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Friday, 14 May 1915

Mr FISHER - Do you mean security?

Sir WILLIAM IRVINE - Yes, security to enable them to engage in large undertakings which they might be reluctant to undertake unless they had the certainty which the Bill gives. Clause 3 is likely to have some effects which I am certain the Attorney-General has not fully considered. I opened my remarks by saying that I did not think this portion of the Bill had received the full consideration which it deserved. It provides that an enemy contract is one -

(o)   to which an enemy subject is a party; (Z>) in which an enemy subject has an interest; or

(c)   which is or is likely to be for the benefit of enemy subjects or of enemy trade.

The definition of enemy subject is limited in clause 2 to what is defined as an enemy subject under the proclamation, and there is not much criticism to be attached to it, but paragraph c, which defines as "enemy contracts" all contracts which are or are likely to be for the benefit of enemy subjects or of enemy trade, enormously extends the operation of the whole Bill, and I wish to point out to the AttorneyGeneral some of the effects of that. The Bill goes on to provide that the AttorneyGeneral is to have the judicial determination of whether any particular contract is or is not an enemy contract. I do not quarrel with the fact that an enormously important judicial determination should be vested in the AttorneyGeneral, nor do I question his ability to properly exercise it, but in this matter there is no discretion allowed. It is purely a judicial determination. The Attorney-General cannot make any distinction arising OUt of the desirability or otherwise of cancelling contracts. The Attorney-General's duty will be to find out whether any contract falls within any of these clauses, and, if it does, that contract is ipso facto void, no matter how unjust that voidance may be, or how detrimental it may be to British subjects in Australia. If the matter is brought before him by any one who wishes to get out of a contract for his own purposes, and the Attorney-General finds that the contract is not with an enemy subject in Germany, but a contract, the ultimate profits of which will be for the benefit of enemy subjects in Germany, that contract is absolutely void. That provision, when read in conjunction with the words that -an enemy subject is " any person, firm, or company, the business whereof is managed or controlled directly or indirectly by or under the influence of enemy subjects," has a very wide application. I will illustrate what I mean with a very strong example - a case which has arisen in fact, the main party concerned being one with whom this House will probably have very little sympathy. I refer to the case already launched, in which an action is being brought by the Australian Metal Company against the Union Bank. A writ has already been issued, so that the matter is public property. The Australian Metal Company is a German company: for all practical purposes it is a "branch of the Metallgesellschaft, which is (essentially an enemy organization.' That is why I take that instance. The Australian Metal Company is one which is allowed, under that proclamation, to continue to carry on its business here, provided that it gives the fullest kind of security that there shall be no transmission of money, or goods, or anything else to Germany. This foreign company is nominally an Australian company, inasmuch as it has been registered here, and that fact raises one of the great difficulties in this situation, but I am dealing with it as a company which is, to all intents and purposes, a German company, and as being in the same position as an individual subject of the German Emperor who happens to be resident here. That company sues the Union Bank, its debtor, for a large sum of money, about £20,000. The effect of clause 3 will be to say that the contract between the company and the bank is void. I ask the Attorney-General to consider whether that is meant. If the bank comes before him and under this measure asks him to declare the contract void-

Mr Hughes - There is a saving provision.

Sir WILLIAM IRVINE - I am coming to that saving clause, which also seems to require further consideration. Sub-clause 5 says that every enemy contract is void except in relation to goods which have already been delivered or acts which have already been performed at the commencement of the war. The effect of those words is that the money for which the Australian Metal Company is suing belongs to the bank. If we are going to confiscate German property, for Heaven's sake let us confiscate it for the Government and not for the banks. If we are going to take the extreme step, which the Imperial Government has not thought it advisable to take, of confiscating the property of German subjects permitted to reside in the community, let that confiscation be in the hands of the Government, and not in the hands of a private individual, or corporation, or bank. I am referring to sub-clause 5, which the Attorney-General regards as of a saving character -

Every enemy contract made before the commencement of the present war is hereby declared to be and to have been null and void as from the commencement of the present war, as regards all rights and obligations thereunder, except in relation to goods which had already been delivered .or acts which had already been . performed at that time.

In the case I am putting before the House there exists the ordinary form of contract. I have no doubt that the AttorneyGeneral had no contract of this kind in his mind at all. He was thinking of contracts for the supply of goods, but even in that case I shall show that there is likely to be a great injustice that will affect our Australian citizens just as injuriously as our enemies. But the relations of the Australian Metal Company and the bank undoubtedly come under the definition of an enemy contract, because when a man deposits money with a bank to open an account that money is not his. It is not as if he took along a bag of sovereigns and left them there for safekeeping. What happens is that the bank enters into a contract with him to pay certain money on his presenting a cheque. In this instance there is a contract which may be declared to be a contract with an enemy subject, not because the Australian Metal Company reside here, but because the ultimate profits of that contract belong to the principals of the AustraJian Metal Company who reside in Germany.

Mr Hughes - The point is that the profits will go to Metallgesellschaft.

Sir WILLIAM IRVINE - Quite so; I take a very strong instance assuming that in Australia there is a mere branch of the business of an enemy subject residing in Germany, and that it is highly desirable that the whole of the profits under such contracts should be secured from being in any way transmitted to the principals in Germany until the termination of the war. Every measure which the Government may think necessary for the purpose of giving that security shall receive my hearty support.

Mr Hughes - Would that not amount to the expropriation of private property ?

Sir WILLIAM IRVINE - It is expropriation of private property; and my object is to show that clause 3 necessarily compels expropriation, and that the Attorney-General has no discretion that may mitigate this. I am not suggesting that such discretion should be given.

Mr Hughes - To annul a contract is one thing, and to take private profits and keep them is quite another.

Sir WILLIAM IRVINE - For instance, profits amounting to £20,000 may be lodged in the bank by the Australian Metal Company registered here, such profits being intended ultimately to go to an enemy subject residing in Germany. Of course, the Attorney-General will take steps to insure that the profits shall not go to that enemy subject abroad; and as to that we are all in accord.

Mr Hughes - They cannot go during the war.

Sir WILLIAM IRVINE - Quite so; but ultimately, unless another arrangement is made by the Imperial Government in the nature of a general confiscation, these profits" ought to go to the company in Germany.

Mr Hughes - Of course; but such profits ought not to be made in the meantime, and then there will be no profits to go to Germany at the end of the war.

Sir WILLIAM IRVINE - I am not talking of making profit, but of the effect of the Bill. I am speaking of a particular company here which has entered into a contract with an Australian bank to pay to the company a certain amount of money. That being a contract, the benefit of which, under the Bill, will ultimately go to the German company in Germany, it falls directly under the definition of an "enemy contract." If I were Attorney-General, and such a case came before me, I should have to declare the contract an enemy contract. And what is the effect? The proclamation at once annuls the contract; and the debt of the bank to the company of £20,000, or whatever the amount may be, is, of course, also annulled. The bank holds the money, the Government gets nothing, and the debt is destroyed ; the only gainer is the bank, by the amount of money it promised to pay to the company. I do not suppose for one moment that the AttorneyGeneral intends anything of that kind.

Mr Hughes - Will the honorable member let me have some particulars - not names - of the contract ?

Sir WILLIAM IRVINE - I know nothing about the particulars of the contract; all I know is that a writ has been issued. Such an account may never have been opened so far as I know.

Mr Hughes - What is this a contract to do?

Sir WILLIAM IRVINE - The contract is the ordinary contract made by a person who opens an account by paying in a certain sum of money, the obligation of the bank under the contract being to repay that money.

Mr Hughes - I now see what the honorable member means. He says -that this deals with deposits by aliens or by persons under paragraph c.

Sir WILLIAM IRVINE - I have cited an extreme case.

Mr Hughes - I do not think that the case is as presented, but anyhow if it be so, I admit that it treads on ground that I did not intend.

Sir WILLIAM IRVINE - I fully anticipated that that was not the intention, but I am showing that that is the effect; and that it is very difficult to draw the line exactly. An enemy contract means any contract which is, or is likely to be, for the benefit of an enemy subject; and in this case the " enemy subject " is the principals of the Australian Metal Company, who are living in Germany. Under the circumstances I have instanced, the AttorneyGeneral can only do one thing, namely, declare the contract void; and the effect is confiscation, though the benefit is not to the Government, but to the party to the contract who seeks to have it declared void. This is an illustration of the danger of declaring void contracts which are partly performed, one party having done his part, while the other party has yet to fulfil his obligation.

Mr Fisher - And in your opinion the Attorney-General has no option of any kind.

Sir WILLIAM IRVINE - No, there is no option.

Mr Hughes - Of course, the honorable gentleman does not mean, that according to sub-clauses 3 and 4 of clause 3, I have no option.

Sir WILLIAM IRVINE - I pointed out at the beginning of my argument, that the Attorney-General has a judicial determination to make, but has no discretion. The honorable gentleman, of course, knows the difference ; he has merely to ascertain the facts, and, if the facts are such as I have cited, he has no discretion. If the contract is declared an enemy contract, it is one, and it is void ; all the AttorneyGeneral has to do is to ascertain the facts.

Mr Hughes - I do not admit that the class of contract to which the honorable gentleman alludes is one covered by clause 3 at all. I am not going to say that the point is not arguable.

Sir WILLIAM IRVINE - I know that the honorable gentleman does not admit that such a contract is covered by the clause, and I am merely endeavouring to point out what seems to me to be the effect of it. I hope that the honorable gentleman will find some way of preventing such results following this Bill, though I admit that it is extremely difficult to do so. If by " enemy contracts " we mean merely contracts now existing with Germans living in Germany, there is not much difficulty, and" most of such contracts are already annulled. But, even supposing the real enemy subject is living in Germany, the law, and the regulations which the Imperial Government have issued, preserve such contracts. The Metallgesellschaft or any other company cannot sue in our Courts or the British Courts; but, after the war is over, as has been recognised by all nations carrying on civilized warfare in the last 250 years at all events, those contracts are not to be voided except in particular cases where it is impracticable to carry them out.

Mr Hughes - I submit that we are now under 'unprecedented conditions; we have had no experience of what ought to be done in the circumstances.

Sir WILLIAM IRVINE - What I really desire to show is that this particular clause, if carried unamended, will effect direct confiscation. Whether confiscation be right or wrong is another matter; but it is a question on which the Imperial Government ought to express an opinion. Let us take the extreme case of a contract between an Australian merchant and a German merchant in Hamburg. Take it that the Australian merchant has sent home money, say, in the form of bills of exchange forgoods to be delivered from Germany. That would be a contract directly with an enemy subject; and are we going to pass a Bill the effect of which would be to destroy the obligation of the German to fulfil his contract ? What does the AttorneyGeneral say to that?

Mr Riley - It is not often that goods are paid for before delivery.

Sir WILLIAM IRVINE - It is done frequently. I wish to put the matter quite fairly, and I am not in any way trying to raise difficulties.

Mr Fisher - As I understand the honorable member, if goods have been purchased, or an Australian merchant has done so much as to advance money on the purchase, that contract should remain intact until after the war is over.

Sir WILLIAM IRVINE - Keep everything as it is. The guiding principle is not to allow any benefit either in goods or money to go to an enemy subject during the war; adjustment can take place afterwards. Once we begin to meddle with contracts existing here, difficulty arises, and I admit that similar difficulty is raised by clause 4.

Mr Hughes - Do you say that the contracts referred to in sub-clauses 5 and 6 ought to date from the present, and not from the commencement of the war ?

Sir WILLIAM IRVINE - If a contract dates from the commencement of the war, the effect is even more drastic. If, at any time, we take a hatchet, and cut a contract in two, we are just as likely to injure the Australian party as to injure the enemy subject; it depends on which party has carried out the contract, and to what extent.

Mr Riley - If the Australian contractor has accepted payment for goods, would the honorable gentleman allow him to send the goods ?

Sir WILLIAM IRVINE - Not during the war - that governs everything.

Mr Fisher - The contract must lie dormant.

Sir WILLIAM IRVINE - Yes, so that the Imperial Government - or the Commonwealth Government, so far as it acts in co-operation with the former - may, at the conclusion of the war, have their grasp on everything. Whether they be rights under contract, or rights of property in the more common sense, let us have them at the end of the war in our hands, as a basis of negotiations, it may be, as to terms of peace. It is not adopting the right course to simply cut a contract in two. We do not know what has been done by either side, and the case may be one in which goods have been sent to Germany and money not yet received for them, or it may be a case in which a merchant here has received money and has not sent the goods to Germany.

Mr Hughes - Would not the honorable gentleman's proposal, if put in the form of legislation, have the effect of simply leaving things as they are?

Sir WILLIAM IRVINE - I say you ought, as far as possible, to leave things as they are. You must not continue any contract which involves the holding of any communication with the enemy. You must not pay any enemy. You must not approach an enemy during the war - and the Government is entitled to the support of the House in passing the most stringent measures for carrying that into effect. But the proper way to do it is not by coming forward with what the AttorneyGeneral, in his speech, called " the sharp edge of legislation," and simply saying, " There is the contract ; cut it in two." I could give numerous instances of contracts existing between our people and enemy subjects living in Germany, in which very great injustice might be done." In some cases you may give benefit to the Australian party to the contract; but in some other cases you will benefit the other party.

Mr Hughes - How is a party to a contract to know whether he is bound or free?

Sir WILLIAM IRVINE - The usual way is to obtain an ordinary judicial determination. That is what the Courts are for. But I say again, with regard to these important metal contracts, which extend over a number of years, that I am prepared to support the Government even if it is against the principle I am advocating, because of the importance of the situation, and because, for the most part, these contracts, in my opinion, are absolutely terminated by the war. But the effect of clause 3, where it is proposed to cut a contract in two, cannot be foreseen. This clause will enable all kinds of people to dishonestly get out of their contracts. Germans living here, as well as British subjects, may come to the AttorneyGeneral and say, " Here is my contract; end it."

Mr Riley - But we have no power to compel a German to fulfil his contract at the present time.

Sir WILLIAM IRVINE - A German living here?

Mr Riley - Yes.

Sir WILLIAM IRVINE - Of course we have. If the honorable member will recognise the guiding principle set out in the proclamation, he will see that it is, as I have observed, merely a statement of the law which has been observed by all civilized countries for over 200 years. That is, the subjects of one country who happen to be resident in another country are protected in the carrying on of their ordinary businesses, unless the necessity exists, in the interests of public safety, to take measures to intern them. Under this clause it is possible for any man, either Germans living amongst us or Australians who have a contract with Germans in Germany or here, to say, " I want this contract brought to an end." I am sure the Attorney-General does not mean to do that. It should be remembered, also, that the saving clause is no saving clause at all. It is the worst part of the Bill, because it states that the Bill can only be applied to those stipulations that remain to be fulfilled. The Bill does not apply to the stipulations that have been fulfilled. I point this out to the AttorneyGeneral, because I feel sure that he will consider the desirability of taking this into very full consideration. With regard to clause 4, I have already intimated that this does also bring the axe into operation to some extent, and that it may have the effect of terminating some contracts that are not strictly at law terminable. But I want to make this suggestion to the Attorney-General: Seeing that this legislation in clause 4 is brought in for the purpose of achieving a particular and necessary result with regard almost entirely to one class of industry - namely, the mining industry - the shipments of concentrates and other mining products to other countries - would it not be wiser to confine its operations to contracts of that particular class? Because here again we are making a general provision relating to all contracts and we may go far beyond metal contracts. There are, for instance, a number of contracts for the supply of meat, of coal, of hosts of other things within Australia. Honorable members will know that there are in many of these contracts suspending clauses set out in general terms, where delivery becomes impossible by reason of war, strikes, &c, and where one party may find it necessary to suspend the performance of the contract. If this clause is passed as it stands, it will go far beyond the Government's immediate objective, and will enable people engaged on contracts of that kind to see that their contracts are voided.

Mr Fisher - Is the honorable member's, principal fear that incidental parties may come in and obtain relief; or that private persons may obtain relief from their obligations by simply becoming patriotic ?

Sir WILLIAM IRVINE - No, I am not now referring to enemy subjects. I am dealing with clause 4. I have pointed out that if there is going to be confiscation it should only be confiscation by the Crown. And, dealing with clause 4, I am in sympathy, with the main object that the Government have in view in giving certainty to the annulment of a number of contracts relating to the mining industry, about which there may be some uncertainty; and I am in favour of it because of the exceptional circumstances affecting that industry in that the existence of these long contracts has rendered the companies unable to make new business arrangements, and that the absolute necessities of the case may require some strong steps to be taken. That is the only reason why I favour the clause at all. But we may couch it in such wide terms that it will go much further than is intended.

Mr MASSY-GREENE (RICHMOND, NEW SOUTH WALES) - It may refer to contracts between British subjects?

Sir WILLIAM IRVINE - And not only between British subjects, because the clause is in no way limited.

Mr Fisher - I am not so positive as the honorable' member for Richmond.

Sir WILLIAM IRVINE - There is no difficulty with clause 3, which deals with enemy contracts, but clause 4 does not deal- with enemy contracts at all. It deals with contracts. It says, " Either party to a contract to which this section applies may by notice in writing to the other party terminate the contract as regards all rights and obligations relating to any future supply or delivery under the contract." What is the contract to which the section applies? It is a contract for the sale or delivery of goods the performance of which "is by operation of law or by the terms of the contract suspended, or is or may be by act of a party suspended, or is claimed by the party against whom the notice is given to be suspended," during the war. That applies to a whole host of Australian contracts in Australia, which have in them the ordinary suspension clause. One party to the contract may justly say that the war renders it impossible for him to perform his contract, and so claim to be entitled to its suspension under this clause until the termination of the war. That would give every party the right to terminate. Such a thing was never intended. It would be a much greater injustice where one party did not claim suspension, and the other party declared that by virtue of this law his contract was suspended during the continuation of any of the items in the suspension clause, including the war. I am not going to take up the time of the House debating the general principles with regard to this measure. These have been very ably debated by the honorable member for Balaclava and other members who have preceded me. But I have brought these matters before the Attorney-General in order that he may give them his serious consideration. May I point out also that there is no immediate urgency for this Bill. It is in no sense a war Bill.

Mr Hughes - I do not admit that.

Sir WILLIAM IRVINE - It does not deal with anything that tends to the efficiency of any operations of the war, or of the safety of any person in regard to anything arising out of the war.

Mr Hughes - The necessity would not have arisen but for the war.

Sir WILLIAM IRVINE - That is quite true, but the necessity is not so urgent that the Government cannot give these matters fuller consideration than they have done. I do not urge that this Bill should be put back for another session. It is desirable that whatever alteration of the law we are going to make should be made as early as possible. But it is not a matter of a few days. There is an abundance of time to take such serious questions as this into particularly careful consideration, and I urge that that should be done. Then, again, this Bill is, to a large extent, merely a declaratory proposal. We have no constitutional powers for dealing with a great many things that are referred to in the' Bill. Our constitutional powers may extend to some contracts - contracts, for instance, which are to be performed outside Australia-

An Honorable Member. - The supply of coal, for instance.

Sir WILLIAM IRVINE - Probably we should have the constitutional power to deal with that kind of thing. But as T understand it is intended to invite the State Parliaments to supplement what we do by Acts of a similar kind in their own Legislatures, it is highly desirable that the model legislation which we establish here, and which we shall ask them to follow, should be based upon reasonable and sound lines.

Mr Webster - This points out a new limitation to the Constitution.

Sir WILLIAM IRVINE - Oh, no. It points out a very old limitation that I and other honorable members have referred to many a time. It may be that many of the proposals in this Bill can be carried out by the State Parliaments under the Constitution as it now exists. For instance, the Broken Hia contracts, which are most closely concerned with the Bill, are, for the most part, contracts that would not come under our constitutional powers, because, in most cases - I do not speak definitely, but I think the Attorney-General will agree - delivery is to be" within the State in which the contract is made. But that is a secondary matter, which I need not discuss now. I understand the Government desire to bring forward a Bill which, so far as the Federal Parliament can give authority, will give authority.

Mr Hughes - That is so. I do not admit that we have not the power in any case.

Sir WILLIAM IRVINE - I do not ask the Attorney-General to admit anything. But that is, I understand, Ministers' intention as far as this Parliament has power, and they will invite the State Parliaments to supplement ours by local legislation.

Mr Hughes - The States Parliaments, through their Premiers, have given the positive assurance that they will do that.

Sir WILLIAM IRVINE - Then it becomes all the more necessary that the model upon which we invite them to act should be a model which has been drawn after careful consideration, and which will not carry this rather drastic legislation further than necessity for it actually exists.

Mr Hughes - I quite agree with that.

Sitting suspended from 1 to 2.15 p.m.

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