property until the payment was made. The omission to provide for a specific time within which such payment should be made, and the property thereby pass, seems to me to point very strongly to the conclusion that the contract should not be, and was not intended by the parties to be, construed so as to hold this stipulation as a condition and not as a warranty. As I think, then, the trial of this action proceeded on the incorrect assumption of law that a failure to comply with this stipulation operated so as to enable the defendant to treat the contract as repudiated by the plaintiff. The answer to the suggested issue No 4 should therefore be in the negative. For each of the grounds given above, then, I think that the only matter for determination was an assessment of damages, and as such damages have not been assessed, the action should go back for that purpose. I think the appeal should therefore be granted, the judgment for the defendant set aside, and judgment entered for the plaintiff on the claim and on the counterclaim, and the action sent back for assessment of damages. Appeal allowed. Interlocutory judgment entered for the plaintiff. Defendant to pay plaintiff's Solicitors for appellant: Cannan & Peterson, for W. B. Solicitors for respondent: King & Gill, for Marsland & Marsland, Charters Towers. F. C. BROWNE V. HARRINGTON. Lukin J. L 1917. Lukin J. THE KING v. NEW QUEENSLAND COPPER CO. LTD., Contract-Construction-Loan or subsidy-Advance by Government The defendants were the owners of copper mines and smelting works, and for many years mined and smelted copper, winning much metal from the ground, March 14, 15, 27. and establishing and maintaining a small settlement about their properties. In 1911, the mines and works were closed. Application was made for financial assistance to the Government, and after the Minister for Mines had received a favourable report from the State Mining Engineer, the Government, by Executive minute, recommended that a loan of £1 for every £1 expended by the defendants up to £2000 should be granted for the purpose of assisting the defendants in further developing their mines, on the condition that should payable mineral be discovered the money was to be re-paid, with interest, as soon as the mines were worked at a profit. Negotiations were continued, and at the request of the Minister, the defendants prepared a draft agreement, which, after reciting the application for a loan or subsidy" and the agreement to advance £3000 on the £1 for £1 basis for the purpose of carrying out the development work indicated in the State Engineer's report, stated, inter alia, Clause 6—“ The amount so advanced as aforesaid shall be repaid to the Government out of the profits which shall hereafter be derived by or accrue to the company from the working of the said mines before the declaration of any dividend, but shall not be otherwise payable" (certain items to be taken into consideration in estimating profits were then stated). The draft was signed by the Minister for Mines, and on the assumption of its final completion the work of development was commenced. Several weeks later the Under Secretary for Mines suggested an alteration in Clause 6 by striking out the words "but shall not be otherwise payable," and by providing inter alia, that no sale of the defendants' properties should be made unless the liabilities under the agreement had been discharged or unless the purchaser agreed to pay those liabilities or the defendants agreed to apply the purchase money in repayment of the loan. The defendants pointed out that the proposed amendment would operate to make the assets of the company liable for the repayment, and that in the event of a winding up the liquidator would be compelled to provide for the advance as a debt. This amendment was not inserted, and Clause 6 was allowed to stand, but the words "but shall not be otherwise payable were not re-inserted. The money provided by the Government and an equal amount provided by the company was spent in accordance with the terms of the agreement. The company went into liquidation. The Crown proved for the whole of the money advanced under the agreement as a debt due. The liquidator refused to accept the proof and by agreement between the parties, the question was referred to the Court, in an action brought on information by the Attorney-General against the company and the liquidator, seeking declarations of right, injunction, and damages, and the repayment of the money advanced. The defendants denied liability, on the ground that the money was payable only out of profits, and counterclaimed for rectification of the agreement in the event of any other interpretation. Held, that on the proper construction of the agreement, the money advanced by the Government was repayable only out of profits. Semble, if that was not the correct interpretation of the agreement, the defendants would be entitled to have the agreement rectified. TRIAL OF ACTION. This was an action tried by a Judge without a jury, brought by information in the name of the Attorney-General against the defendant company, which was in liquidation, and the liquidator thereof. The principal question turned on the construction of an agreement in writing made between the Minister for Mines and the defendant company. That agreement was entered into under circumstances which are sufficiently stated at pp. 201-203 of the judgment. By that agreement, which recited that the company owned three mines and had "applied to the Minister for a loan or subsidy of £3000 to assist in further developing the said mines," and that the Minister had "agreed to advance" that amount or such lesser sum as might be required to carry out certain work specified by the Government Mining Engineer, it was agreed, inter alia "1. The Minister will advance to the company the sum of one pound for every pound provided by the company but the total sum so to be advanced by the Minister shall not exceed three thousand pounds. "4. Monthly payments of the expenditure shall be furnished to the Warden or other officer of the Department for the district in which the said mines are situated who will submit the same to the Minister and if the same are found correct payment of the Government advance in respect thereof will be made without delay. "6. The amount so advanced as aforesaid shall be repaid to the Government out of the profits which shall hereafter be derived by or accrue to the company from the working of the said mines and subject to the terms of this agreement there shall not be divided amongst or paid to members or shareholders THE KING v. COPPER CO. LTD., AND ANOTHER. THE KING v. NEW QUEENSLAND COPPER CO. LTD., AND ANOTHER. of the company any profits or dividends or bonuses or any returns of any kind until the company has repaid the advance to the Government. Provided always that before any such profits are ascertained all money which shall be expended by the company in development or in capital expenditure (other than the sum of three thousand pounds to be spent by the company in pursuance of this agreement) as well as a proper allowance for supervision and management in respect of the work for which the loan is granted and a proper allowance (not exceeding seven and one-half per centum per annum) for depreciation of such machinery and plant belonging to the company as may be required for working the mines during the term of this agreement shall be taken into account but as regards money expended for development or in capital expenditure other than the said sum of three thousand pounds and other than money expended for supervision and management as aforesaid it. shall be subject to the same being incurred with the sanction or approval of the Minister. Any reconstruction of the company or change in the Articles of Association during the term of this agreement shall be subject to the approval of the Minister. For the purposes of this clause of this agreement the company shall supply the Minister with a copy of the annual statement of accounts, assets and liabilities, profits and losses etc." The agreement also provided that no tributes should be let except with concurrence of the Minister, and gave power to the Minister, if it appeared to him that the company did not desire to mine the ore developed, to require the company to let the mines on tribute, and provided that one-half of the money received from tributors should be paid to the Minister towards repayment of the advance. The company did the work indicated in the report, and spent £1 for every £1 advanced by the Government, and furnished reports of the work done. The development work was not successful, and when all the advance was exhausted, the work of development ceased. Shortly afterwards, the company, on the petition of a creditor, went into liquidation. The Crown made a proof of debt for the whole of the moneys advanced under the agreement. This was rejected by the liquidator, on the ground that on the proper construction of the agreement the Crown had no right to claim repayment except out of profits derived by or accrued to the company and THE KING V. AND ANOTHER, that in fact there were no such profits; and, by consent of the parties, the question of the rights of the Crown COPPER CO. LTD., NEW QUEENSLAND under the agreement was raised by an action brought by information in the name of the Attorney-General, claiming (i.) payment of the sums advanced, on the ground that upon the true construction of the agreement, the Crown was entitled to repayment of the advances made, whether any profits had or had not been made by the defendant company; (ii.) a declaration that the Crown was entitled to prove in the winding up for those sums; (iii.) a declaration that the Crown was entitled to be paid in priority to all other creditors; the appointment of a manager and receiver, and injunction and account. The defendants denied liability, on the ground that no obligation to repay the advances existed except out of the profits derived by or accruing to the company from the working of the particular mines, and alleged that no such profits had been made; and they also made a counterclaim for rectification of the agreement if the meaning thereof was not in accordance with this contention. Stumm K.C. and Wassell, for the defendants: The defence rests on the interpretation of the agreement itself, which is not ambiguous. Rankin v. Scott, Fell & Co. (1). On the counterclaim for rectification the drafts of the agreement, the negotiations therefor, and all surrounding circumstances are admissible and are relied upon. Encyclopædia of English Law, 2nd Ed. Vol. XII., p. 463. By the agreement the liability for repayment is restricted to profits and to profits from the working of the company's mines, and from the working of those mines only which are to be developed under the scheme proposed by the engineer mentioned in the agreement. An advance of money or a contract for loan, like any other contract, may be subject to conditions. The covenant to repay in this case is not absolute but qualified-viz, out of the profits which shall hereafter be derived by or accrue to the company from the working of the said mines. It may be that the law may imply an obligation to repay in the absence of any express provision; but, if so, in this case, the express covenant prevents any legal implication. By designating the only source and the exact source of repayment, other sources are excluded. Halsbury, Vol. X, par. 779; Aspdin v. Austin (2), Matthews v. Blackmore (3), (1) 1904, 2 C.L.R. 164, at p. 173. (2) 1884, 5 Q.B. 671. (3) 1857, 2 H. & N. 762. |