Opinion Number. 86



Key Legislation


The Minister for Home Affairs

The Melbourne and Metropolitan Board of Works has sent in an account against the Commonwealth for 8s Id for interest at 5 per cent, from 6 January 1902 to 5 April 1902 (date of payment of principal) on £33.4.6, the cost of additional sewerage connections at the Commonwealth Offices, Spring Street.

In a letter of 6 May from the Secretary to the Board the following passage occurs:
The Treasurer of the Board has reported that you have declined to pay the amount of 8s Id accrued due as interest at the rate of 5 per cent on £33.4.6 from 6 January 1902 to 5 April 1902, on the opinion of the Commonwealth Attorney-General that it should not be paid.

The Accountant to the Department of Home Affairs, in a minute dated 6 August 1902 quotes the above passage and adds:
I would suggest that the Attorney-General's opinion be obtained as to the Commonwealth liability for interest on claims which are not paid spot cash.

The Minister for Home Affairs asks to be advised accordingly.

In support of the claim, the Secretary to the Board directs attention to sub-sections (1) and (2) of section 6 of the Victorian Act No. 1491(1) as follows:

  1. In all cases in which the Board provides any water-closet or water-closets or drains appliances apparatus and connexions pursuant to the requirement of any owner as hereinbefore provided, or performs any works matters or things under section one hundred and ten of the Principal Act or under the last preceding section of this Act the costs and expenses thereof with interest as prescribed in section one hundred and sixteen of the said Principal Act shall be recoverable after the expiration of one month from the time that the Engineer-in-Chief of the Board, or such other officer as the Board may appoint for the purpose, certifies in writing to the Board that the same have been provided or performed and the amount of the costs and expenses thereof.
  2. Until paid such costs expenses and interest shall be and remain a charge upon the property in respect to which they were incurred and may at the expiration of seven days after demand in writing therefor be recovered at any time from the owner thereof for the time being.

Section 116 of the Principal Act (No. 1197)(2) provides that:
All costs and expenses which by this Part of this Act are made payable to the Board by the owner of any premises or for which he may be liable shall remain a charge upon such premises, and together with interest at the rate of £8 per centum per annum shall be recoverable at any future time from any owner thereof.

Incidentally it may be mentioned that, if Mr Walters' memo of 28 July 1902 is correct that the principal was paid by cheque on 17 March 1902, there is an error in the account which claims interest to 5 April.

The Commonwealth has not disputed the claim for the principal money, and has paid the amount. But its liability was founded, not on the State Act-which cannot impose an obligation on the Commonwealth, whether in the nature of a rate, a compulsory payment, or a penalty-but on the fact that services have been rendered to the Commonwealth at its request. For these services the Commonwealth has impliedly contracted to pay.

But has the Commonwealth contracted to pay interest? The State has, to secure payment by owners etc., provided by statute that interest shall be payable from a fixed date, and that the principal and interest shall be a charge on the property. These provisions are not applicable to the Commonwealth for two reasons: (1) that they do not purport to bind the Crown; and (2) that the State Parliament has no power to impose this liability on the Crown as represented by the Commonwealth Government. See also United States ex rel. Angarica v. Bayard 127 U.S. 251, where it is laid down as a well-settled principle that interest is not allowed on claims against the United States, unless the Government has stipulated to pay interest, or interest is given expressly by Act of Congress.

[Vol. 2, p. 143]

(1) Melbourne and Metropolitan Board of Works Act 1897 (Vic).
(2) Melbourne and Metropolitan Board of Works Act 1890 (Vic).