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Sydney General Post office - Contract for erection of additions - Report of Royal Commission


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·THE PARLIAMENT OF THE OOUMONVTEAL'l'H OF AUSrrRALIA.

REPORT

OF THE

ROYAL COMMISSION

REGARDING THE

CONTRACT FOR THE ERECTION OF

ADDITIONS TO THE GENERAL POST OFFICE, SYDNEY.

Presented by Command 7th September, 1939; ordered to be printed, 22nd September, 1939 .

[Cost of Paper.-Preparation, not given; 760 copies; approxim11tc cos t of printing and publishing, £29 .]

Printed and Publis hed for the GoVERNMEN'l' of the Cm.BIOl'i'WEAL'rH OF AuSTRALIA by L . F. JOHNSTON, Commonwealth GoYe rnmen t Prin ter, Canberra. (Printed in Austr alia.) No. 223.-F.4328.-PRICE Is. 3D.

COMMONWEALTH OF AUSTRALIA.

REPORT OF THE RO-YAL COMMISSION REGARDING THE CONTRACT FOR THE ERECTION OF ADDITIONS TO THE GENERAL POST OFFICE, SYDNEY.

To His Excellency, Brigadier-General the Right Ho norable LoRD GowRIE, K night Grand · Cross of the Most Distinguished Order of Saint 111ichael and S aint George, Coml?anwn of the Most Honorable Order of the B a__th, Companion of the D·istinguished Otde1 ·, 1 -lpon whom has been conf erred the Decoration of the Victoria Cross,

Governor-General and Commander-in-Chief in and over the Commonwealth of Australia.

MAY IT P LEASE YouR ExcELLENCY:

By Con1mission under the hand of Your Excellency, dated the 7th day of June, 1939, I was appointed to inquire into and report upon the circumstances in relation to the proposal to erect certain additions to the General Post Office, Sydney, including the matters leading up to and relating to- .

(a) the calling for tenders for the erection of those addit ions ; (b) the approval or approvals of the acceptance of a tender or tenders for the erection of those additions, and the steps leading to that approval or those approvals; (c) the subsequent approval of the acceptance of a different tender for the erection

of those additions, and the steps leading to that approval; (d) the signing, on behalf of the Commonwealth, on 3ist May, 1939, of a contract for the erection of those additions ; and (e) any other matters which are relevant to or connected with the foregoing. The first sitting of the Commission was held on the 8th June, 1939, at the Supreme Court House, Sydney, when lVIr. vV. J. V. Windeyer appeared as Counsel to assist the Commission. At the same time Mr. Monahan, K.C., and 1\ir. Carson of Counsel, obtained leave to appear for vVunderlich's Ltd., and Mr. Dovey, K.C., and Mr. Curlewis of Counsel, for Messrs. H. G. Whittle

& Sons Pty. Ltd. Subsequently Mr. Loxton of Counsel obtained leave on the 13th June to appear for John Grant & Sons Pty. Ltd., Mr. Wright of Counsel (on the 14th June) for the Honorable H. V. C. Thorby, M.P. , and Mr. Richards of Counsel (on the 23rd June) for Mr. James Orwin, Works Director, Sydney.

Thereafter sittings were held at Sydney on the 9th June, at Canberra on the 13th, 14th, l 5th, 16th and 17th June, and again at Sydney on the 19th, 20th, 21st, 22nd, 23rd, 26th, 27th, 28th, 29th June, 3rd, 4th, 5th, 6th, lOth, 11th, 12th, and 13th July. I proceed to deal with the several matters in the order set put in the Letters Patent.

(a) THE CALLING FOR TENDERS F OR THE ERECTION OF THOSE ADDITIONS.

In December, 1935, Cabinet gave consideration to a memorandum setting out the urgent need for acquiring additional land for the purpose of extending the Sydney General Post Office (Postmaster-General's file 19), and approved of negotiations being opened for the purchase of the adjoining property in Pitt-street, known as "Hoffnung's Building;'. Negotiations followed and upon a further submission being made Cabinet, in August, 1938, approved of. the compulsory

acquisition of the property, with a direction that before steps were taken to build on the land, plans should be submitted to it. ·

I should add that prior to the decision for a new building: consideration given the possibility of utilizing the existing building (Sydney file 12), but thiS..was found be The existing accommodation was inadequate and the space available was InsuffiCient for the staff employed, and the provision of additional space was a 1natter of great urgen?:f· .

The Works Director, Sydney, prepared various plans. the proposed 1936,

but they were confined to floor space in a proposed new and so as It IS to

ascertain, there was no plan at or about this time, of the I refer spemally

to this, in view of the circumstances that the facing to the elevatwn 1n P1tt-street assumes much greater importance than do other parts of the building . . ]'.4328.-2

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Sketch plans, consisting of a drawing of the Pitt-street elevation--undated-signed by Mr.lVIehaffey, Director-General of Works, and Mr. Henderson, Chief Designing Architect, together with blue prints showing floor space, were in the possession of the Works Departn1ent, Sydney. The blue prints are dated June, 1937, but there is no indication on any of such plans of the material to be used for facing the building. The first mention of sketch plans for the additions to the General Post Office by reference to date, is an endorsement of the 25th Janu·ary, 1937, by Nir. Henderson, on Document No. 11 in the Canberra file, as follows :-

The D.G. ·works. Authority might be given to the W.D. Sydney (at that date Mr. Hoy) to prepare any necessary sketch pl ans for additions to the G.P.O., Sydney, on the understanding that same will be submitted to this office. ·

At page 744 of Transcript before this Comn1ission, Mr. Hoy, now Assistant Director-General of vVorks, swore that sketch plans were prepared in 1936 followed by others. On 3rd February, 1937, Mr. flenderson received sketch plans (see Document 12) , and again on 3rd August, 1937, he received further plans (see Document 15). I-Ie endorsed the papers on the 30th August, 1937, to the effect that amended plans had been handed to the Works Director, Sydney, on 25t h August, 19 37. (See Document 15.)

In a submission (Document 40) to the Works Director, Sydney, dated lOth Noven1ber, 1937, Mr. Bruce, Quantity Surveyor, Sydney Office, set out that he estimated the cost of the proposed extensions facing Pitt-street of the Sydney General Post Office, as £410,337. On 19th May, 1938, the Works Director, Sydney, sent sketch plans Nos. 1, 2 and 3 to Mr. I-Ienderson, and on the 23rd M:ay, 1938, Mr. Henderson wrote to Sydney (Document 33) and stated that he preferred plan No. 2. Thereafter, on the 3rd August, 1938, Mr. Hoy, as Assistant Director-General of vVorks, wrote to the Acting Deputy Director, Posts and Telegraphs, Sydney, setting out a proposed time-table for t he erection of the additions, and he minuted a copy thereof to the Works Director, Sydney, as follows :-

For your information. It has also been arranged with Mr. Henderson that alternatives wi ll be obtained for the upper face of the building to be in Sydney or HavvkeEJbury sandstone or terra cotta. On the 26th October, 1938, the Works Director, Sydney, under cover of a memorandun1 , sent to the Director-General .of ¥1 orks three sets of plans and a general description of the proposal (Documents 56-60). Such description contained the following paragraph:-

The remainder up to top of parapet to be faced with architectural terra cotta · or alternatively ''vith Sydney sandstone.

On the 30th November, 1938, Mr. Bruce, in a submission (Document 82) to the Works Director, stated that plans were available for the preparation of quantities on the 20th Septmnber, 1938. He also stated that drawings for granite and terra cotta front were one month behind schedule. On the same day Mr. Bonwick, t he Acting Architect in charge of the Drawing Room, in a submission to the Works Director, Sydney, stated that l\1r. H oy, following a conference with l\1r. Henderson, instructed him (Bonwick) to have drawings prepared showing alternative scheme for stone work finish to portion of elevations shown on drawings as terra cotta finish. In relation to this it is to be observed that Mr. Hoy suggested that this was put forward as an excuse for delay. (See Transcript page 810.)

On 25th January, 1939, in a memorandum to the \¥orks Director, Sydney, Mr. Hoy, for the Director-General of Works, quoted a telegram received by the Director-General from the Postal Department (see Canberra file 100). The telegram contained a passage in these terms:­ The Prime Minister decided yesterday that tenders for both seetions of the work be invited forthwith. The memorandum included an instruction to the Works Department, Sydney, in the following terms:-

You might get this advertisement into next Saturday's paper. In the Sydney IV!orning Herald and Daily Telegraph issues of 28th January, 1939, and 4th February, 1939, and The Sun issue of 30th January, 1939, an advertisement as under was published :-

GE NERAL POST OFFICE. PROPOSED NEvV BUILDING HOFFNUNG'S SITE, PITT-STREET. Contractors desirous of tendering for demolition of existing building known as Hoffnung's, excavating site and erection of nine-storey steel framed building, are requested to submit their names to the Commonwealth \Vorks Director, Customs Bouse, Sydney, not later than Monday, 13th February, 19 39.

H. V. C. THORBY, Minister for Works.

As .a result of the advertisement, thirteen contractors submitted their names, and on the 21st February, 1939, the Acting Works Director wrote to each of them a letter in the terms following :-G.P.O., SYDNEY- EXTENSIONS.

It is desired to advise that plans, specifications and bills of quantities for the above are now available at this office. A fee of 10 guineas is payable on the quantities, which 8Um will be refunded on receipt of a bona fide tender. Tenders in envelopes suitably endorsed and accompanied by the ne cessary deposits will be received up to noon on \Vednesday, 15th March, 1939, and should be forwa.rded to the Commonwealth Works Director1 Customs House, Sydney.

No tender necessarily accepted. . .

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In the Sydney Morning !Jerald, the Daily and The Sun issues of lst March,

1939, and 4th March, 1939, an advertisernent in the following tenns appeared:­ CoMMONWEALTH OF AusTRALIA.

DEPARTMENT OF WORKS.

Separate tenders accompanied by tbe necessary deposits will be received up to noon on the dates shown for the following works :- ·

(1) * * * '-.c. * * * * * * * * *

(2) G.P.O., Sydney, extensions-15th March, 1939 . Plans, specification ::; and tender forms are available at the office of the Commonwealth Works Director, Customs House, Sydney, and at-(i) Post Offices, Newcastle and Gosford.

Bills of quantities for (2), extensions of G.P.O ., Sydney, are available for a fe e of 10 guineas each, which sum will be refunded' on receipt of a bona fid e tender. Tenders, in envelopes endorsed with the name of the work, should be forwarded to the Commonwealth Works Director, Customs House, Sydney. · ·

No tender necessarily accepted.

H. V. C. THORBY, Minister for Works.

Tender were received fr01n eleven contractors for a buildin O' faced with terra cotta, and a similar number for a building faced with stone. All of such had previously submitted their narnes to the \iV orks Director, Sydney, as likely tenderers. Tenders were opened on 15th March , 1939, by the Tender Board, which consisted of Messrs. J arnes Orwin (\iVorks Director,

Sydney), P . R. Cleland (Senior· Clerk and Accountant , vVorks Departrnent, .Sydney), and C. \iVestbrook Department, Sydney).

The Bill of Quantities was drawn by Mr. W. C. Bruce, Quantity Surveyor, · Works Departrnent, Sydney. He comp1enced to prepare it before Christmas, 1938, and completed it in February, 1939 (see Transcript page 876). This being the history of the preparation of plans and the Bill . of Quantities, and in

particular t he provision for facing with terra cotta or stone as alternatives-, it is necessary to draw attention to the circumstances under which terra cotta came to be considered. lVIr. Hoy, in evidence (page 745), said that terra cotta was t alked about in 1937, with sandstone as an alternative, and that after discussions in Canberra about November, 19 37, between two architects from the Sydney Office and Mr. Henderson, fresh sketch plans were made. He added that

Mr. Henderson definitely favoured terra cotta, and rnentioned the subject of a " colour surface". lVIr. Bruce, in evidence (at page 877), said that the idea of terra cotta came from conversations

he had with Mr. Henderson. This was at the time of his (Mr. Bruce's) making the estimates. He added that Mr. Henderson had had a trip abroad and had informed him that the tendency abroad was to paint architecture; that it depended more on fo rm and colour, and that terra cotta was the best medium of expressing colour. This, he said, was the fiTst time that he (Mr.

Bruce) had heard terra cotta mentioned in connexion with this proposed building. Mr. Hoy, in evidence (at pages 745 and 746), stated that an estimate was made on the l Oth November, 1937, when terra cotta only was considered. Mr. Bruce, in evidence (at page 876), said that at the time of making his first estimate, terra cotta only was considered and his estimate was made

on the basis that terra cotta would be used for the facing. . There are other passages in the evidence of Mr. Hoy which show he had had

discussions with Mr. Henderson, in all of which the Chief Designing Architect showed a defin1te preference for terra cotta (see Transcript pages 789 , 807-8, 810, and see Document A.l, Postmaster-General's file, and 208 Canberra file). It is clear from the documentaTy evidence, supported by the sworn evidence of t he referred to, that the question of.the facing for the

a n'lat ter a:lmost entirely

rn the hands of Mr. Henderson. There rs no reason at all for douotrng the genuineness of Mr. HendeTson's preference foT terra cotta. It is to be observed that in evidence, Mr . W. A. Grant , of John Grant & Sons Pty. Ltd., refers to a conversation which he said he had with Mr. Henderson in January, 1939. Mr. Grant's evidence contains this passage (at page 980)-

He (Mr. Henderson) showed me the plans, and there was t erra cotta on one of the elevations, and I said, " H ullo, t erra cotta ", and he said " Yes ". I said "What is the idea of terra cotta on the G.P.O. ? " He said, " Oh well ! "

I said, " It doesn't strike me as anything very wonderful alongside the other " . · . ,

He said," You do not think I want the damn stuff, do you? I have got t o put 1t there .. . . . .. . .

I said, " V/ho is asking you to put it there ? " He said, "That is coming from up above". Later, Mr. Grant said that the expression indicated that there was some pressure being put upon Mr. Henderson.

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· If this conversation is correctly repeated by Mr. Grant, and indicated Mr. Henderson's state of mind, it would obviously be inconsistent with a genuine preference by Mr. Henderson. The only "pressure from above" that was suggested before the Commission, was that it would by either the Minister for Works, or the Postmaster-General in J anuary, 1939, or Mr . Mehaffey, or possibly Mr. Hoy. It is fair to state immediately that there is not the slightest foundation for any such suggestion affecting those four, and it is pToper to add at once that I am not at all

satisfied that t he conversation occurred in the way retailed by Mr. Grant. This comment is based partly on its complete inconsistency with a large body of evidence that is not in any way questioned by any interest represented at the hearing. As well, it is quite in conflict with Mr . Henderson's high reputation. MOTeover, I find it impossible to understand, if this conversation occurred as suggested, why it was not mentioned when Mr. Grant had the interview with the Honorable the Minister for ·works (Mr. Thorby) in March, 1939 , to which reference is made later.

I have no doubt that the conclusion to be drawn is that the question of the extension to the General Post Office was an urgent one and was so treated by Cabinet; that the preparation of plans and the Bill of Quantities is free from any suspicion of irregularity, and that in particular the proposals for the facing of the extensions were the result of the bona fid e consideration of the Chief Designing Architect, MT. Henderson.

(b) THE APPROVAL OR APPROVALS OF THE ACCEPTANCE OF A TENDER OR TENDERS FOR THE ERECTION OF THOSE ADDITIONS AND THE STEPS LEADING TO THAT APPROVAL OR THOSE APPROVALS.

Tenders dosed on Wednesday, the 15th March, 1939. They were received by the Tender Board, consisting of Mr. Orwin, Director of Works, Mr. Cleland, Accountant, ·works Offi ce , Sydney, and Mr. ·westbrook of the Customs Department. The normal procedure was fo llowed in the removal of tenders from the tender box and in the immediate dealing wit h them thereafter

(see Transcript page 827). That procedure involved all tenders being registered by the Secretary of the Tender Board. He handed them to the Works Director, whose duty it was to forward them to the Director-General of Works, Mr. Mehaffey, at Canberra. (See Transcript page 840.) On the day that tenders closed, Mr. Henderson was in Sydney in connexion with his duties, and Mr. Taylor, Manager and a Director of Wunderlich's Ltd.-the suppliers of terra cotta­ invited him and Mr. Orwin to lunch at the Royal Automobile Club, Sydney. (S ee Transcrip t ll20.) I find, as a fact, that dming the lunch, the state of the tenders was so far disclosed that Mr. Taylor learned that Grant's tender was the lowest for stone and Whittle's for terra cotta ; that Whittle was second for stone and Grant for terra cotta ; that the difference' between the lowest and next prices for terra cotta was about £1,400 and for stone about £20. As the evidence stands, it is fair to state that I am not satisfied that·Orwin was Taylor's informant. Indeed, if it were material, I should be disposed to conclude that it was not he, but for reasons that will appear later I do not regard this as of any importance. What is of importance is that which followed. At the conclusion of the lunch Mr. Taylor suggested that he should take his two guests to a

building in Clarence-street that had been treated with terra cotta in a manner similar to that contemplated for the proposed General Post Office additions-in this respect, that it commenced at the base in a dark colour shading off towards the top of the building. The trip was eventually made. As to what happened between leaving the Club and going to Clarence-street, there is a conflict of testimony between Taylor and Orwin, but s_ubstantially I accept Orwin's version, which is of such import t hat it is necessary to quote verbatim from the Transcript (at pages

1299-1231). In the car was there anything said by Mr. Taylor to you about the G.P.O. ?- He said he would like to take Mr. Henderson and myself up to a building in Clarence-street that had been treated with terra cotta in a similar manner to what Mr. Henderson had in mind for the G.P.O. That was starting with the dark colour and then shading off.

Dark at the base and shading off to a lighter colour at the top ?-Yes. What did you say to that ?- I said I was very busy and I did not think I could spare the time, and in any case I would have to go to the office. Mr . Taylor said "It will only take ten minutes or so to go up". * * * * * * * * * * * * * *

What happened after that ?-After that Mr. Henderson said to me, " Will yo u recommend terra cotta", and I said to him, "No, I won't recommend terra cotta, this is your job, you designed the building, and I know you have had all along certain ideas regarding the facing of it with terra cotta, but this work has been going on for a considerable time, long before I came to Sydney, and as I have only just come into it, practically at the eleventh hour, I do not feel justified in making a recommendation " .

What was the effe ct of that on Henderson ?- Mr. Henderson was a little put out. What did he say ?- He said, "Well, I think you should". What did Taylor say, if anything ?- Mr. Taylor's exact words to me were, "As Works Director, I think you should make a recommendation".

What did you say then ?- I said, "No, what I shall do is this. In my report to Head Office I shall suggest that the question of facing the building with either terra cotta or stone be referred to you (that was Henderson) for a recommendation ".

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Did Henderson say anything to that ?-Just that he said, " Oh; I think you might", referring to his suggestion that I should make a recommendation. What after that ?-After that Mr. Taylor said, "What about going to this building", and we went downstairs. He drove us in his car up to Clarence-street. We there saw a building that was faced with terra cotta, starting with a darkish colour at the base and shading off to the top to a lighter colour. We got out of the car to have a look at the building, just glanced at it for two or three minutes, then went back to Mr. Taylor's car, and he drove

us down to the Customs House, where we parted.

In the afternoon of the same day Mr. Orwin prepared for, and forwarded to, the pirector-General of Works, lVIr.1\Iehaffey, a memorandum, which, for identific ation purposes, IS numbered 133-4 of the Canberra file. In that document Mr. Orwin set out the tenders, and the following paragraph appears :-

The question of terra cotta or stone fa cings m,ght be referred to the Principal Designing Architect for recommendation . .

The architect there referred to, of course, was Mr. Henderson. The t enders were enclosed and forwarded in a separate envelope. On the 17th March, Mr. Hoy, Assistant Director-General of Works, minuted this memorandum to Mr. Henderson-Please report on the above alternatives, terra cotta and stone.

On the 20th March, Mr. Henderson did report, and addressed his report to 'Mr. Hoy. That Document (Canberra file No. 135) is in these terms-G.P.O., SYDNEY, EXTENSIONS. With reference to the attached memorandum from t he Works Director, Sydney, setting out particulars of the

tenders received for the extensions to the Sydney G.P.O., I desire to inform you that the facade of the building was design ed with a view to the use of terra cotta facings. The design, being of a simple nature, would allow for the grading in co lour from red granite to say cream at the top.

Although the existing building is in stone, I can see no reason why, with the new desig n, con struction in stone should be perpetuated. I recommend that consideration be given to the acceptance of the lowest tender in terra cotta.

On the same date, Mr. Hoy drafted for the Director-Geneml of Works a submission for the Department of the Postmaster-General.

It is to be observed that Mr. Hoy is an architect and Mr. Mehaffey is not. The former, in evidence, stated that it was his duty qua this matter, to advise Mr. Mehaffey on design (and his opinion in the submission is based on design) . In the memorandum which he, Mr. Hoy, forwarded with the submission, there appears (in the first paragraph) this statement­

! am forwarding herewith a submission to the Postal Department regarding the tenders received for the abovementioned building, as I think in a job of this magnitude it should receive your signature if po ssible . (Canberra file 139 .)

The submission of the same date directed to the Director-General, Posts and Telegraphs, is signed by Mr. Mehaffey. It advises the Postal Department of the tenders rec eived and contains the following paragraphs :-The material for the fa ce of the building has been carefully considered by t he Chief Architect of this Department

and his opinion, with which I concur, is that the be st result will be achieved by adopting the first proposal given above. namely lower floors in granite and upper floor s in terra cotta. The design being of a simple nature would allow for the grading of the terra cotta from the red granite below to say a cream at the top. Although the existing building is in stone, there is no possibility of duplicating in any way, and there seems,

therefore, no special reason why, with the neW' design, construction in stone need be perpetuated.

The last paragraph contains a recommendation that " the lowest tender, that of H. G. Whittle & Sons Pty. Ltd., £410,776, for the building with a granite and terra cotta face, be accepted." (See Canberra file 136.)

In answer to this submission, Mr. Vv. S. Stanton, on the direction of Sir Harry Brown­ see his evidence on page 575-addressed to the Director-General of ·works a memorandum dated the 28th March, 1939, the first sentence of which is in these terms-This Department concurs generally in the recommendation made in your memorandum of 20/ 3/ 39 .

On the 3rd April, 1939, M.r. Mehaffey made a submission to the Minister in the terms following :-SYDNEY G.P.O.: EXTENSIONS. THE MINISTER :

Submitted herewith is a copy of a memorandum which wa s to the P.ostmaster-Gene ral's Department regarding the Sydney G.P.O. extensions, and copy of the reply whiCh has been from that Derartment. It will be noted that it is stated in the reply " With regard to the funds aspect, the pos1twn 1s that Cabmet approval of the proposal has been obtained, and such being the case, y;mr Department wi ll doubtless make the necessary

arrangements with the of the Treasury for the financmg of the work. F.4328.-3

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2. The financial po sition, as near as it can be ascertained, will be as follows :-£

Acceptance of the lowest tender, say, viz., that of H. G. Whittle & Sons Pty. Lt d. for terra cotta for the upper floors 411,000

438,500

* * • * * * • * * * * * *

3. It is estimated that very little expenditure can take place during this fin ancial year, as the fi rst portion of the job will be demolition of old structure and taking out of excavation. 4. The maximum amounts required are likely to be-£

Present financial year 5,000

Financial year 1939-40 200,000

Financial year 1940- 41 . . 200,000

The balance will probably carry fo rward into financial ymu 1941-42 as, even though the building may be finis hed prior to June, 1941, adjustments of account will take some time. 5. It is recommended that approval be given for the acceptance of the lo west tender, and for an expenditure of £450,000 as set out above, subject to the provision of funds, as required, by the Treasury.

(Sgd.) M. W. MEHAFFEY, (M. W. Mehaffey) Director-General. 3/ 4/ 39 .

This submission was minuted on the 17th May by the Treasury as follows :­ Funds are available. TRSY. CFN. Div. 32/ 5. £450,000. (Sgd.) W. E. LIVINGSTONE,

for Accountant. 17/ 5/ 39.

It is necessary to record that of the two tenderers, Mr. Whittle and Mr. Grant, each had inteTviews within a few days of the date of tenders closing on the 15th March. Mr. Whittle called at Canberra to see Mr. Mehaffey, and in his absence saw 1\ir. Hoy. Mr. Grant called to see Mr. I\1ehaffey.

The substance of each of these interviews is accurately recorded in documents placed on the file at the time, and it is sufficient, therefore, to indicate the nature of the interviews by reference to those documents. The first is No. 139, Canberra file, being a memorandum made by Tdr. Hoy directed to Mr. Mehaffey on the 20th March, which contains the following paragraph :-

For your personal information, I have to advise that Mr. Whittle called at this office last week prior to my having any knowledge of the receipt of these tenders and advised me that he had submitted tenders, and was quite happy about the competition for the terra cotta front, but as to the alternative, Hawkesbury stone, being practically in the hands of two firms, it made it very difficult for other contractors to properly compete with them.

The second is the document addressed to the Honorable the Minister (Mr. Thorby), dated 22nd M:arch, 1939, drafted by Mr. Hoy and signed by Mr. Mehaffey (Canberra file 144). It is in these terms-G.P.O., SYDNEY: EXTENSIONS. THE MINISTER :

Attached herewith for your information is copy of a memorandum which has been forwarded to the Director· General, Posts and Telegraphs, regarding tenders for the above building. Mr. William Grant, representing Messrs. John Grant & Sons Pty. Ltd., called on me to-day, and handed me a letter (copy attached) in which it is complained that Messrs. Wunderlich Ltd., who

It was pointed out to Mr. Grant that if an investigation was made by this Department into any particular material, we may place ourselves in the position of having to investigate other materials, and that, if any change were made at all, it would necessitate the calling of fresh tenders. You will be interested to know that on the day after the tenders closed Mr. Whittle called at this office and mentioned verbally that he was quite satisfied with his tender for the job faced with terra cotta, but felt that the price for the stonefacing had been loaded against him by the firms supplying Hawkesbury stone.

He was informed that we could not see how the Department could take action to verify this or cope with this question. Mr. Whittle did not propose to write to the Department, but tried to make us aware of his difficulties, and you will see that his trouble over the stone work is similar to that of which Mr. Grant complains regarding terra cotta.

It is not seen that the Department can take any action, as a decision could only be based on total prices, but, as Mr. Grant mentioned that he was likely to call on you or on the Postmaster-General, it appeared advisable to acquaint you of the facts before that inte.rview might take place. ·

(Sgd.) M. W. MEHAFFEY, Director-General. 22/3/39.

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:Mr. Whittle also interviewed the Honorable the Postmaster-General (Mr . Cameron). As the Minister says, " Mr. vVhittle did not ask for anything. He simply conveyed the information­ he had been put some trouble by J o_hn Grant, who had refused to give a quote for stone until about fourteen IDI?-utes ?efore clos1ng of page 374.) . .

Mr. Grant Interviewed Mr. Thorby, making a complaint about "funny business" , whwh really related to a discrimination in the quotation of terra cotta to him (Grant) as comnared with other tenderers. Thereafter, Mr. Grant forwarded two letters substantially the

complaint made in person. (Transcript page 410.) Both Mr. Thorby and lVIr. Cameron have they were in effect in no way by . interviews in arriving at

therr dec1s1ons. No one has suggested that the lVhn1sters deCISions were affected as a result of the interviews; and in those circumstances it is unnecessary to refer to them in more detail. Mr. Thorby, before arriving at a decision, had interviews with both M:r. Cameron and Mr. Harrison. · Later he coRferred with Mr. Mehaffey, who had with him the full Departmental file. The discussion between the Minister and the Departmental Head appears at page 415 of

VIr. Thorby's evidence and is as follows:-I discussed again with Mr. Mehaffey all the points associated with t he tenders, the qualities of terra cotta versus sa_ndstone, and pointed out to him Mr. Cameron's views on behalf of the Postal Department and raised the question With him of his recommendation. He had in the file a recommendation of Sir Harry Brown (see Document 151,

Canberra file), as Director-General of Posts and Telegraphs, who had made no recommendation to me as Minister for Works, and no reco mmendation at that time to the Postmaster-General. It had gone to t he Director-General of Posts and Telegraphs, Melbourne. I pointed out to Mr. Mehaffey that I was convinced that sandstone would make a more substantial job and a very satisfactory job and it would conform with the existing Pos.t Office and that there

were a number of buildings in that vicinity of terra cotta (sic), and that in my opinion it was the most suitable and would make the most stately type of building. I said it would make the most appropriate type of building, as it was adjoining the Post Office and Commonwealth Bank, both of which are of sandstone. I told Mr. Mehaffey then that I proposed to approve of the acceptance of the lowest tender of all for the building, that of John Grant & Sons, unless

he could convince me or satisfy me that there was some sound reason why I should accept his recommendation. We had quite a friendly discussion and I pointed out to Mr. Mehatiey that I did not like reversing a Departmental head's recommendation at any time unless I had every justification. Mr. Mehaffey said, "I am quite easy about it. I have no definite views ". I think he said, " It is 50-50 with me ". He sajd, '' I am sflJtisfied t here is nothing between

terra cotta and sandstone. It will make a satisfactory building"; I said, "I propose to approve of the tender of Grant & Sons, which is the lowest tender of all for the sandstone face building " . He said " I am not going to question that", or wo rds to that effect. He may not have mentioned words to that effect. Before that he said he was advised by the late Mr . Henderson and that he was really accepting the recommendation of the late Mr. Henderson, who was

the Chief Architect. He said " The other a!chitects agree with your view".

In a later passage dealing with his reasons, the Honorable the Minister stated in evidence-There were two factors which influenced me in my approvt=d . One was the fact that it was t he lowest tender of all , and the other was the fac t thflJt I w2.s working under a very definite instruction from Cabinet that all contracts fo r buildings carried out in any Department had to be very carefully scrutinized, and, if possible, economy carried

out. (Transcript, page 4:16.) Grant's complaints, whether they were justified or unjustified, about the way the terra cotta people had treated them, had nothing to do with you · Answer.-It did not concern me, for the simple reason terra cotta was not the lowest tender and it had not

influenced my mind in any shape or form. (Page 417.) Mter the interview with Mr. Mehaffey, Mr. Thorby dictated his approval, which Is numbered 169 in the Canberra file, and is in these terms-DIRECTOR-GENERAL OF VVORKS:

. G.P.O., SYDNEY: EXTENSIONS.

I have carefully examined the attached memorandum regarding the Sydney G.P.O. extensions, together with the list of tenders received. It is noted that the lowest tender for terra cotta facing is £410,776, and that the lowest tender fo r Hawkesbury stone is £409 ,325-a difference of £1,451. In addition to the fact that the Hawkesbury stone is the lowest tender,

I am definitely of the opinion that it will be a more substantial and satisfactory job. .

I am therefore approving of the acceptance of the tender of John Grant & Sons Pty. Ltd. for £409,325, whwh provides for a front elevation to be faced with granite on the lower floors and the upper flo ors.

I have discussed the matter with the Postmaster-General, and he concurs w;tn th1s demswn. (Sgd .) H. V. C. THORBY, Minister. 18/ 4/39.

As well, on the same date, the 18th April, :Mr. signed a minute directed to

the Honorable the Postmaster-General, informing him of h1s approval of Grant's tender. The minute is No. 168 in the Canberra file and is in these terms-MY DEAR PosTMASTER-GENERAL: G.P.O., SYDNEY: EXTENSIONS.

Following our conversation this afternoon regarding the above work, I had a further discussion wit h Director-General of "\Vorks, with the result that I have approved of the acceptance of the lowest t ender for the erectiOn of the Post Office additions in Pitt-street, Sydney-that of John Grant & Sons Pty. Ltd., fo r the sum of £409,325 . The contract provides for the front elevation to be faced with granite on the lower floor s and Hawkesbury

sandstone on the upper floors. . , .

It will be noted that the lowest tender fo r terra cotta facmg on tne upper fl oors was £410,776- an mcrease of £1,451. I am convinced that the stone facing will be the most satisfactory and substantial finish .

10

Mr. Cameron for his part, on behalf of the Postal Department, reached a decision also in favour of Grant 's t ender, as t o which he stated in evidence-Working on the principles which I vtould follow in any circumstances as a Ca binet Minist er, I think t he lo west t ender must be accept.ed unless it can be shown t hat t he cont ractor is incapable of fulfilling his commit ments, the contractor has st ipulated a material which is unsuitable for Go vernment p urposes, or in certain circumst ances the question of British preference may crop up when a tender involving t he use of import ed mat erial.is involved. Otherwise I should say so long as t he materials are suitable, the contractor is capable of fulfilJ ing his contract, t hen t he lowest tender must be accept ed.

* * * * * * * * * * * * * *

Grant's tender being the lowest, acc ording to your principle Grant's t ender was the one which mus t be accepted 1 A nswer .-Yes. There was nothing before me to show that by t he use of terra cotta I would gain fo r my Department an amount equal t o what it would cost as an extra payment fo r the use of terra cotta.

* * * * * * * * * * * * * *

Would t his fairly put the position : all things being equal, the lowest tenderer 1 A nswer.- Y es , I think that is the purpose for which tenders are called. (Transcript, page 372. )

The foregoing discloses the steps leading up to what may be called the first approval (that of lVIr. Thorby). As appears from an examination of it, it is based upon oral evidence of witnesses as borne out by documents, the accuracy of which is unquestionable. I now proceed to set forth certain conclusions based thereon and offer certain comments arising out of the1n.

The firs t matt er which calls for comment is the episode of the luncheon to which Mr. Taylor invited Mr. Henderson and Mr. Orwin on the day upon which tenders closed. It has been admitted that at that luncheon the figures in respect of the tenders which had closed at 12 o'clock that day, were made known to Mr. Taylor, an interested party . I have indicated that I do not think that Mr. Orwin was the informant. However that rnay be , this does no t present itself as a rnatter for serious concern. Departmentally it would be an irregularity, because so far as concerns New South Wales, the Commonwealth forbids the disclosure of such information. Curiously, in ·western Australia it is not forbidden by Commonwealth Departmental practice, but the reasons for the distinction are imrnaterial. Except for Departm.ental considerations , t here is little objection to· be raised to it. In a number of very large Government Departments in New South Wales t he figures are disclosed immediately after the closing of tenders. This appears in the evidence. IY.Ioreover, the tenderers ascertain quit e soon after the closing of t enders what the position is substantially, because the deposits are returned promptly t o such tenderers as are not, as it is put , " in the In addition, lVIr. Mehaffey, in his

evidence at page 642, said that in Canberra the amount of tenders is often known ten minutes after tenders close. What is much more important to my mind is that which occurred after the lunch and before t he visit to set out in detail above. For reasons that it is not necessary

to state, Mr. Henderson's part need not be adverted to more than to say that it is to this episode that t he Chief Designing Architect referred in the letter which he left just prior to his tragic death. The letter itself contains intrinsic evidence to this effect and there is as well extrinsic evidence that this is so . I add that t he late Mr. Henderson enjoyed the highest reputation, not merely for his skill and ability, but for his keen sense of responsibility and of duty, and in particular Mr. Thorby endorsed that view in his evidence. As well, it was stated from the witness box that Nlr. Henderson was very seriously harassed by the extraordinary amount of work that fell upon his shoulders for quite some time past.

So far as concerns lVIr. Orwin, I am of the opinion that by reason of his part in the interview with Mr. Taylor, he cannot escape severe criticism. Mr. Richards has urged very strongly that at worst it may be called an indiscretion. He points out that Mr. Orwin and lVlr. Henderson were officers of long experience .and high standing, that they would be thrown into contact with, amongst many others, Mr. Taylor of Wunderlich's, in oonnexion with many governmental activities, and that this being so, he might well be expected to have social intercourse of the sort involved on this occasion. Further, he has urged that Mr. Orwin was placed in a difficult position by reason of t he way in which the question of recommendation cropped up. I have already referred t o this in detail and it suffices to say that in my opinion the discussion in the presence of Mr. Taylor, and resulting in lVIr. Orwin's addition to his report to the Director-General t hat the recommendation of the Chief Designing Architect might be obtained, is indefensible. It will be seen that the occasion following the lunch of the 15th March, was

not official, and at least for that reason nowhere appeared on record. It was a social engagement at which matter.s were discussed which in my opinion ought never to have been discussed not only in the presence of but also with an interested party outside the Department, as Mr. Taylor clearly was at that dat e. Mr. Richards has sought to put this construction upon it ; that lVIr. Orwin was anxious to keep clear of it, and that for this reason he merely put the note that he did, namely that the matter might be referred for the recommendation of Mr. Henderson. If he was· anxious to keep clear of it, I cannot understand his inserting this To my mind, in

11

adding it to his report, it was as though he were himself recommending terra cotta-this for the reason that he knew that that would be Mr. IIenderson's recom_ mendation. The matter presents itself to · my mind in this way. The consideration of the tenderers involved not merely a mathematical question of the amounts of tenders and a simple question of saying which was the

lowest. It involved the exercise by some one or more-departmentally, and ultimately ministerially-of a discretion and the arrival at a judgment-in this case probably a choice between terra cotta represented by Mr. Taylor's company, and stone. These were obviously not only in competition, but in close competition, as was known at that moment. In those

circumstances the mere discussion, as I have pointed out, was irregular. In the result, no detriment to the Commonwealth followed, nor indeed could it be anticipated by Mr. Orwin, as the facts were. It is quite true that even in the absence of the suggestion made by Mr. Orwin, Mr. Henderson would have been asked his opinion in the ordinary course. Mr. Mehaffey at page

643, says that that undoubtedly would have been so. Moreover, in the result, the Minister's decision in approving of the tender of Grant & Sons, meant that Mr. I-Ienderson's recommendation was not given effect to. It does seem to me that in a matter such as this, it is no answer to point out that no harm resulted. It is highly desirable that a departmental decision or recommendation should be entirely free from suspicio of improper influence, and whilst it is impossible for me

t o suggest a general principle of what is or is not improper, I am definitely of the opinion that this interview was improper. So far as concerns Mr. Taylor, I do not regard myself as obliged t o make any direct comment. He, himself, in the witness box, expressed regret if by his action he had compromised either of the officers concerned. He is a man of great ability and strong

personality and regarded the interview as quite legitimate. I content myself with saying that I do not agree . The question of ministerial and departmental interviews after tenders have closed is adverted to in the rna tters appearing under (e) of the Terms of Reference.

It is necessary to point out that Mr. Mehaffey, as I find on the evidence, did have a view in favour of terra cotta. Following the Minister's discussion with him, in the result, the recommendation formally made by Mr. Mehaffey in favour of this facing was not accepted by the :Minister. Thereafter Mr. lVIehaffey faithfully and loyally proceeded to give effect to the Minister's

decision. It should not need authority to establish the proposition that it was his duty so to act, but in the circumstances I am bound to draw attention to the fact. The duty is stated in Lowell's The Government of England, Vol. l, 1917 Edition, at page 187: "He gives his advice frankly until the Chief has reached a decision, and then he carries that out loyally". The

reference is to an officer situated in the position substantially the same as that occupied by the Director-General of Works ; and Mr. Mehaffey acted in accordance with the principle.

(c) THE SUBSEQUENT APPROVAL OF THE ACCEPTANCE OF A DIFFERENT TENDER FOR THE ERECTION OF THOSE ADDITIONS AND THE STEPS LEADING TO THAT APPROVAL. For the purpose of appreciating what follows, it is important to refer to the fact that Mr. Thorby's letter approving of the acceptance of Grant's tender and dated the 18th April,

was forwarded by :L\1r. Cameron to Sir Harry Brown, Director-General of Posts and Telegraphs, on the 19th. (See Transcript 372.) ·

The circumstances under which Mr. Thorby's decision came to be reviewed involve a simple recital of the interest taken by Sir Harry Brown in the subject of the facing to the General Post Office. The first occasion on which he took any interest in the subject at all was when a letter caine from the Department of the Interior outlining the tenders received and making the

recommendation to the Post Office that they should adopt terra cotta and accept a particular tender. This document is 137 in the Canberra file dated the 20th March, over the signature of Mr. Mehaffey. (See Transcript page 574.) f

Sir Harry Brown states that he was interested in a paragraph in this reading, " The design being of a simple nature would allow for the grading of the terra cotta from the red granite below to say a cream at the top ". His prompted him to c?nsult

Mr. J\1ackennal, Director of Works in Melbourne, whose opiniOn he valued, and from him he obtained an unofficial view that the suggested use of terra cotta would "look pretty good''. Sir Harry Brown it was who instructed Mr. Stanton to draft and forward the memorandum, dated 28th March, 1939, concurring in the Works recommendation of the 20th March, 1939.

(Canberra file 151.) . .

He stated in evidence that he thought that that was the end of the matter until he received the latter from :.Mr. Thorby addressed. to Mr. Cameron file 107, qanberra

:file 168). It is to be observed that th1s document of the 18th April, was forwarded to Sir Harry Brown by the direction of the Minister. There is noted below that direction the words, ·"Mr. Stanton. P. Spk. H.P.B. 22/4/39 ". This, Sir Harry Brown swore, was

12

put on by him and that it required Mr. Stanton to see him about the matter, which he (Mr. Stanton) did, when t he Director-General informed him that he was surprised and could not understand why a recommendation that had come from a Department supported by the two chief people concerned, and afterwards concurred in, should be altered without their knowing anything about it. He instructed Mr. Stanton to get in touch with Canberra and see what the position was­

" because I was anxious, knowing that a new Postmaster-General was to take ·office and that the new Postmaster-General should have an opportunity of seeing what was proposed to be held up against t he express recommendation of the man who was responsible for the design of the building and for whose opinion I had the very highest regard". (See Transcript page 576.)

Thereafter· Mr. Stanton reported to Sir Harry Brown, and there is noted on the minute paper the following : " Discusse d with Mr. Viney and request made ±or notification in regard to the acceptance of a tender to be held in abeyance in view of the intention to communicate with new Minister in regard to terra cotta facings instead of :Hawkesbury sandstone. W.S.S.

24/ 4/39 ". (See Postmaster-General's file, page 108.) The witness then proceeded in his evidence as follows : " I think the thing remained in abeyance for a day or two until the new Postmaster-General was appointed, and my recollection of that is that when he was appointed and it was announeed in the press, I called him on the telephone to offer my congratulations, and then I mentioned to him this question referring to the Sydney Post Office and I said that I proposed that we should enter a protest and if he agreed I would send a letter for him to post on to the new l\1inister of the Interior. That letter was dictated, and I think there was a covering letter sent in it to Mr. Harrison the same day."

This version is corroborat ed by the evidence of 1\ir. Harrison at pages 542-546, which, so far as it is relevant, follows :-* * * * * * * .• * * * * * *

Yes. On 26t h. He co ngratulated me, and in the course of his congratulations he said, "There is one matter to which I would like to direct yo ur attention. It is rather urgent". He then mentioned the extensions to the G.P.O. He said, "I bave received a letter addressed to your predecessor Mr. Cameron, in which the Minister for Works has approved of a t ender for the erection of the alterations, covering a stone facing."

He then told me t hat t he Post Office had concurred with the recommendation that had been made by the Director-General of Works and t he Chief Architect of t he Works Department, in which they had recommended to the Post mast er-General's Depart ment the use of a terra cotta facing. Up to that moment I had no knowledge that any argument had de veloped around t he facing of that Post Office building. I have to confess that at that moment I t hought sandstone might have been the m,ost suitable, and I said to him, "Why terra cotta? " He said, "\Vell,

it lends itself to that type of building. The building has been designed for it. The Chief Architect has recommended it. The Director-General of Works has recommended it, we as a Post Office have concurred, and think that the maintenance ch1uges will be considerably lower; and, as a matter of fac t, the whole thing is very desirable, and we would like you to take up the point with the Minister and see if it is not possible for him to agree with the reco mmendation of his officers ".

* * * * * * * * * * * * * \ I asked him then why a terra cotta frontage should be used for the building, and why they should depart from the existing sandstone. He said he was given to understand that it was good architectuml practice if they could not come close enough to a building in an alteration to depart from it as far as possible, and he then said that " Seeing that the officers have agreed to it and we. desire it, we would like you to take it up with the Minister ". I at' ked him where were similar buildings in Sydney that had terra cotta facings ; .he said there were many such buildings. I then said, " Your case seems to be quite a good case. You had better draft me a letter, as you seem to know the facts ; and if I am in accord with your draft letter I will sign it and send it on to the Minister ". The draft letter was subsequently sent to me, I concurred with his view, signed the letter and forwarded it on to the Minister. * * * * * * * * * * * * * * On 5th May, Sir Harry Brown was in Canberra, he rang me from the Department of the Interior and pointed out he understood the Minist?r had sent a note to me pointing out that he concurred with the previous Minister's decision confirming sandstone ; he said, "But, Mr . Harrison, he cannot do that in face of the recommendation of these men who are paid to advise Ministers, these experts of the ; and in the course of conversation he said, "I understand that a new process has been discovered with regard to the manufacture of terra cotta and I believe the benefit of that will come to the department and that gives a definite advantage to terra cotta in every way". · * * * * * * * * * * * * * * I told him I theught that the logic of the case was very sound insofar that we as a Department desire terra cotta, that the principal officers of the Works Department had recommended terra cotta, and that now that a cheaper process had been discovered, that would react to the benefit of the Department it seemed to be a complete case. * * * * * * * * * * * * * * ·when yo u said in that letter, for instance, "I hold the view quite strongly that this new building of modern type wou ld lend itself particularly well to the system, contemplated by your architect when the main design was conceived ", you are expressing views that had been formulated for you ?-Those views were views that I had subscribed to in m.y first discussion with Sir Harry Brown. I had discussed the possibility of terra cotta as against the ordinary sandstone from the point of view of maintenance, and he had convinced me that the maintenance charges with regard to terra cotta could be considerably lower. In fact the letter addressed by Sir Harry Brown to Harrison is undated, but the evidence is not disputed that it was drafted on the 26th by Sir Harry and sent on that date by the Honorable the Postmaster-General, Mr. Harrison, to the Honorable H. S. Foil, Minister for the Interior.

13

Sir to Mr. Harrison with this document a covering letter dated

the 26th Apnl. In VIew of the Importance of these two documents in relation to what has been referred· to as the revival of the question of a decision, they are reproduced in full-D E AR MR. HARRISON, 26th April, 1939.

I attach hereto a letter which I hope you may be disposed to send t o Senator Foil relating to the contract to be placed fo r t he new building adjoining the Sydney General Post Office . '

2. I think it would be a fatal mistake t o lose the undoubted benefits whic h would arise from the use of a terra cotta facing on this large and important building. 3. C.opies of the c_orrespondence on the subj ect are with t he accompanying letter to Senator Foll, and you will see from this that not only do the officers of th1s Department fe el t hat terra cotta is desirable but that

the experts of the Department of Works bold siwilar views. '

The I:Ionorable E . J. H arrison, M.P., Postmaster- General, Canberra, A.C.T. Mr. Viney notifie d by telephone as t o the position.

Mr. Groves.

DRAFT.

M Y DEAR MINISTER,

Yours faithfully, (Init.) H. P. B.

(Init.)

(H. P. Brown), Director-General.

w.s. s. 27/4/39.

May I refer you to the letter of the 18th April written to my predecessor by Mr. Tborby. 2. Thit:: proposal comes as a surprise to the Department, which had concluded that the recommendation of the Director-General of your Depart ment and t he Chief Architect to use a terra cotta facing would be adopted. 3. This Department has given a good deal of consideration to the mat erial t o be use d and is in full a c;oord with t he views expressed by your Director-General in his memorandum of 20/3/ 39, a copy of which is attached.

4. There is so little difference in the cost of t erra cotta as against sandstone as to make this aspect of the question unimportant, but from the point of view of appearance and subsequent upkeep there seems no doubt whatever that terra cotta is preferable. Many large and important buildings erected in Sydney and Melbourne during the last few years have received this t erra cotta treatment, and it would certainly appear to be more in conformity with modern practice to adopt that material on the new Sydney building. Sandstone dirties and det eriorates from exposure to the weather to a somewhat serious extent, giving rise to heavy costs if the building is to be maintained in a presentable

state. On the other hand, terra cotta is not likely to show any appreciable det erioration from such causes, and when it does accumulate grime and dirt, it can be restored almost to its original condition at very small cost. 5. I think you will agree that all the evidence is in favour of the use of t erra cotta, and I should be glad if you would arrange for this method of treatment to be adopted.

Senator the Honorable H. S. Foil, Minister for the Interior, Canberra, A.C.T .

Yours faithfully, (E. J . HARRISON.)

This letter signed by Mr. Harrison was seen by Senator Follin the circumstances detailed by him at page 503 of the transcript. The Senator there states that Mr. brought it

to him on the file apparently in the ordinary way ; that he (Mr. Mehaffey) said that there was a matter for him to decide whether the new Post Office in Sydney had to have a sandstone facing or a terra cotta facing ; that he (the Senator) asked what did Mr. Thorby think about it-" He has been Minister for a long time and he probably went into the thing very fully.'' Mr. Mehaffey's reply was that Mr. Thorby favoured sandstone facing and that the Postmaster-General of the

time agreed with it ; that he (Senator Foil) observed : " Well, I see no reason to vary that decision." He therefore endorsed Mr. Thorby's viewpoint and instructed the Director-General to write to the Postmaster-General accordingly.

This decision of Senator Foil, endorsing that of Mr. Thorby was conveyed over Senator Foll's signature of the 2nd May, 1939 (s ee Canberra file 182).. It was referred by direction of the 1Vlinister dated 2nd May, and was seen by Sir Brown Canbe!ra on the 5th ..

he spoke to :Mr. Harrison on the telephone and Informed him that It was an situatiOn to him (Sir Harry Brown) that nobody in Canberra who was really concerned with th1s proposal seemed to have taken part in the discussions as to any change or favour any change. (See Transcript 580.)

Following upon that, Sir Harry Brown drafted a letter which he wished his Minister to send to Senator Foll. (See Document 118, Postmaster-General's file). This draft was prepared by Mr. Stanton but was not sent, and thereafter Sir Harry Brown drafted for Mr. Harrison a

14

letter addressed to Senator Foil, dated 11th May, expressing surprise at his (the Senator's) decision and making fresh representations on the matter. The document expresses Sir Harry Brown's views. (Se e Transcript 585). That letter (Canberra file 188) is in these terms-11th May, 1939. MY D EAR MINISTER,

I must confess some surprise on reading your letter of the 2nd of May that you support the view that stone should be used for the upper floors of the new G.P.O. to be erected in Sydney.

I am sorry I find myself in disag reement with you on this matter, but in common with your own expert officers, including the archi t ect respons ible for the design, I hold the view quite strongly that this new building of modern type wm1ld lend it self particularly well to the treatment contemplated by your architect when the main design was conceived.

As you will recollect, the vicinity of Pitt-street in which the new building will be situated is largely comprised of old buildings- not of a pretentious character- which in the near future must give way to modern structures risin g to a mu ch greater height than the buildings already in existence. The street itself is comparatively narrow and, both from t he aesthetic and utilitarian s tandpoints, t here seems little doubt that the treatment of the extensive facade of the new Post Office with a vitrified material will have distinct advantagel:l over the more sombre characteristics of a stone being.

I regard the light refl ection from the building in terra cotta material as a great asset in such circumstances, and I am satisfied that not only will the face of the building be less inclined to accumulate dirt than would a stone frontage but when the occasion arises it will be much less costly to restore it to its original state than would be the process of attempting to clean stonework wh en it became dirty and blackened. There are several instances , includin g the existing Sydney G. P .O .• where pressure has been brought upon the Departmentto clean the external stonework of its buildings and where it has been found imperative to do this work the costs have been unusually high.

On the score of initial cost, t here is practically nothing to choose between one type of facing and another of the t wo kinds under consideration. In the circumstances, may I ask you to be good enough to arrange that when the contract is being placed it will include t he stipulation that terra cotta is to be used for the facing.

Senator the Honorable H. S. Foll, Mini st er for the Interior, Canberra, A.O.T.

Yours sincerely, (Sgd.) E. J. HARRISON.

It is to be observed that in the meantime Sir Harry Brown had learned from Mr. Mehaffey, Mr . Henderson and l\1r. Hoy of the visit of Wunderlich's representative to Canberra.

After making his decision endorsing Mr. Thorby's view, Senator Follleft for Queensland. On his return he received the letter of the II th May, from Mr. Harrison strongly protesting against his having agreed to sandstone (above set out), and sent for Mr. Mehaffey and the file. In the course of a long interview, the Senator asked Mr. Mehaffey about his (Mr. Mehaffey's) recommendation, the recommendation of the Chief Architect, and discussed with him the strong representations made by the Postmaster-General and inquired the actual difference in cost between sandstone and terra cotta which he fbund to be £I,450-"which, of course, would play little or no part in a contract of over £400,000 ".

The Senator's evidence continues at page 505 as follows:-" I felt, as Minister for Works, that the Works Department, as the Department which actually carries on building for every other Department, that I should recognize and allow the Postmaster-General's Department to have some say in a building which they themselves were occupying, and it was by coincidence that the recommendation that was made by our own Chief Architect and by our own Director-General of vVorks. I told Mr. Mehaffey that even then, without knowing who the tenderer was, to arrange for the acceptance of the tender for terra cotta facing and that it be given to the lowest tenderer and he told me that that was Whittle & Co., and he told me what the price of the tender was."

The communication embodying this decision was drafted by t])e Senator himself on the 16th I939. (Canberra file 189). It read as follows:-THE wORKS DIRECTOR :

Confirming our interview to-day-when you asked m.e for an opinion on the 1st May as to whether sandstone or terra cotta sho uld be used in the facing of the new G.P.O. in Sydney, I was not then fully acquainted of the strong representations made by the Postmaster-General's Department and experts that terra cotta should be used, and not saildstone.

After representations being made to me by the Postmaster-General-by whose Department the building will be occupied-and in view of the fact that you, as Director-General of Works, definitely recommended on 20th March, 1939, that the tender, of H. G .. Whittle & Sons Pty. Ltd. for £410,776 for the building with a granite and terra cotta face be accepted, I now approve of the lowest tender being accepted on the basis of your recommendation.

(Sgd.) H. S. FOLL,

Minister.

Canberra, 16/5/39.

039

15

It is important to advert here to the circumstances under which document 190, Canberra file, of the 16th .May, came to be sent by Senator Foll. On the evening of the day when the earher conversation was had, Mr. l\1ehaffey mentioned to Senator Foll the information as to a possible saving of some £2,000 gleaned by Mr. Mehaffey as a result of the visit of Wunderlich's . Senator Foil then instructed Mr. Mehaffey to inform the Postmaster-General

accordingly. This was done by Mr. Mehaffey drafting and Senator F oll signing the document (Canberra file 190) with endorsements thereon.

This document (190) is in these terms-MY D EAR Pos TMA STER-GENERAL : 16th May, 1939. G.P :O., SYDNEY : NEW BUILDING.

In reply to yo ur let ter of the 11th May, I have to advise that further information has j ust been received to the effect that a slightly diffe rent process of producing t erra cotta will r esult in a reduction of up t o perhaps £2,000 in the co t of same, and. therefore the prices for stone and terra cott a may no\ be co nsidered as equal. In t hese crrcumst ances, and havmg regard to the other aspects presented in your letter, I am now prepared agree to t he contract bein g carried out with terra cotta fac ing, and am, therefore, instructing my officers to enter

mto a co ntract forthwith with the lowest tenderer for the work on that basis.

T ht' I-l onomltle E. J . Harrison, M.P ., J>ostmaster-General,

P arliament House, Canberra, A.C. T.

Seen. A.D .G.

Yo urs faithfully, (Sgd.) H. S. FOLL.

Plen.se advise W.D . arrange accept Whittle's t ender terra. cotta-£2 ,000 saving ? M. 17/5/39.

At that stage Senator Foil swears-and there is no reason to doubt it in any respect- that he had never heard of Mr. vVhittle. At no time had he ever seen anybody associated with Wunderlich's. On the 17th May, Mr. Mehaffey addressed a memorandum to the Works Director, Sydney,

informing him of the approval of the acceptance of Whittle's tender and directing him to take action accordingly. With this communication tenders were returned by registered mail to the Works Department, Sydney. From the foregoing, it is manifest th at the decision of Senator Foil, which had the effect

of reversing that of Mr. Thorby, is traceable to the intervention of the Director-General of Posts and Telegraphs, Sir Harry Brown. He has been described by Mr. Cameron, in evidence, as " hard as nails and straight as a die". Just how his intervention came about is clearly set forth . It is necessary to consider certain comments made on it. There is no suggestion of anything sinister in it. Sir Harry Brown's evidence is clear. It agrees with the documents on the file , and is corroborated by the evidence of the Honorable the Postmaster-General. I am satisfied that his intervention was due to a very strong and quite honest opinion that for the building which would be occupied by his Department, terra cotta was not merely a suitable, but also a

desirable, material for facing. .

It is to be observed that Sir Harry Brown did not have any interviews with either of the tenderers, but did see two representatives, a Mr. Solly and a :Mr. Juncks, of Wunderlich's­ suppliers of terra cotta--in his office at lV1elbourne on the 24th March. He said that at that interview they expressed the desire to bring under his notice illustrations of buildings in t erra

cotta, and that they left with him son1e four pamphlets (produced in evidence) which he examined : that apart from this interview, he had not seen or heard of anything from Wunderlich's; and that no other influence of any sort was brought to bear upon him in forming an opinion. No question arises, therefore, as to the propriety of that which Sir Harry Brown did. It is true that Mr. Windeyer has urged that Sir Harry Brown was officious in seeking to have the earlier

decision reversed. His language to the Postmaster-General was emphatic, and I think his intervention was capable of being regarded as officious. But examining it in its complete setting, I am not disposed to adopt Mr. Windeyer's comment. . . . . . .

The extent to which a departmental head will seek to influence a ministenal demsion depends not only upon the circumstances of the case, but on the particular departmental head. As matters now stand the Government of the country could not be carried on without the aid of an efficient body of permanent officers occupying a position duly subordinate that of .the Ministers who are directly responsible to the Crown and to Parliament, yet possessing suffiment independence, character, ability and experience to be able to advise, assist, and to some extent influence, those who are from time to time set over them." (See the Northcote-Trevelyan

Commission Report cited in Marriott's The Mechanism of the Modern State, Vol. II., at 120.

16

There is one int erview occurring shortly before t he decision of Senator F oil, that calls for special reference. It was an interview on the 8th May, at which Mr. Mehaffey saw the representatives of Wunderlich at Canberra. The interview arose in this way. On t he night of the 4th May a representative of Wunderlich's rang Mr. Carrodus. He (Mr. Carrodas) made a memorandum in respect of it and addressed it to the Director-General of Works. It is in these terms-

A representat ive of Wunderlich's rang me last night and stated that represent ations ha d been made to t he Minister by t he stone people that stone should be used at the extensio ns of G.P.O., Sydney. -Wunderlich's desire that if such :Pepresent at ions have been made, they be given a n opportunity of putting the case for terra cott a before a decision is arrived at .

They understand that it had been decided t o use t erra cot t a.

(See Canberra file, Document 183).

(Sgd.) J . A. CARRODUS,

4/ 5/39.

This memorandum Mr. Mehaffey saw in due course. As well, Mr. Taylor of Wunderlich's rang Mr. !viehaffey seeking an interview and mentioning the subject-matter on which they wished to see him. He pointed out t hat t enders were under consideration, t hat there was no possibility of varying the price, hnt if they had anything they wanted to say, to write. (See Transcript page 353) . Wunderlich's, through lVIr. Reg. Taylor, did write on the 4th, and that letter is as follows :-

Following the writer 's t elephone communicat ion with you t his morning, I desire to confir m t he intimation th11.t a recent develop ment in the manufacture of our t erra co t ta faience for t he faci ng of buildings has resulted in a substantial saving in t he cost of prod uction and following on a conference of our various Works Executives yesterday, t he Directors of our Company have practically decided to st andardize the met hod .

Reviewing our es t imate for the t erra cotta requ ired fo r t he facade of the Sydney General Post Office extensions i ndicat ed that we would be in a positio n to submit a more favorable bid, hence my request that you should deJ2.y further consideration pending our submission of det ails and amended price. I might state that we are at present carrying out in Melbourne, a large contract under t his method, which has

been favorably commented upon by the building authorities of the Melbourne City Council and a number of the leading Melbourne architects. I would be glad, on intimation from you t hat it would be convenient, to go to Canberra on Monday next and supply for your consideration, an amended estimat e det ails of mat erial and t he met hod of application .

P honed Mr . Taylor's office O.K . M. 5/ 5/ 39. £2,000.

Called 8th May, 1939 and advise d that the1e would be a 1eduction of £2,000 in the terra cotta tenders.

Endorsement on back of letter-

M. 6/5/39.

Advised 12th May, 1939, by Secretary to Sir Harry Brown that the Postmaster-General had addressed Senator F oll a definite request that terra cotta be accepted for this building- ·

M. W. MEHAFFEY, 12/ 5/ 39.

After receipt of this letter, Mr. Mehaffey discussed it with Mr. Hoy and they decided that if there was a means of saving £2,000, they should listen to Wunderlich's representations and examine them "although it could not affect the present position" (page 355). Thereafter, Taylor called with another representative of the company and interviewed lV.Ir. Mehaffey and Mr. Hoy.

Mr . Taylor referred to a process of manufacturing terra cotta which was being carried on in Melbourne more cheaply than in Sydney. He suggested that Mr. Hoy should be driven to Melbourne t o see some of the product manufactured by the new process, actually being put into a building (pages 357 and 8). It was pointed out, however, by Mr. Mehaffey that there was no occasion for Mr. Hoy to go to Melbourne as 'at that time they were not interested in the suggestion. This was largely because no decision had been arrived at as to whether sandstone or terra cotta was to be used. Moreover, it was made clear that tender prices could not be affected by the suggestion.

Upon the evidence of Mr. Mehaffey and Mr. Hoy, corroborated as it is by Senator Foil, there is no reason to doubt that this interview was not reported to Senator Foil untiJ after he had made his decision, and t hat therefore the possibility of a saving of £2,000 in no way entered into that decision. Various comments have been made as to the propriety of the interview.

This is dealt with generally under the subject of "Interviews". (See page 26 of this report). For the moment, it is material only to state that no exception can be taken to the way in which this was handled by Mr. Mehaffey and Mr. Hoy. The matter appears completely as of record. So far as concerns the statement made to them that it was a recent development, and that that was the real reason for seeking the interview, I am not impressed by this. I am satisfied that the conferenc e referred to in Mr. Taylor's evidence as having taken place in Sydney attended by a number of representatives of Wunderlich Ltd., was held as he says. I am not satisfied that this letter and the seeking of this interview were prompted solely by the. desire to introduce

0 4 1.

17

something new following upon this conference. On the contrary, I am satisfied that Mr. Taylor was anxious to clinch a decision in favour of t erra cotta if it could be clinched, by adding one further advantage-as he suggested-to be derived from adopting it as the facing material, namely a saving of £2,000. This, quite incidentally, of course, would bring Whittle's tender

down below Grant's if a direct effect could be given to it, and make it the lowest tender of all. In making this observation, it is fair to state that there is no evidence to suggest that Mr. Whittle was a party to the representations. When, in fact, the decision was made to adopt terra cotta, Mr. Hoy, as Assistant

Director-General of Works, discussed with Mr. Mehaffey how this reduction could be ensured. Following the discussion, the course was suggested that Mr. Orwin, as Works Director, should see Mr. Whittle to ascertain whether he would be agreeable to adopt a course that would secure this saving. Mr. Mehaffey said, " You cannot put anything into writing, because we do not know

whether we will use the stuff." (See J}'Ir. Hoy's evidence at 752.) Later Mr. Hoy rang Mr. Orwin instructing him to see the contractor. Mr. Orwin's suggestion was that he get a letter from him. Mr. Hoy instructed him not to do that "because we do not know whether we are going to use the material. We have not yet investigated the process ". Mr. Orwin promised

to get in touch with the contractor. He did, in fact, see him. Prior to seeing Mr. Whittle, :Mr. Orwin discussed the matter with Mr. Cleland, the Accountant, who was present at the interview which took place with Mr. Whittle and Mr. Wilkinson of I-I. G. Whittle & Sons Pty. Ltd. Nir. Orwin communicated to Mr. Whittle his instructions from Canberra and indicated

that if -the new process were adopted, the Department would look for a substantial consideration upon the completion of the building. Then followed the making of what has shortly been called " the gentleman's agreement ".. The result of the interview was reduced to writing and placed in Mr. Orwin's safe. It is to be observed that this document was not put upon the file. It was

dictated to Miss Daly, a typist, and was witnessed by Mr. Cleland. (See Exhibit 6.) It must strike any mind as curious, and for this reason I have approached it with at least ·some caution. But it is fair to Mr. Orwin to point out that he took no part in the original discussions in Canberra ; that he carried out instructions in seeing Mr. Whittle, and that so far as concerns the document

embodying the effect of his interview with Mr. Whittle, his evidence is corroborated in detail by that of Mr. Cleland, and I accept it. The only other matter which arises for mention is that on the lith May, 1939, a letter was sent by Mr. Telford Simpson, on behalf of John Grant & Sons, addressed to Senator Foll.

The letter is in these terms-With reference to my telephone conversation last night, I thought it might be worth while letting you have a. short memorandum. of the position as I understand it. Messrs. John Grant and Sons' tender was, I understand, not more than £50 in excess of the tender of

Mr. H. G. vVhittle, and that this latter tender was considered the lowest tender, and instructions were given by you as Minister for Works to accept the lowest tender. The point I wish to bring before you is that it is do ubtful whether Mr . vVhittle is the lowest tenderer in view of the possibilities emanating fro m _ the follo wing facts. The supply -of a certain quantity of terra cotta is required by the contract. Wunderlich Ltd. are t he manufacturers of terra.

cotta and have a monopoly of this kind of material. Messrs. John -Grant and Sons received a quotation fro m Wunderlich Ltd. for the amount of t erra cotta required for t he job in the sum of £1 3,1 50, but I am credibly informed that for the same quantity of terra cotta Wunderlich Ltd. quoted Mr. Whittle £10, 522 , so that this creat ed a difference, calculated on the two prices, of £2, 628, and making allowance for the £50 which divides the two tenderers

it means that if John Grant and Sons had got the. same quote fr om vVunderlich Ltd. fo r the same material as Mr. \Vhittle did, their tender would have been reduced by £2,578, and I understand fro m Mr. Grant . that he is prepared to reduce it by this sum provided he gets the terra cotta fro m Wunderlich Ltd. at price 9u oted to Mr. Whittle. My justification for bringing this under your notice is not that I have any mterest m John Grant and Sons, but because it seemed to me that the Commonwealth might by calling upon Wunderlich Ltd. to give an explanation

as to why it made different quotes for the same material save £2,578, assuming vVunderlich Ltd. were then to reduce its quote to Mr. Grant, which, it does appear to me, would be very difficult for them not to do , especially as they are a monopoly and there is certain legislation being passed in this State now dealing with matters of this sort .. Mr. Thorby also interviewed Mr. ,V. A. Grant at the Commonwealth Bank Office, Sydney, expressed his

intention of investigating this matter thoroughly. He was very much concerned ..and was greatly Impressed by the information he received. This information may not have been brought under your notice as Mr . Thorby left the Cabinet in a hurry, and no doubt his office was somewhat upset.. . , .. · .

I realize that Mr. 'Vhittle would be disappointed, but agamst that we might state t nat a grave InJUStiCe would unwittingly be done to Messrs. John Grant and Rons, and these two 1 suggest, cancel one another.

The question of saving such a large sum of money as £2 ,?00 should then. be t he deCidmg factor. .

I hope your presence in the Griffith Electorat e w1ll have the desued result, and that you have a pleasant trip to Queensland. Kindest regards. P.S.-If you care to give Mr. Grant ten minutes of your time to-day he will be very pleased to wait on you.

D.G. of Works, ·

. (Sgd.) J.A.C.

No reply necessary. the tenderers,

23/ 5/ 39.

I advised Mr. Simpson by 'phone that I wa.fJ not prepared to meet Mr. Grant or any of

(Sgd .) H. S. FOLL.

18

As the endorsement shows, Senator Foll did advise Mr. Simpson on the telephone that he was not prepared to meet J\1r. Grant or any of the tenderers. (See Transoript page 512 ). In addition he consulted lVIr. Carrodus and Mr. Mehaffey with regard to the letter and " we discussed the matter and decided that it was quite impossible to interfere between tenderers and sub-contractors". (See page 512). It is clear that Senator Foil took no .action on the representations contained in the letter, and was in no way influenced by it in arriving at his

decision.

(d) THE SIGNING ON BEHALF OF THE COl\1MONWEALTH ON 31sT MAY, 1939, OF A CONTRACT FOR THE ERECTION OF THOSE ADDITIONS. On Wednesday, the 31st May, 1939, the House of Representatives met when the Honorable the Speaker took the Chair at 2.30 p.m. After certain questions and answers there appears, at page 990, in Part 8 of Hansard (Proof) the following paragraph :-

SYDNEY GENERAL POST OFFICE.

Mr. CURTIN.-Is the Prime Minister in a position to answer question No. 8 on the Notice Paper? Mr. MENZIES.-That question relates to the matter which wa s discussed here the other day regarding the acceptance of a 'tender for certain additions to the General Post Office, Sydney. All I can say at the present time is that the matter is under consideration by the Government. The possibility of some speedy investigation of the matters raised in relation to t he tenders; is now being investigated by me. I have had the advantage of some tentative conversations on the subject with the Leaders of the other two parties in t his House, and I shall make a statement to-morrow. In the meantime I assure Honorable Members that no contract will be signed.

This assurance to the House was, of course, based upon the Right Honorable the Prime Minister's knowledge that consequent upon a meeting of Cabinet at about 10 a.m. of that day, instructions were given by the Honorable the :Minister for the Interior to Mr. H . T. Glover, that on no account was the General Post Office Contract to be signed.

The fact is that notwithstanding the Honorable the Prime Minister's assurance to the House given some little time after 2.30 p.m., the Contract was signed by the Contractor and by Mr. Orwin, the Works Director, on behalf of the Commonwealth in the afternoon of the 31st. :Mr._ Orwin's signature was affixed at 4.20 p.m. and within some five or ten minutes (s ee Transcript

85) he telepho ned :Mr . Mehaffey, and he being unavailable, spoke to Mr. Henderson requesting him to inform Mr . :Mehaffey that the General Post Office Contract had been signed, " as I know he will be anxious to know " . (Transcript page 86.) In order to understand how it came about that the person or persons responsible failed t o ensure that this understanding was honoured, it is necessary to deal first of all with the events which occurred earlier on the 31st. It will be necessary also, in order to understand the attempted justification on the part of the Director-General for not carrying out the instructions he received, to go back to the events from the 26th to the 31st inclusive.

At about 10.30 a.m. on the 31st· May, Mr. H. T. Glover, who is the Liaison Officer between the Minister and Department of the received a telephone 1nessage requiring him to report to the Cabinet Room at Parliament House, Canberra. He proceeded to the Cabinet Room and Senator Foll came out and instructed him to "get in touch with Mr. l\1ehaffey and Mr. Carrodus and tell them that on no account is the General Post Office Contract to be signed. That is an instruction from the Prime Minister and from Cabinet." He, IY.fr. Glover, from Senator Foil's offioe in Parliament House, rang Mr. lVIehaffey not later than 10.45 a.In. and conveyed these instructions to him. His reply was, " I have already given instructions for the quantities to be checked over and over again and the Contract not to be signed." (See Transcript page 119.) Mr. Glover, after several attempts to see Mr. Carrodus,· conveyed to him personally Senator Foil's instructions at about 12 noon. rv'Ir. Mehaffey has given evidence that he received the Prime Minister's instruction as detailed by 1\Ir. Glover, on the morning of the 31st. (See Transcript page 617). He adds that he said to Mr. Glover that he had given instructions to that effect, apparently on the Tuesday, and that there was no necessity for him to do it over again.

It is admitted that nothing was done specifically upon that peremptory instruction, at any rate until after the Contract had been signed in Sydney. At 3 o'clock that afternoon, whilst talking with l\1r. Carrodus in the Senate Chamber, Mr. l\1ehaffey observed to Mr. Carrodus, referring to a file which was then being used by Senator Foil, "There is nothing on that file that anybody has told any one not to sign that Contract. I think I will go and send a telegram and get a record on the' file." ·(See page 618.) He adds that he told Mr. Carrodus that there was no necessity to worry about the instruction, as the quantities had only just come in and it was a week's work in this going slow. Later on, he was called out from the Senate Chamber to the telephone and was informed by Mr. Viney that Mr. Henderson had just come in to say that Mr. Orwin had rung him reporting that the Contract had just been signed. Mr. Viney added that he bad therefore withdrawn Mr. lVIeha:ffey's telegram. After some consideration

043

19

Mr. lVlehaffey instructed Mr. Viney to see that the telegram was sent, notwithstanding the information he had conveyed to him. His reason for giving such an instruction, although the telegram would be futile, was that he foresaw a very searching inquiry and he preferred that the fact should appear rather that he had ultimately sent a telegram, than that it had been withdrawn.

(See page 619.) It is clear on these facts that Mr. Mehaffey was under an obligation to forward specific instructions on the morning of the 31st to Mr. Orwin not to sign the Contract. Moreover, it is clear that the real question for consideration is not so much the failure on the part of

Mr. Mehaffey to observe the Prime Minister's undertaking given some ti1ne after 2.30 p.m. in the afternoon, but rather to carry out the clear instruction given at 10.40 in the morning. In either event, the obligation is a serious one, and Mr. l\1ehaffey cannot be acquitted of son1e measure of blame for his failure. In these circumstances two substantial questions arise for decision-

( I) Are there any ciroumstances affecting what I find . to be his (l\1ehaffey's) responsibility for not carrying out the instructions received ? and (2) Did Mr. Orwin, in signing the Contract, act in disregard of any instructions, or in any other manner inconsistent with his duty? ( 1) For this purpose, it is necessary to consider the happenings between the 26th and the 31st May. On the evidence, it is beyond question that on l\1onday, the 26th :May, Mr . l\1eha:ffey put in two telephone calls to Sydney seeking to speak to Mr. Orwin, or, if he was not available, Mr. Cleland. The telephone records show that on the 26th, the first of these two calls was put in at 11.13 a.m. and the second at 11.45 a.m., and that in each case the caller was Mehaffey and

the person called Orwin or Cleland; so that undoubtedly on that date Mr. Mehaffey had two telephone calls to Sydney. The form of the records shows that Mr. Mehaffey is mistaken in his recollection of the way in which the calls arose. It being clear that these two calls were made, it is important to ascertain what was the nature of the communication and to whom it was made for the purpose of ascertaining whether, as Mr. Mehaffey suggests, he conveyed an instruction,

or, as I'vir. Orwin and/or lVIr. Cleland suggest, it was an inquiry only. For this purpose great assistance can be obtained from the events which occurred in the I-Iouse as set out in Part 7 of Hansard (Proof 26th May). Hansard shows that the Honorable the Speaker took the Chair on Friday, the 26th May, at 10.30 a.m., and that immediately Mr. Forde referred to the arrangement

of business for that day and its possible effect on the motion of which he had given notice-" That the General Post Office additions proposed should be referred to the Parliamentary Standing Committee on Public Works.'' Thereafter appears the following :-Mr. BEASLEY.-Has the contract for the additions to the General Post Office, Sydney, yet been If the Minister is unable to give me an answer to the question now, will he D,gree to supply it some time lat er during

the day 1 Mr. PERKINS.-The latest information I have was up to Tuesday afternoon last. The Contract had not then

been signed, but the contractor had been informed that his tender had bee n a,ccepted. It is the intention of the Government to honour its promise to accept the tender. Mr. FORDE.-Before my motion is debated 1 Mr. PERKINS.-The Go vernment has entered into a bond with t he contractor ·which it must ho nour. Usually about eight or ten days elapse between tbe making of the decision t o a, ccept a tender and the actual signing of the Cont ract. In this matter the Government feels that its honour is at st ake and that it must sign the Contract after having notified the contractor of the acceptance of his tender. In regard to the other portion of the Honorable

Member's question,_ I shaJl ascertain whether the Contract has yet been signed. I do not think it has.

It is to be noted that Mr. Perkins represents in the House of Representatives, Senator Foil, the Minister for the Interior. Some time later, as appears at page 800 of Hansard, in answer to a question by l\1r. Forde, lVIr. Perkins replied, " As I have already told the House, I am unable to say at the moment

whether or not the Contract has been signed. The Acting Leader of the House has already given an assurance that the matter will remain where it is at present until the return of the Prime l\finister ''. f

Mr. HUGHES.-Until Tuesdl;ty next. Again, at page 828-Mr. FORDE (Capricornia-Acting Leader of the Opposition) [3.51].-I ask the Minister representing the Minister for the Interior if he can give to the House a definite assurance that the Contmct for additions to the General Post Office, Sydney, \\>ill not be signed before Parliament m.eets next week.

Mr. PERKINS (Eden-Monaro-Minister-in-Charge of External Territories) [3.52].-I give that assurance. I have ascertained upon inquiry to-day following the question asked by the Honorable Member for \Vatson (Mr. Jennings) (sic) that this Contract has not been signed and that the arrangement is that it will not be signed before next Tuesday.

Mr. FORDE.-Will the House be given an opportunity to discuss the ma.tter before the Government signs the Contract 1 Mr. PERKINS.-! shall not go so far as to say that. The only assurance that I, as the representative in this Chamber of the Minister for the Interior, am able to give, is that the Contract will not be signed befor e next Tuesday, on which day the Minister will return to Canberra.

20

The record of the proceedings in Hansard leads to the clear conclusion that the order o£ events is as follows :-The l\1inister is .asked, inter alia, has the Contract been signed He indicates that he is unaware; and later states the result of his inquiry, nan1.ely that the Contract has not been signed and that th ere is an " arrangement " that it will not be signed before next Tuesday.

I am satisfied that the Minister's answer is the result of information conveyed to him by Mr. :IYieha:ffey, which itself is the outcome of his telephone calls to Sydney. In passing, one should observe that the word "arrangement" does not necessarily mean precisely what it appears to convey, but that it is the result of the information obtained by 1\!Tr. Mehaffey on his telephoning to Sydney. Mr. Mehaffey clai1ns that be gave instructions

on that date, that the Contract should not be signed. (See pages 612-3.) Mr. Meh affey's evidence is that on the 26th . he got a message from Mr. Perkins and thereafter he rang Sydney for Mr. Orwin and in his absence spoke to Mr. Cleland, and ultimately said " Well, do not sign the Contract until you hear from me. I(eep on checking the quantities ". (Pages 612- 3.) .

Mr. Cleland's evidence is that on the 26th the conversation between him and Mr. Mehaffey was-" How about the G.P.O. ? " I replied, "We have received a letter from Whittle & Sons advising that they anticipated lodging the Bill of Quantities on the Monday following".

He asked, " Is the tender on the old form 1 ". I said, "Yes". He then said to me what I understood to be a question, "It is not signed '1 ". I replied, " No ".

Mr. Cleland's evidence is in accord with the strong probabilities as appearing in Hansard, and I am satisfied that it is the correct version. To my mind the conclusion is inescapable that on the 26th an inquiry only was made by lVIr. Mehaffey and that no instruction of any sort was given with regard to the delaying of the

Bill of Quantities or not signing the Contract. The next question for consideration is whether, not having conveyed any instructions­ as I find-on the 26th, he did on any later occasion give instructions that the Contract was not to be signed.

Mr. lVIeha:ffey 's evidence is that he did not speak to anyone on the 29th. Mr. Orwin's evidence is that he (Orwin) did speak to lVIehaffey on the 29th (Transcript, page 78). Mr. lVIeha:ffey said that on the 30th he spoke to Cleland. Cleland swears tbat he spoke to Mr.

lVIehaffey only once, namely on the 26th, and did not speak to him at all on the 30th. (See

Tra,nscript, page 837.) 1 ·

The telephone records contain no call from Mr. Mehaffey on Monday, the 29th, but they do contain a call · on Tuesday, the 30th, in these terms-" 2.31 p.m.-Mehaffey. Orwin or Cleland". .

That day, Tuesday, was the expiration of the period of delay " arranged " and mentioned by Mr. Perkins at page 828 of Hansard. It would therefore be not unnatural, as the period of what one might call the first postponen1ent was running out, that Mr. Mehaffey should ask had the Contract been signed.

I am satisfied that whatever conversation Mr. Mehaffey had, and with whomever he had it, it occurred on the 30th. This because-(a) the telephone records support it and negative the 29th ; (b) in retailing it to Mr. Hoy, Mr. Mehaffey fixes it as the 30th ; (see Transcript,

page 7 68) and (c) it is the Tuesday on which the period of" delay" expires. The next question is, what was the communication 1 As to this, Mr. Mehaffey's evidence is that he got Mr. Cleland again on the telephone. He had learned from Mr. Cleland on the Sunday in Sydney that the quantities were expected on the Monday ; that at the conversation, which I find to be on the 30th (and to be in fact with Orwin and not Cleland), he swears that he asked Cleland was the Bill (of Quantities) sent out. He said " Yes ", to wbicb Mr. Mehaffey replied, " I suppose there is no general hurry." He said, " No ". I (Mehaffey) said, " Do not sign the Contract. I{eep oi1 checking the Bill of Quantities until you hear from me ". (See page 616.) , · .

In Mr. Hoy's evidence (page 768), he refers to this conversation had by Mr. Mehaffey with Sydney. He says that on that date, Tuesday the 30th, Mr. Mehaffey told him (Hoy) that he bad had word from Sydney that the Contractor had lodged his Bill of Quantities; that Hoy said, "It looks as if he (the Contractor) has fulfilled his part of the c.ondition ", and Mehaffey said, " That is all right. Sydney Office is going to keep on checking until they hear from me".

21

M!· appears at page 78. H e says, " On the 29th I received a telephonic

communiCation from the Duector-General. The conversation was as follows :-cr Is the Contract for the G.P.O. signed 1 ".

I replied, "No, sir. We have to check the contractor's prices with the Bill o£ Quantities first". He then said, " How long will that take 1 " I replied, "Whittle thinks that it can be done in a day, but I think that it will take longer ". He replied, "All right. No hurry".

It is true Orwin puts this on the 29th. But fo r the reasons outlined above, this must be t aken to have occurred on the 30th. I find as a fact, therefore,. that the conversation was not wit h Cleland, but was with Orwin, partly Cleland says he n?t speak at all t he 26th with Mr . lVIeha:ffey ,

and partly because ·It would be against Orwin s 1nterest to admit a conversat ion on t he 30th and that he would be little likely to make such a mistake. ·

As to what the conversation was, I am satisfied that Orwin is substantially correct · that the instructions were " not to hurry" ; that they did not include the stat ement-" Do not sign the Contract." Mr. Hoy's evidence alone at page 768 already referred to would tend to that/, since. in repeating. .on the 30th to l\1r. H oy, M/ Mehaffey does

mention the keeping on checking the quantities, but does not 1nention " not t o sign the Contract ' ' . -

Insofar as Nir. Orwin is affected by any instructions of the 30th, t he matter is to some carried a little further by Mr: Carrodus' evidence at page 309. H e says t hat when the

ag1tatwn occurred on 31st after learned. that had been signed, he put a

call through to 1\1:r. Orwin and asked him ·: Why did you sign It In the face of defi nite instructions that you were not to do it ? " Orwin said : " I did not get those definite instructions. I got to .take as long as I could over checking the quantit ies, but I did not get the

Instruction not to sign the Contract." · .

In my opinion, that substantially represents the instructions received by Mr . Orwin. Moreover, if Mr. Orwin had received instructions not to sign the Contract, it is i1npossible to think that he would have rung up, as he puts it, within five or ten minutes of his having signed it, for the purpose of informing Mr. 1\!Ieha:ffey of the fact.

(2) For this purpose it is necessary to deal with the events in Sydney from t he 29th to the 31st May. Mr. Bruce, the Quantity Surveyor, Works Department, Sydney, prepared the Bill of Quantities, as already noted in detail. vVhen he had completed t he preparation of the Bill, he

had no more association with the General Post Offic e extension until after the acceptance of Whittle's tender (page 885) and his next acquaintance wit h the matter was that on 1v1onday morning, the 29th lVIay, :rvir. Cleland, the Clerical Section, asked for the spare Bills of Quantities for the Contractor. At that time, he (lV!r. Bruce) was of opinion that the Bill would t ake smn e

two days to check. On Monday morning, the 29th, between 9 a.m. and 10 a. m., lVIr. lVlcElgunn, the Contracts Clerk, Works Department, informed 1\ir. Bruce that the Bill of Quantities was coming in. In his letter to the Works Director, dated the 25t h May, Mr. Whittle had stated that he expected to be in a position to sign the Contract on Monday, 29th instant, in the afternoon.

(Sydney file 211.) On the Tuesday Mr. Bruce received a telephone call fror11 Mr. Whittle, the Contractor, saying that he was sending in his Bill and did not want it to be delayed in any way. Mr. Bruce informed him that he would get it through as soon as he could, probably by the next day. _ No one had mentioned to him the question of taking time over the checking of the

quantities. The Bill of Quantities was brought in at about 10 o'clock on Tuesday morning. Checking of it commenced at 11 and finished about 11 on Wednesday. It was done by two machinists and the only reason for that extra assistance was t hat he, Mr. Bruce, had promised the Contractor to have it ready the next day (p age 819). H e, Mr. Bruce, made

the appointment for the signing of the Contract for 2.30 p .m. Wednesday, the 31 st. Mr. Wilkinson of I-I. G. Whittle & Company brought back a part of the Bill that had been returned to hin1, and that on that occasion J\ir. Bruce made with Mr. \Vilkinson the appointment for 2.30. He, Mr. Bruce, informed the Contracts Clerk, r\1r. McElgunn, and t he Works

Director, Mr. Orwin, that the appointment had been so made. Tbis was in accordance with the usual procedure (page 893). Mr. Whittle arrived at the office at 2.30 p .m. and some corrections had to be made. After the corrections were made he, Mr. Bruc e, took Iv.Ir. Whitt le and 1\1r. Wilkinson and another, whose name he does not state, to Mr. McE lgunn's room, and thence

to Mr. Orwin's room. The Contract had been prepared by Mr. McElgunn. He places the time at which he took them to Mr. Orwin's room as somewhere about 3 o'clock. At that stage he says that Mr. Orwin suggested that they should all go al?ng t o the . B?ard Room to sign the Contract and that he (Mr. Bruce) took no further part prwr to the s1gn1ng of t he Contract.

There was later a reference to him for his opinion about the Contract time and be again vvent · to the Board Room when they bad finished. (Page 897.) Nlr. McElgunn (page 931) says that

22

he was present when the signatures were attached. He fixed the time of their being brought by :ll1r. Bruce as about 3 o'clock. That there was nothing unusual in the circumstances of the signing of the Contract on that day ; that on the contrary the usual procedure was followed. It will be noted that neither of these witnesses gives any definite evidence as to the time at which the Contract was signed. The fact is that after the parties repaired to the Board Eoom for signing, some 400 pages of the Bill of Quantities had to be initialled. (See Transcript.) l\1r. Orwin's evidence appears at page 82. He says, and this in accord with all the other evidence, " The signing of the Contract did not take place in my room." By this, of course, he means the signing by Whittle. He fixes the time that the Contractor and Mr. \Vilkinson and the third man were first brought to him as about 3.15 p.m. The signing of the Contract is conducted by the Contracts Clerk, Mr. McElgunn. After the execution of the Contract on the part of the Contractor, the documents ar:e brought into him (Mr. Orwin). He says (page 83) that after the Contract had been signed by Mr. Whittle, it was presented to him for signature and was signed by him at 4.20 p.m. There is no reason to doubt, and; on the evidence, every reason to accept, Mr. Orwin's statement that be signed the Contract at the time indicated. Before the telephone records had been produced to the Commission, 1\-fr. Orwin had sworn that he rang up Canberra at 4.25 p.1n. and asked for Mr. Mehaffey, but in his absence, informed Mr. Henderson of the signing of the Contract. The telephone record fixes that call as 4.35 p.m. I accept Nlr. Orwin's testimony as to the time as substantially correct.

From the 1natters above set forth, it is clear that lVIr. Mehaffey n1ust be held to have failed in his duty. That he erred in some respect is rather admitted by him when in evidence he stated that he took full responsibility for the position that the Qontract was signed in the face of positive instructions. By this, it would appear, he meant as the head of the Department, although he has, I very fairly volunteered the explanation that he did not seek to shelter behind any

other officer. I-Iad the Prime :Minister's undertaking been given to the House in the morning and the instructions to l\1r. lVIehaffey included a statement that such an undertaking had been given, he must have left himself open to grave censure. An undertaking so given is of such a solemn nature that any party would fail at his peril in his duty to see that it was observed.

But the conclusion which I have formed is that that is not precisely the fault to be laid at lVlr. Mehaffey's door. Nevertheless at some time not later than 11 o'clock at any rate, he clearly received Cabinet's instruction that on no account was the Contract to be signed. In my opinion that laid upon him the clear duty then and there to cmnmunicate with l\1r. Orwin who, he knew, was the person to sign tl1e Contract ori behalf of the Commonwealth, independently of anything that bad occurred before that day, to inform lVIr. Orwin of Cabinet's permnptory instruction and in this way to ensure that the Contract would not be signed.

In the witness box he was asked -vvhether he would not consider it negligent not to have conveyed that to Mr. Orwin. He would not admit it. I cannot agree with him. I am forced to the conclusion that the mere onussion so to communicate was negligent. One has to guard against the natural ten1ptation to view the matter after the event and not to appreciate the position as at the time that it happened. But I have given the question the most careful consideration, and I am satisfied that the conclusion is the correct one. To what extent is the fault-for in a Departmental sense, fault it is-palliated by the circumstances surrounding its

occurrence ? On Mr. lVleha:ffey's evidence, the failure specially to act on the instruction, is explained by the claim that he had already given an instruction to the same effect. I am convinced that he had not, for the reasons appearing earlier in this branch of the inquiry. But it is fair to him im1nediately to state that this does not involve the' inference that in so swearing, Mr. Mehaffey stated what he knew to be untrue or was indifferent as to its truth or falsity. I am satisfied that he honestly believed that he had taken such steps as would ensure compliance with the instruction. The evidence is overwhelming that when he learned on the afternoon of the 31st that the Contract had been signed, there was consternation in the office of the Director-General of vVorks, and he hi1nself was greatly upset. One of his officers used the word "collapse" to describe Mr. Mehaffey's reaction to the information received by him.

He impressed me as a Departmental head with a keen sense of responsibility, and in the result there can be no doubt that in reviewing at the time the happenings of that and the previous days, his 1nind very confused. He had about the 18th May told Mr. Orwin to hold his hand, though that instruction was later countermanded. That be believed on the 31st that he had done all that was necessary, is to my mind proven. It could not be suggested that he deliberately omitted to take action that day, as the conversation with Mr. Carrodus in the afternoon in the Senate Chan1ber- as to which I entertain no doubt-shows that he genuinely believed that he had already taken such earlier action as rendered a particular step on his part unnecessary. In that, he was mistaken and for that reason he fell into the error of omission as found.

23

-047 .l

The real position was that he had received some information as to the checking of the Bil of Quantities and h ad told Mr. Orwin not to hurry. These were the circumstances which, linked up with the earlier communication between him and l\1r. Orwin, gave rise to t he belief in his tnind that there was no o.f the 9ontract being signed, and that therefore the position

was safeguarded. Hence, whilst being dnven to the conclusion at which I have arrived, I feel it n1y duty to add that I am convined that Mr. lVIeha:ffey honestly, and for reasons which to hinl seemed sufficient, believed that the occasion did not call fo r special action. · So far as concerns Mr. Orwin, I should state at once that his signing of the Contract on

behalf of the Commonwealth was done in complete ignorance of such instruction as was given by Senator Foll on behalf of Cabinet on the morning of the day when the Contract was signed . It is clear that the only communication relative thereto which he received t hat day was the telegram which of course was despatched from Canberra after the Contract had been signed by

him in Sydney. In this connexion obviously no question arises concerning Mr . Orwin. Further, the evidence establishes that he had no part in the arranging of the appointment for signing. This was done by Mr. Bruce, the Quantity Surveyor, an officer of the highest repute, whose evidence was treated by all parties represented at the hearing as completely · trustworthy. It was suggested, in the course of argurnent, that the happenings in Canberra

were so much the subject of news in the daily press a.nd of discussion in the Sydney ·works Office, that Mr. Orwin mu t have been at least put upon inquiry. He swore that he was not in effect aware of anything that should have prompted him t o hold his hand. I was constrained to examine t hi aspect ,;vith some caution, since at fir st glance it seemed strange that this should be so ; but

upon full consideration of the matter I am satisfied that his evidence on this should be accepted. It was further suggested ·that Mr. Orwin was negligent in this respect that he had, aR lVlr. vVindeyer points out, clearly received instructions on the 31st "not to hurry". In view of that, lVIr. Windeyer submits, Mr. Orwin was negligent in not taking steps to see that the checking

of the Bill of Quantities was in fact delayed. I-Ie has urged that unless l\1r. Orwin did something, the checking would follow its normal pace, t aking-as Mr . Orwin said-something over a day. He gave no in struction at all to Mr. Bruce, who was responsible for the checking, and he (lVIr . Bruce) quite honestly, and following the practice which had been adopted on previous occasions,

at the request of the Contractor, expedited the matter, instead if delaying it. On this, Mr . vVindeyer has submitted that Mr. Orwin, having received those instructions, is responsible fo r having failed to take some step to see that effect was given to them. The precise way in which the instruction referred to by Mr . Windeyer was received

appears, as has already been indicated, at page 78 of Mr. Orwin's evidence. There, it will be remembered, he said that Mr. Mehaffey, after asking him if the Contract had been signed, asked him in effect how long it would take to check the Contractor's Bill of Quantities, and being informed that Mr. Whittle thought it could be done in a day, whilst he (Mr. Orwin) thought

it would take longer, said to him: "All right, no hurry". If this communication had been received by Mr. Orwin with a knowledge of the happenings which was possessed by the Departn1ental Officers in Canberra, I should feel that there was great force in what Mr. Windeyer has suggested; but on this, as on other matters relevant to Mr. Orwin's part, I was greatly impressed with Mr. Richards' submissions on his behalf.

lVIr. Richards drew attention to the form of the conversation, commencing with "Is the Contract signed ", and concluding with, " All right, no hurry " . He has argued that the effect of that is really that Mr. Mehaffey was not pressing as a matter of urgency, but that he did not give a direction to delay; in other words, that Mr. sh?uld take time, .but that if he

did not delay unduly, it could not be regarded as a disobedience of an Instructwn. Moreover, Mr. Richards has urged that-Mr. Orwin was aware that time was running and that a few days only remained within which the Contractor could require that the matter should be completed. With this in mind, Mr. has thap . . Orwin, whilst taking

care not to hurry, was nevertheless faced w1th the obhgatwn not to give the Contractor real cause for complaint of unwarranted delay. Further, Mr. Richards has subrnitted that 1\'Ir. Orwin's ringing up some five or ten minutes after the Contract had been signed in order to infonn Mr. Mehaffey of that fact, was done with the air of a man seeking to impress his superior officer with the fact that he had completed his duties with promptitude. . ·

I agree with Richards that is with man

who -was aware that If he was at fault, It was either a dehberate dlSobedwnce of Instructions or negligence in carrying them out, and that in his telephoning so promptly he would be revealing to his superior his shortcomings. . . . . . . .

I am of the opinion that no cntimsm can be levelled Mr. Orw1n 1n .connexwn with the signing of the Contract; on the contrary I express the opinion that the Circumstances under which he affixed his signature to the Contract do not afford any adverse comment He carried out his duties with propriety and with due regard to h1s obhgatwn to safeguard th interests of his Department and the Commonwealth. ·

24

(

e) ANY OTHER MATTERS ·wHICH ARE RELEVANT TO OR CONNECTED \VITH THE FOREGOING.

MINISTERIAL DECISIONS.

As already indicated, the decisions-the one to accept Grant's tender, the other to accept instead \:Vhittle 's tender-were . the decisions of the Minister for the Interior at the respective times--lVlr. Thorby and Senator Foll. As to each decision, the Postmaster-General for the time concurred in it-JY1r. Cameron in Mr. Thorby's decision, Nir. Harrison in Senator Foil's ; indeed, as to the latter decision, it is more correct to say that at the insistence of the Permanent Head of his Department, Mr . Harrison pressed Senator F oll to give effect to the opinion of the departmental experts, involving the reversal of Mr. Thorby's decision.

The position with respect to each may fairly be described thus-The earlier decision was arrived at with due consideration and honestly with a belief in the n1ind of the Honorable the l\1inister-a belief shared .by his colleague the }Ionorable the Postmaster-General-that the interests of t he Commonwealth were best served by the choice

of stone rather than terra cotta for t he facade of the proposed building. Mr. Thorby felt, as well he 1night, that his varied 1ninisterial experience, together with this practical knowledge as a builder, fitted him peculiarly to form a sound opinion and to appreciate the better the advice given him. by the experts of this Department. I-Ie had a full discussion with the Director-General of \V orks and sought his views . The problem was really not a building problem in the ordinary sense. It has been described, and aptly, as one rather of aesthetics. In any case, it would appear to be a subj ect as to which any ordinary well-informed lay mind capable of understanding simple facts , could arrive at a decision without great difficulty. lVIr. Thor by decided, as he was clearly entitled to decide, ·and with an1ple support for his view, if it needed, not to accept the Department al rec01nmendation. His decision could properly be described as one arrived at in the face of, not in spite of, t he advice of the experts, the Chief Designing Architect (Mr. Henderson), and the Assistant Director-General of \¥ orks (Mr. Hoy) who also is an architect. These two officers really provided the expert Departmental recommendation. Certain other senior architects in the took the contrary view, namely that of the Honorable

Nlinister. By contrast it may be said that the decision of his successor, the Honorable Senator Foil, was ultimately arrived at in accord with the Depart1nental recommendation and that of the two architects already named. The way in which this came about has already been set forth in some detail. It is necessary only further to say here that there is no ground for even suspecting t hat it was not a completely honest and considered decision with a full . appreciation of responsibility, and it should be added, with due regard to the circumstance, that it involved a reversal of the decision of his predecessor; Senator Foll, like Nlr. Thorby, had a full discussion with Mr. I\1eha:ffey.

It is, if course, only too obvious that t his latter decision is the centre round which the whole of this inquiry 1noves. It is desirable t o state at once that the searching light thrown by these proceedings on the decisions and upon the part played by each of the four Ministers therein, leaves no room to question t he entire honesty and propriety of those decisions. It is not within the province of this Commission to deal with the merits of the respective approvals

of stone and of t erra cotta. In passing, however, it seems to me pertinent to observe that the evidence so clearly establishes the entire suitability of either for the purpose of facing the proposed building, that any one mind could decide in favour of either with complete equanimity, and under the circumstances I should fin d it difficult to understand a criticism of either decision in the absence of so1ne suggestion of fraud or impropriety. One fact emerges from this inquiry. No one has suggest ed that there is even a suspicion of bribery or of any sort of monetary consideration involved in the actions of any person, ministerial' or departmental. So far as concerns the lVIinisters, it is demonstrated that as to all four, each reached his conclusions conscientiously and with regard only to the responsibility resting upon him and to the interest of the Commonwealth. Since the second decision--Senator Foil's endorsed by l\1r. Harrison-was that which gave rise to the original criticism, it is proper to point out that after Iv.Ir. Thorby had given evidence, and

in answer to an inquiry by myself, JVIr. Wright (with other Counsel), announced that he made no suggestion of dishonesty or impropriety against any Minister; and Mr. Wright added that this announcement was made with Mr. Tharby's authority. At the time I expressed opinion which I repeat-t hat that announcen1ent did him credit. I add at this stage that it is manifest that a calm dispassionate consideration of the matter at or about the time that the subject decision was made-with material readily available to him-must have enabled Mr. Thorby to reach at that time the same conclusion as he expressed through his Counsel during the hearing.

It seems regrettable that Mr. Thorby, whose earnestness is not open to question, did not approach the matter on learning of the reversal of his decision, with more tact and less heat. The circumstances of his becoming acquainted with the fact appear in the transcript of his evidence at page 432, et seq. Mr. Thorby said he first heard of it " when there was an

1049

25

announcement made that the tender of Whittle & Company h9Jd been accepted. I actually in the in the corridor of ParliamBnt House that night about teatime.

I think It was dunng the tea adJournment . . . . I happened to meet the Minister's Liaison Officer, Mr. Glover , who had been my Works Liaison Officer in the past. I said to him " I s. that corre?t " He said, "It has been ann?unced ". I said, "I want to see your Minister I Will not let It rest at that. I do not agree With what has been done. You can tell your ·

1VIinist er straight away I disagree or disapprove of what has been done" or words to that effect

. . . . Immediately the dinner hour was concluded I was just going into or coming out

of the House of Representatives when JYir. Glover came across and said "l\1y Minister will see you now ", or " would like to see you now "-words to that effect. I immediately went into Senator Foll's room. I was rather in what I said. I was very definite, so

were they. I would say was .a .. There was no. quarrel. (Page 433.)

lVIr . Thorby then descnbed the Interview In detail. He said further in evidence that he left the room " feeling very dissatisfied and I intimated t hat I would bring the matter up in the House". The end of the interview is described by M:r. Thorby in these words-(Mr . Harrison) said .the Government was not going to be dict ated to by me and my reply was that if he were gomg to t ake up t hat attitude, I had come there on the friendliest possible footing, I did not want to go behind their backs, I did not wish to be unfair but wanted t o deal with the matter openly and fairly, but if they were going

to adopt that attitude, the actual words I u,'3ed were these " If you are going to adopt that attitude, then I will clean yo u up in the House". Those were the actual words I used. I am almost cert R.in he said it was a Government decision and I said " I will deal with the whole Government, if necessary''. (Page 435.) At the commencement there were present 1\!Ir . Thorby and Senator Foll only; the

Senator showed himself quite ready to help Mr. Thorby. He sent for the file and also for H arrison, Mr. Carrodus and 1VIr. :Mehaffey. The details of what occurred at the interview 1vere given by all five persons present and they do not all agree. This is not surprising. Senator Foll described the conditions as such that " it was not possible to carry on a very intelligent

discussion " . Such comment as becomes necessary is based upon lVIr. Thor by's own evidence. This I have examined carefully following the addresses of Counsel. The conclusion to which I am forced is that Mr. Thorby was so precipitate in his action upon learning of the reversal of his decision, that a situation was created that could have been avoided. I think he was sensible

of hurt where no hurt was either intended or occasioned. I-Iis view of the situation was as expressed at page 425. "There is a recognized principle that a successor does not reverse a decision of his predecessor unless there is anything that conflicts with the policy of the Government of which he is a member " . At another place he expressed the opinion " that there n1ust be some sound reason for reversing a predecessor's decision. He (the successor) must take the responsibility

and justify his action ". It is not necessary to discuss the accuracy of t his view of the

constitutional position. Mr. Thoroy, in another place, was asked" Does it not boil down to this; that your view of the matter was that your decision had been reversed and you wanted to know Answer: "Yes." (See page 426.) It is apparent from his evidence that Mr. Thorby's

approach to Senator Foll was less that of a person seeking information and more that of one demanding an explanation. As already stated, Senator Foll showed himself ready to assist. It is manifest that a simple explanation lay at hand. I agre e with the. suggestion of Counsel that with "i\!lr. Thorby's knowledge of departmental files-had he t aken time to look at the file

which was available-he must have discovered that the explanation to which he rightly felt he was entitled, was a simple one, and free from any criticimn so far as concerns the Ministers. His evidence shows at pages 422, 427, 442, 476 and 477 that he was aware t?_at the Departmental file would, in the regular course, contain some reference to the matter. It IS not to be that he would have to exmnine a large file. The only references would be to such happenings

as may have occurred between the 18th April, the of his the l 6.th the date

of Senator Foll's decision · so that if the fil e contained anything, as In fact It did, he would know that comparatively few documents at t he t op would need to be ins.pected. Viewing matter from his point of view, the fil e was the proper place to loo!L Either explanation for the reversal of Mr. Thorby's decision would apJ?ear completely on the fil e, or not.

If it did not, it would carry its own comment. I! It appeared, he have examined It . In t his instance had he examined it he must have discovered a very simple and completelyregular explanation.' One cannot help feeling moreover if Mr. Thorby ha.d fully to the

two succeeding that honesty of purpose whiCh he properly claimed for and as

well the same capacity to form a judgment, he would not have felt that the occasiOn called even for explanation. . .

In addition, it has been suggested that J\[r. Thorby was not unmindful of the to embarrass the Government. To the extent that t his comment relates to what occurred In Parliament, I indicated during the course of addresses that I did. think that the Terms Reference required that it should be with .. as that cntiC.Ism relates to Mr:

initial approach to Senator Foll, on learning of his deCisiOn.' I do not think the comment IS JUStrfiea! ·r have earlier what I consider to be the correct view on that matter!

26

P .C. ITEMS.

In the course of the hearing frequent references were made to the circumstance that terra cotta was th e subject of a monopoly. So far as concerned Australian terra cotta, it is not disputed that this is really in the hands of Wunderlich Ltd. It was suggested more than once that in those circumstances it should have been a P.C. item as ordinarily understood in the building t rade, and that t he circumstance that it was not so treated was in itself suspicious.

The fact is that the provision for terra cotta was drafted by Mr. Bruce, the Quantity Surveyor, and appears as Item Xl67 in the Bill of Quantities in these t erms-Allow lump sum for terra cotta as will be quoted by Wunderlich's Ltd., whose price has been m,ade up from the working drawings and details, &c.

Mr. Bruce, in evidenc e, stated that if there had not been an alternative provision for stone, the item terra cotta would have been made a P. C. item; but, t here being alternatives for stone and for t erra cotta, and the desire being t o ensure competition in the manner explained by him, that the item was inserted as it in fact appears.

The direct importance of the matter, namely, as to whether there was anything irregular in relat ion to t he subject contract, disappears entirely in view of the evidence of Mr. Bruce, who , as I have had occasion earlier to mention, was regarded by everybody as thoroughly reliable in every respect. But the matter having been raised, comments were made by learned Counsel on the subj ect particularly of material which is in the hands of one supplier only. Various suggestions were made, and I was invited to deal with the subject of P.C. items in the report.

I am satisfi ed that it is not called for ; moreover, the evidence on the subject is not sufficiently full to enable on e to offe r a suggestion or express an opinion that would have any value at all. Indeed, such evidence as appears in the Transcript was allowed not because of its direct relevancy to any Terms of Reference, but only because of a suggestion- complet ely dispelled in the result­ that there was something sinister in the circumstanc<": that it was not made a P.C. item. The

suggestion arose only because of the di scrimination in price quoted by Wunderlich's to Grant's compared with other t end erers. The fact is that neither the Department of \iV orks nor th e Postmaster-General's Department was in any way involved. Mr. Monahan, IC.C ., in the course of his address, offered certain considerations both for and against the insertion of P. C. items ; these are set forth-

Firstly, it gives control of purchase to the building owner in three respects- ( a) from whom, (b) as to quality, including appearance and design, and (c) as to price. An item P. O. gives the building owner control in these three respects ; secondly, it limi ts the builder 's profits in respect of these items. Yonr Honour remembers that in t he ordinary standard fo rm, the building contract stock form, these items are always deal t with and the amount of profit is scheduled ranging from about 2 pe r cent. to 10 per cent. according to the particular items being dealt with as P.C. If an item is a matter of P:C. then the builder's profit is limited by that specified percentage, an d if he wants any more he has to provide for it in a lump sum.

The third r•' ason in fnvour of it is that it gives the owner a cash discount that may be allowed by the supplier. Th e reasons against it are, it appears to me, t hese-(1) it destroys the chance of the builder getting a lower price than the Government. That, I think, is a very ser-io us matter, as builders who are large customers of merchants are enabled t o go ro und and get pri ces that the Government cannot get. That has a natural tendency to save money. Sometimes it seems somewhat unfounded, but there is that supposition . There is no doubt that very often builders

who are const antly in touch with merchants as customers can make a better deal and get a thing lower than the Government would get it . The second reason is t hat it increases the Government's responsibility, (a) as regards delivery; (b) as to the care of the commodity after del ivery and (c) as to the quality of the article delivered. If there is any argument about the quality of t he particular P .C . item delivered, he has to go and argue with the merchant. If it is made P.C. the builder says "I don't care, yo u can go and argue over it".

The t hird reason against it is t hat it diminishes the monetary control exercisable over the builder. The more you put P.C. items the less money you have and you have to keep hold of him until the job is finished. If you have three-quarter P .C. items you have no hold on him at all hardly. The more you put in P.O. the more you diminish the owner's control over the contract with regard to the amouD;t of money he can have.

The fourth reason is that it may completely destroy the penalty cl ausE's . I regard that personally as a most serious thing. In my experience one of the most diffic ult things to enforce in a building contract is the penalty clauses . If you employ a builder to carry out your work, such as stone fa cing, for example , that pil es up the P.O. items and it is a very diffic ult thing to enforce the penalty clauses.

The next is that it seriously curtails the competition between The more you increase the volume of the P.C. items in any contract, the more you destroy the competitive nature of the building as between rival tenderers. It limits the various matters. Again you t est that by, taking an extreme case, a case where three-fourths are P.O. items. You have little or nothing left for competition.

And the last is t hr-tt where a tenderer is also a supplier, it gives him an unfair n.dvantage. That particularl y arises in this case.

I NTERVIEWS.

As appears above , interviews were had by Mr. Grant and Mr. Whittle, whose companies were t enderers, and Mr. Taylor, whose comp any was the supplier of the terra cotta. The particular interviews had by each with Ministers and/or Departmental officers have also been set forth . The method of approach of each of the two t enderers shows that he realized that it would be improper for him as a tenderer to seek to influ ence either a Minister

27

or a Departmental head. There can be little doubt that notwithstanding the claims--by at any rate, one of them-that it was in the public interest, the sole object of seeking such interviews was to improve his company's prospects. Mr. Taylor at least was frank in the statement of hi s intentions, although hi s claim that there was nothing irregular or improper in such activities

cannot be acknowledged. It is desirable that reference should be made to the dangers inherent in such interviews after tenders closed. I have been invited to suggest a general principle in relation to them, which both Mr. Mehaffey and Mr. Carrodus have described as embarrassing. T would not be warranted in attempting to suggest a general principle. The subject is much

too large and complicated to be dealt with upon the incidental evidence only that was given. That some interviews, even after t enders have closed, are unavoidable, and indeed of advantage t o the public, is clear. But that they should be open to persons interested without some regulation, is obviously undesirable and fraught with the possibility of great public mischief.

Insofar as a particular interview dealt with before this Commission arose for comment, that comment bas been made. For the rest, I have deemed it my duty to draw attention to the subject­ matter as a question demanding some regulation. It becomes necessary to refer to the great body of evidence that has been given during

the sittings of the Commission. This, it seems to me , was largely unavoidable, and for this reason : quite early an atmosphere arose, due-there is no doubt- to the circumstance of the very keen competition between two tenderers represented by Mr. Grant and Mr. Whittle respectively, accentuated by the interest of Mr. Taylor's company. Mr. 'Vindeyer, assisting

the Commission, made it clear that he was '' exploring every avenue of inquiry " and was anxious that all the information that possibly could be available should be placed before the Commission. It involved the claim, which was acceded to, of Counsel for various interests, to be allowed to deal with matters which were not always strictly relevant, but which seemed likely from time to time to explain matters which required explanation , or to provide information which appeared for the moment to be lacking.

The process of .first assuming guilt or something sinister, and then seeking something in the testimony of a witness or in a document to support the assumption, is not unknown, and is as dangerous as it is simple. At various times, mainly during cross-examination, it made its appearance. However, as well in their addresses as in the examination of witnesses and documents,

Co unsel were given the greatest latitude. One result, therefore, of this exhaustive inquiry is that opinions arrived at are the more confident in that they are based upon evidence as complete as possible. Four Ministers of State gave evidence, and reference has been made to them. A number of Departmental officers:

were called as witnesses ; their work in the particular departments to which they were attached, has been investigated fully and tested by cross-examination, not always free from severity. In the circumstances, therefore, the opinion formed with respect to them is at least based upon the very fullest possible material. It is gratifying to be able to record that the inquiry has

shown that the public is well served by a body of officers not only of high qualifications, but of a keen sense of responsibility. I am obliged to Counsel representing the various for their great !n

particular, I desire to express my indebtedness to Mr. vVmdeyer, Counsel appomted to assist the Commission, and the gentleman instructing him. As well, I desire to acknowledge the very great assistance of Mr. Rowlands, the Secretary of the Commission, and_ the shorthand-writers and typists, upon whom an additional strain was imposed on those occasiOns when the hours of

sittings were extended.

25th July, 1939.

By Your Excellency's Command, A. V. MAXWELL, A Judge of the Supreme Court of New South Wales,

Commissioner.

P r inted a n d P 11blis hed for the GovERr\ ilfENT of t h e OF AusTHALIA by

L . F. JoHNS'l' ON , Governm ent Pnnter , Canberra.