Crown Liability in Contract: Australian Woollen Mills Pty. Ltd. v. Commonwealth, Study notes of Law

Download Crown Liability in Contract: Australian Woollen Mills Pty. Ltd. v. Commonwealth and more Study notes Law in PDF only on Docsity! Case Notes 95 Jackson v. Goldsmith. Yet however sound it may be in theory, the result in practice is unfortunate. That a person should suffer in court for his own stupidities alone in the past presentation of a case is fair enough, but this is secured by the rule that only parties to past actions and their privies can be bound by estoppel. When the facts place a plaintiff in exactly the same position vis-a-vis two defendants as a previous plaintiff was placed with regard to them, it would be more convenient and more sensible if the position between the two defendants was bound to be the same in each case. This much at least can be said for a general duty. B. J. SHAW CONTRACT - OFFER AND ACCEPTANCE-PROMISE CREATING LEGAL OBLIGATIONS AND MERE STATEMENT­ CROWN LIABILITY IN CONTRACT If the Commonwealth Government promises to pay subsidies to a certain class of manufacturers, can such manufacturers enforce the promise on the ground that the Crown in the right of the Com­ monwealth has contractually bound itself to pay them? In Australian Woollen Mills Pty. Ltd. v. The Commonwealth l the Full High Court, consisting of Dixon C.J., Williams, Webb, Fullagar and Kitto H., held in a joint judgment that there was no contractual obligation upon the Crown to pay such subsidies. The facts of the case are very involved. With the conclusion of the Second World War the Commonwealth Government surrendered its power of compulsory acquisition of wool and allowed the resump­ tion of free auction sales. However it continued the control of prices on cloth imposed during the war. Realizing that the free sale of wool would bring foreign buyers to Australia against whom the local cloth manufacturers would not be able to compete, because of the pegged prices on cloth, the Commonwealth Government informed them by circulars and letters that it would pay subsidies on wool purchased for domestic purposes. To become eligible for payment of subsidies the manufacturers had to submit to governmental con­ trol on the amount of wool purchased. This measure was necessary to avoid excessive stock-piling. The Government also declared that it retained the right to review and vary the amount of subsidies. In 1948 the Commonwealth Government decided to end the price control and, therefore, also cease the payment of subsidies. Th(: payments of shbsidies on wool purchased before 1949 and still on hand had to be refunded. Subsequently Australian Woollen Mills Pty. Ltd. sued the Commonwealth for payment of money alleged to be due under the above subsidy scheme for wool purchased before 1 [1954] A.L.R. 453. Res Judicatae 1949, and for the recovery of an amount which it was forced to refund. The action came in the High Court before Kitto J. who referred it to be argued before the Full Court. The Full Court dismissed the action. The Court's view was that the Commonwealth Govern­ ment never had an intention to assume a legal obligation.2 Its offer to pay subsidies was simply an announcement of an intended govern­ mental measure and not a promise which would legally bind it if acted upon by the manufacturers.3 The distinction between such announcements on the one hand and promises creating binding legal obligations on the other is very subtle. It would appear that if a person made an offer asking for the performance of some particular act, such performance would amount to an acceptance of the offer and create a binding legal obligation on the part of the offeror.4 However not every statement is intended to create such obligations. It may be a mere gratuitous promise or a flippant remark.5 To prove that the offeror intended to bind himself by his promise it must be shown that the offer was such as to induce the offeree to act in the particular way6 and consequently there had to be a request in the offer, expressed or implied, to perform the act.1 The Full Court in the present case following this reasoning stated that a test "to determine whether a contract has been made or not is to ask whether there has been a request by the alleged promisor that the promisee shall do the act on which the latter relies. Such a request may, of course, be expressed or implied."8 The presence of a request presupposes also the requirement that the offeree should act upon such request, and not simply perform an act which would coincide with the offer.9 Whether the performance of the act without any knowledge of the request is sufficient to con­ stitute a contractual obligation has given rise to interesting argu­ ments.10 However as the authorities stand now it is necessary that the offeree should act on the request. 2 Ibid. 470. 3 Ibid. 472. 4 Williams v. Carwardine (1833) 4 B. & Ad. 621; Shadwell v. Shadwell (1860) 9 C.B. (N.S.) 159; Alliance Bank v. Broom (1864) 2 Dr. & Srn. 289; Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q.B. 256; Glegg v. Bromley [1912] 3 K.B. 474. 5 Guthing v. Lynn (1831) 2 B. & Ad. 232; Miles v. New Zealand Alford Estate Co. (1886) 32 Ch.D. 266; Wigan v. English & Scottish Life Assurance Association [1909] I Ch. 291. 6 Salmond & Williams on Contracts (2nd edn., 1945) 101; see also Denning J. in Robertson v. Minister of Pensions [1949] I K.B. 227, 231 and Singleton L.J. in Turburville v. West Ham Corporation [1950] 2 K.B. 208, 225. 7 Carlill's case (supra); Combe v. Combe [1951] 2 K.B. 215 per Denning L.J. at 221, and per Asquith L.J. at 226. 8 [1954] A.L.R. 453, 468. 9 The Crown v. Clarke (1927) 40 C.L.R. 227. 10 Goodhart (1951) 67 L.Q.R. 456 and (1953) 69 L.Q.R. 106; Smith (1953) 69 L.Q.R. 99; Denning (1952) 15 Mod.L.Rev. I; Bennion (1953) 16 Mod.L.Rev. #1.