The Treasurer desires advice on the following points in connection with the War Loan:

1. Whether the prospectus of the first Commonwealth War Loan can be reasonably construed to mean that an intending subscriber to the Loan was entitled to lodge an instalment of the Loan at any branch of the Commonwealth Bank of Australia, and have the same accepted free of exchange?
2. Was the Australian Mutual Provident Society, having made application in Sydney for £250,000 of the Commonwealth War Loan, and having been allotted that amount, entitled to deposit an instalment of £50,000 in Brisbane and have the same accepted free of exchange?
3. Does the fact that the prospectus of the second War Loan contains a paragraph which does not appear in the prospectus of the first War Loan, viz:

Instalments ON WHICH NO EXCHANGE WILL BE CHARGED, if paid within the same State in which the application is made, will also be received at any branch of the Commonwealth Bank of Australia, etc. in any way indicate that it was reasonable to construe the prospectus of the first War Loan as entitling subscribers to lodge their deposits at the Commonwealth Bank free of exchange?

4. Is the Commonwealth Government legally or morally bound to refund to the Australian Mutual Provident Society the sum of £125 charged as exchange by the Commonwealth Bank on an instalment of the Society's subscription to the Commonwealth War Loan due on the 15th October and paid at Brisbane?
5. Is the Commonwealth Government legally responsible for the act of the Commonwealth Bank in charging exchange in connection with the Commonwealth War Loan?

1. The Commonwealth Bank is the agent for the Commonwealth Government for the purpose of collecting the subscriptions to the War Loan. Under the prospectus instalments may be paid at any branch of the Commonwealth Bank so that payment to a branch of the Bank is payment to the Commonwealth and the subscriber is under no further obligation as to the transfer or disposal of that money.

The question of exchange does not concern the subscriber as his obligation ends upon paying the money at a branch of the Commonwealth Bank.

This interpretation is, I think, confirmed by the form of application which provides for cheques to be accepted free of exchange. The Commonwealth Bank being obliged to accept cheques free of exchange, the internal transference of the money between the branches of the Bank is no concern of the subscriber.

In my opinion, a subscriber is entitled to lodge an instalment at any branch of the Commonwealth Bank, and to have the same accepted free of exchange.

2. See answer to (1).
3. I do not think that the prospectus of the second War Loan has any bearing on an interpretation of the prospectus of the first War Loan. The prospectuses deal with different loans and the conditions surrounding the issue of the second prospectus may have necessitated an alteration of the conditions contained in the first prospectus. The second prospectus can only have a bearing on the second War Loan.
4. The Commonwealth Bank, as agent, having made an unauthorised charge, the question arises as to how far the Commonwealth, the principal, is liable for the act of the agent.

In Halsbury's Laws of England, Vol. 1, p. 201, it is stated that where a principal, in conferring authority upon its agent to act on his behalf, imposes conditions or limitations on its exercise no act done by the agent in excess of the conditional or limited authority is binding on the principal as regards such persons as have or ought to have notice of such excess of authority. In this case by the prospectus the Commonwealth limited the authority of the Commonwealth Bank by requiring them to accept instalments without exchange.

The Bank having charged exchange, the Commonwealth is not liable for this act of its agent.

Neither do I think that the Commmonwealth can become liable by ratification of the act of the Bank. The first essential to an agency by ratification is that the agent should not be acting for himself, but shall intend to bind a principal (see Halsbury's Laws of England, Vol. 1, p. 175). In this case the act of the Bank in charging exchange was for its own benefit, and the Commonwealth cannot ratify that act so as to be responsible for it.

In my opinion the Commonwealth is not legally bound to refund to the Australian Mutual Provident Society the sum of £125 charged as exchange by the Commonwealth Bank, but the Commonwealth Bank is legally liable to refund the sum in question.

With regard to the question of the moral obligation of the Commonwealth, the act was done by the Bank for its own benefit, and I do not think that the Commonwealth is under any obligation to come to the assistance of the Bank, in refunding moneys unlawfully charged by the Bank.

(5) See answer to (4).

[Vol. 14, p. 195]

1. This date is attributed. This opinion is undated in the Opinion book, But appears between two other opinions dated 12 january 1916.