I refer to your memorandum of 28th August, 1950, forwarding a copy of a letter dated 27th July, 1950, addressed by the Premier of Tasmania to the Prime Minister.

(2)  The Premier of Tasmania states—

1. that his Government is dissatisfied with the working of the Agreement;

2. it does not wish to continue as a party to the Agreement, and proposes to raise a loan to discharge its liability to the Commonwealth;

3. it is not practicable to give the twelve months’ notice required under clause 16.

The Premier then gives formal notice that the State desires that the Agreement shall not apply to any housing project entered into by the State after 31st August, 1950.

(3)  The manner in which the Premier states the legal position under the Agreement does not appear to me to be fully in accordance with its terms. Thus the Premier observes that ‘the Agreement provides that the parties to it may give twelve months’ notice of intention to terminate it’. I do not think, however, that the giving of twelve months’ notice under clause 16 of the Agreement does have the effect of ‘terminating’ the Agreement. The position appears to me to be rather that—

(a)  the Agreement comes into force in relation to any State upon being authorized or approved by the Parliament of the State;

(b)  it applies to all housing projects commenced during the ensuing period of ten years;

(c)  but either party may at any time, on giving twelve months’ notice, exclude future housing projects from the Agreement.

As I read the Agreement there is thus no provision for terminating the obligations of a State in respect of housing already commenced when a notice under clause 16 takes effect.

(4)  I may not have correctly apprehended the purport of the Premier’s proposals. In the conditions of urgency however under which my advice is sought I shall not wait for verification on this point, but shall give advice on the assumption that the Premier desires—

(i)  to exercise the power reserved to the State under the Agreement to exclude future housing projects from it;

(ii)  to abridge the stipulated period of notice required for this purpose, so that the exclusion will operate forthwith;

(iii)  to obtain release for the State from its obligations (e.g. with regard to the allocation of dwellings, the calculation of rentals and the grant of rebates) in respect of housing projects already carried out.

(5)  In your memorandum under reply you ask the following questions:

(i)  Is there any legal bar to the acceptance of the Tasmanian proposals?

(ii)  Is it necessary in the future to obtain the agreement of the Treasurer of Tasmania to proposed amendments to the Agreement, the First and Second Schedules to the Agreement, or to the manner in which rebates of rental are to be calculated?

(iii)  Has Tasmania the right, subject to compliance with the provisions of the Agreement, to seek further advances and to operate under the Agreement at a future date?

(6)  Summarily stated my answers to these questions are as follows:

(i)  Housing projects commenced after 31st August, 1950, can validly be excluded, by consent of the two Governments alone, from the operation of the Agreement. The release of the State however from its obligations in respect of existing housing projects cannot be made legally effective without the approval of the Parliaments both of the Commonwealth and of the State.

(ii)  Unless and until the Parliament of Tasmania revokes its approval of the Agreement, Tasmania will in point of law remain one of ‘the States’ for the purposes of the provisions mentioned, but will not do so thereafter.

(iii)  If the only step taken by the State is the giving of notice under clause 16(2) of the Agreement, the notice could I think probably be rescinded at some future date, at any rate by consent. But if in order to secure effective release from present obligations of the State the Parliament of Tasmania revokes its approval of the Agreement, it would not be legally possible to resume future operations under the present Agreement.

(7)  In the succeeding paragraphs, I shall further analyse the Agreement, in order to make clear the basis upon which I have reached the conclusions stated in my answers to the questions asked.

(8)  Clause 1 of the Agreement provides that notwithstanding that all the States are named as parties to the Agreement, the Agreement shall operate only between the Commonwealth and the States the Parliaments of which authorize or approve the Agreement and specifically indicates that the Agreement is to operate as between the Commonwealth and a State in the event of that State being the only State which has authorized or approved the Agreement. Sub-clause (2) of Clause 1 goes on to provide that in the text of the Agreement the expression ‘State’ shall only mean a State the Parliament of which authorizes or approves the Agreement.

(9)  I think therefore that the Agreement operates as a series of individual agreements with the particular States and in no case does the Agreement operate as an Agreement between individual States as parties. This follows I think from the terms of Clause 1 and the fact that the Agreement imposes no obligations on any State vis-a-vis the other States.

(10)  The Parliaments of the Commonwealth and the States having approved of the execution of the agreement by their respective Governments in a form substantially in accordance with the form of agreement contained in the Schedule to the Act, it would not be competent for the Executive Government of the Commonwealth to make a legally binding Agreement with the Government of the States which effected a variation of the Agreement in substantial particular. In order to make a legally binding variation of the original Agreement, Parliamentary approval would be necessary. The Government of the State would, I think, be in a like position.

(11)  The matter may be tested I think by asking whether, at the outset, the Parliament of the Commonwealth having approved the execution of an Agreement substantially in accordance with the form contained in the Schedule, it would have been competent to the Government to make an agreement with the State of Tasmania under which Clause 16, instead of being in its present form, had provided for the full release of either party from its obligations, subject only to the consent of the other party. In my opinion such an agreement would plainly not have been ‘substantially in accordance with the form contained in the Schedule’. Accordingly, the Government of the Commonwealth could not validly have made such an Agreement. It follows, in my opinion, that the Government cannot now, by its own mere agreement with the Government of the State, make effective an amendment of the Agreement to bring about that result.

(12)  The Agreement in express terms contains provision whereby it will cease to apply to future housing projects of a State where the requisite notice is given by the Government of that State. The length of such notice is scarcely a matter of such substance that the approval of the Commonwealth Parliament would be necessary before the Commonwealth could accept as effective a notice under Clause 16(2), which specified a period other than the period of twelve months specified in the clause.

(13)  This does not mean that a State may give a notice pursuant to Clause 16(2) naming any period at all therein, and that the Commonwealth is bound to accept that as an effective notice under that clause. But there is no reason why, in a case where a State has given such a notice, the Commonwealth should not waive the non-compliance with the strict terms of the Clause. The shorter notice would then, by mutual assent of State and Commonwealth, be effective to prevent the Agreement from applying to housing projects of the State commenced after the expiration of the notice.

(14)  In my opinion clause 16(2) does not have the effect of bringing the Agreement to an end as between the Commonwealth and a State giving notice under that clause. Such a notice is limited in effect to the matter expressly stated in the clause, viz. the notice operates to remove from the application of the agreement any housing project commenced after the expiration of the notice. It leaves the Agreement in full force and effect as between the Commonwealth and the State giving the notice with all its legal rights, obligations and consequences.

(15)  I have discussed the matter throughout on the assumption that it is the desire of the State to secure release by consent, and in full legal form, from the continuance of its obligations as a party to the Agreement. Perhaps I should add that in point of law the Agreement, though approved by the Parliaments, does not have the full force of the Statute, and operates only as a contract, binding no doubt upon the Governments themselves but not conferring rights enforceable at the suit of private citizens. If therefore it were agreed by all the Governments which are parties to the contract to accept the Tasmanian Government’s proposal, and to treat Tasmania as no longer a party to the Agreement, it is hard to see how such an understanding could be effectively challenged in practice, even though it would not be legally binding. Politically, each Government would be answerable to its own Parliament for the step taken.

(16)  If the State of Tasmania were simply to refuse to carry out any longer its obligations as a party to the Agreement, it would stand in breach of its contract, and questions would arise as to the remedies available to the Commonwealth, and as to whether the contract was discharged or terminated by the breach. But I do not read the Premier’s letter as contemplating any such course of action, and therefore shall not consider further how, on that footing, the questions asked in your memorandum would have to be answered.

(17)  I notice that the subject of the Agreement has been listed by Tasmania in the Agenda for the Premiers’ Conference. The proposals put forward in the Premier’s letter may therefore be further elucidated, and perhaps dealt with, at the Conference.

[Vol. 39, p. 271]