The Governor of the Commonwealth Bank has forwarded the following memorandum asking for advice:

The contractor for the erection of the Commonwealth Bank building, Sydney, Mr Henry Phippard, has made application for an allowance to be granted to him to cover loss incurred on the contract owing to the war. I enclose copy of his letter to me of 12 December together with a report dated 3rd instant from the architect for the building and the statement referred to in support of it.

Mr Phippard carried out the work to my entire satisfaction within contract time, notwithstanding that the contract was taken some time before war broke out, and we insisted on cancelling any portion of the contract that had German goods in it. The saving of rental to the Bank by being able to move into the building within contract time was a matter of considerable benefit financially, and I have the honour to request that you be good enough to advise me whether under the circumstances I would be justified in making Mr Phippard such allowance as I might think would meet the case, and whether if such allowance were made the Auditor-General would be justified in passing same. The architect advises me that on examination of the contractor's books they show that he has made a profit of some £7,000 on the contract (£164,457) which however is all represented by plant and machinery purchased to carry out the work.

The Commonwealth Bank Act, section 11, vests the management of the Bank in the Governor.

In my opinion, the settlement of a moral claim against the Bank arising out of the erection of premises for the Bank is a matter relating to the management of the Bank and as such is determinable by the Governor.

I do not think, therefore that the payment of such claim could be disallowed by the Auditor-General.

[Vol. 15, p. 50]