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Administration of PNG v Leahy

(1961) 105 CLR 6

Overview

There was an agreement between the parties (instigated by Leahy) that PNG officers would eradicate ticks infesting the plaintiff’s cattle.  They failed in their endeavours and Leahy sued.

Leahy succeeded at first instance. On appeal, the High Court held that there was no intention to create legal relations and therefore no contract.

Cattle

 

Facts

There was an agreement between the parties (instigated by Leahy) that PNG officers would eradicate ticks infesting the plaintiff’s cattle.  They failed in their endeavours and Leahy sued.

 

High Court

Chief Justice Dixon

There was no contract as there was no intention to create legal relations. The Department was doing no more than giving effect to government policy for tick eradication when it agreed to assist Leahy. The plaintiff had sought aid and in responding the defendant was doing no more than performing a function of government in accordance with settled policy.

I am clearly of opinion that the Administration of the Territory, by its officers, did not contract with the plaintiff; there was no intention on their part to enter into any contract, to undertake contractual obligations or to do or undertake more than was considered naturally and properly incident to carrying out their governmental or departmental function in the conditions prevailing. They were merely pursuing the policy adopted for the eradication of tick. I do not wish to add anything to the reasons for this view of the case given by Kitto J. whose judgment I have had the advantage of reading. ...

 

Justice McTiernan

Agreed promises alone are insufficient to make a contract. The Administration did not intend to enter into legal relations with Leahy – it was an administrative arrangement in accordance with the Administration’s agricultural policy – McTiernan considered it analogous to a ‘social service’ which does not have ‘as its basis a legal relationship of a contractual nature’. 

... It is argued for the appellant that the arrangements into which it entered with the respondent to give treatment to his cattle to cure them of tick was not contractual. It appears from the evidence that for a number of years the respondent conducted his own eradication campaign but owing to its lack of success handed over the task to officers of the Department ... for some time the campaign was conducted by officers of the Department in a very inefficient manner. Subsequently, a number of cattle died from red-water fever, a disease which is normally associated with tick infestation. The respondent claimed damages for breach of contract. He contended that the arrangement made between the Administration and himself amounted to a binding contract under which the Administration undertook to carry out the campaign properly and that it was guilty of breach of contract in not doing so. This contention was upheld by the learned Chief Justice of the Territory.

The arrangement consisted of agreed promises but that is not enough to make a contract, unless it was the common intention of the parties to enter into legal obligations, mutually communicated, expressly or impliedly. It was not an express or implied term of the arrangement that the respondent should make any payment for the treatment of the cattle. I cannot agree that the Administration through its officers intended to enter into legal relations when, at the request of the respondent, it undertook the organization of the tick eradication campaign with respect to his cattle. The conduct of the parties constituted an administrative arrangement by which the Administration in pursuance of its agricultural policy, gave assistance to an owner of stock to prevent that stock contracting a disease which was prevalent in the Territory. The work done by the Administration was analagous to a social service which generally does not have as its basis a legal relationship of a contractual nature and from which no right of action would arise in favour of the citizen who is receiving the services if the Government acts inefficiently in performing them.

...

[footnotes omitted]

 

Justice Kitto

Reached the same conclusion; there was no intention to create legal relations.

... the statement of claim alleged a contract between the Administration and the respondent by which the former agreed that it would carry on at Zenag a campaign for the eradication of cattle tick from the respondent's cattle, and that the campaign would be carried out thoroughly and skilfully. The consideration alleged was that the respondent would allow the Administration's servants to enter upon his property and spray the cattle thereon, would make available to the Administration the services of six native labourers, and would forbear from interfering with the work of the servants in carrying out the campaign. The breach assigned was that the Administration ... failed to carry out the spraying thoroughly and skilfully. ...

The learned Chief Justice of the Territory, having heard the evidence, reached the conclusion that the contract alleged by the respondent had been made by the officers on behalf of the Administration ... His Honour also concluded that the Administration had committed breaches of the contract, and that the breaches had caused substantial damage to the respondent.

... The question is whether the parties to the correspondence which passed and the conversations which took place evinced an intention to make a bargain mutually binding between the Administration and the respondent in the sphere of legal rights and obligations.

[His Honour discussed the correspondence that had taken place between the parties relating to the agreement]

... The letter dealt also with other topics, showing unmistakably that the respondent did not conceive himself to be bargaining with the opposite party to a business transaction. One paragraph, for instance, spoke of stock problems other than that of ticks, and said that the respondent would appreciate the Department's interest in these problems. The final paragraph contained the statement: "I still think that if more time and scientific knowledge were devoted to quarantine and disease, and perhaps limited experiments in breeding, and more to the private individual breeder, the stock industry generally would be better off in this country". The author of these words was not writing to a business concern or on a business level: he was addressing a department as to how it might best act as an organ of government, concerned to help a primary industry in the interests of the Territory generally.

... There is not in this document the slightest indication that the Administration was entering into a contract with the respondent. The whole thing relates to the carrying out of the Administration's policy of relieving private individuals from the burden of the steps considered necessary for tick eradication and ensuring, in the interests of the Territory as a whole, that those steps are properly taken.

... There is only one inquiry: whether, taking into account all the circumstances, it is right to conclude that the respondent and the Administration were dealing with one another on a contractual basis, or were merely arranging the manner and extent of gratuitous assistance to the respondent which the Department was willing to render in execution of the Administration's policy concerning the eradication of cattle tick in the Territory.

[His Honour discussed the findings of the Chief Justice of the Territory and continued]:

... From first to last the Department showed itself to be doing no more than giving effect to a general policy of dispensing aid to individual cattle owners as a means of coping with a recognized menace to an important part of the Territory's economy. And the respondent's attitude throughout was that of a private person appealing for government assistance on the ground that the Department, by doing for him what it insisted ought to be done on his property, would be performing a function of government in accordance with its settled policy. The whole atmosphere of the correspondence and discussions that took place was different from that which exists between contracting parties. True it is that the Department relied upon the continuing co-operation of the respondent in performing his part of what was arranged between them. The officers concerned were no doubt quite fully aware that if the respondent should make substantial failure at any time in affording the co-operation he was promising, all that had been put into the campaign up to that time would go for nought. But they knew too that he had every incentive to make the campaign a success. The loss, if it should be abandoned, would be far more serious for him than for the Administration, and he had already shown that he felt he was in a cleft stick: he could not afford to carry out a thorough spraying campaign himself, but unless it were carried out he could not get permission to move his cattle from his eaten-out pastures to new country....

... the case falls into the class of which illustrations may be found in Australian Wolleen Mills Pty. Ltd. v. The Commonwealth [1954] HCA 20; (1954) 92 CLR 424; (1955) 93 CLR 546 , and Milne v. Attorney-General for the State of Tasmania [1956] HCA 48; (1956) 95 CLR 460, at pp 472,473 . The arrangements made on 7th June 1954 were not contractual ...


[footnotes omitted]