate disposition of Japanese moneys, after payment of such "debts and claims" as the Controller in his discretion considers should be paid thereout, seems to exclude any notion of compassionate payments; and it is difficult to suppose that they were within the Legislature's intention in the one case when not in the other. And the third observation is that an unrestricted power to provide for compassionate payments is not easy to reconcile with an intention to abide by Article 6 of Part I of the Reparation Agreement; and yet if the power exists at all it exists by force of words which contain no such restriction as would ensure observance of Article 6.

These considerations and the general tenor of s. 13D lead me to conclude that the power to impose conditions under par. (c) is not to be understood as extending beyond conditions for safeguarding any outstanding rights which cannot be satisfactorily protected under par. (a) or par. (b) and which yet need protection in order that the moneys to be paid into Enemy Subjects' Trust Account shall be subjected to all proper deductions such as those referred to in the concluding words of Article 6 of the Reparation Agreement.

I hold, therefore, that the Court has no power in the present proceeding to provide for the future sustenance or maintenance of dependants.