A case has been submitted by the Minister for Defence for the opinion of the Attorney-General upon a file referred, from which the following are the material facts:

On 14 June 1917, Lieut. C, while an officer in command of a company with the 5th Australian Training Battalion at Rolleston, England, received from Captain D., acting on behalf of Lieut.-Col. E., the CO. of the battalion, who was also the imprest holder, the sum of £400 with which to pay his company. During that day he paid away part of this sum, and on 15 June 1917, at 8.30 a.m. he reported that the balance, amounting to £63.10.0, had been stolen from him.

The matter was inquired into at Rolleston on 21 June 1917, by a Court of Inquiry, which was assembled 'for the purpose of inquiring into the circumstances surrounding the loss of the sum of £66, which was portion of pay money entrusted to Lieut. C, 5th Training Battalion, and reporting who was responsible for the loss, and on whom the loss should fall'.

The Court took evidence, which amounted to little more than the facts already stated with the addition of a statement by the Adjutant of the battalion that it was not in his recollection the practice of company commanders in that battalion to place money entrusted to them in the battalion orderly room safe, which was too full to hold it, and his opinion that the only means they have of safeguarding it is by carrying it on their persons, entrusting it to the Mess Sergeant, or locking it up in their cubicles, and the sworn evidence of Lieut. C. himself that on the morning of 15 June he noticed that the pocket of his tunic, in which he had placed the balance of the pay money, had been opened, and that investigation proved that the money had been removed. He added that he considered his cubicle the safest place to keep the money for the night, and that as no keys are available, it is impossible to lock the cubicle doors.

Upon this evidence the Court made the following declaration:

The Court declares that Lieut. A.B.C, 19th Battalion, A.I.F., is responsible for the loss of £63.10.0, public money, to wit Pay Money, entrusted to his charge; and that the loss of this money, to wit £63.10.0, should fall on Lieut. A.B.C. of the 19th Battalion, A.I.F.

The Court recommend that, in view of the fact that as no provision exists for the safeguarding of Public Money entrusted to the care of Company Commanders, definite instructions be issued as to the procedure to be followed when it is necessary for officers to hold money temporarily in their charge.

With this declaration the convening officer concurred.

The following questions were referred to the Crown Solicitor, and are now referred for the opinion of the Attorney-General:

1. On whom, if anyone, does the responsibility for the safe custody of this money lie?
2. In case of loss or deficiency can this Department legally recover such loss or deficiency from such officer by debiting his account, that is, by withholding an amount due to him as military pay?

In the first instance it must be observed that the question comes up upon most unsatisfactory materials, but, as it is of general importance, it is necessary to consider both the general position and the particular case on such materials as there are.

The business of the Court of Inquiryjs primarily to collect information to assist in arriving at a correct conclusion on any subject, and it may be required to make a report (Australian Military Regulations 1916, regs 712, 713; King's Regulations, reg. 666). The Court appears to have proceeded on the assumption that it had to make a judicial finding, on a mixed question of law and fact, and the way the matter was referred to the Court rather encouraged that idea. The Court finds no facts, properly speaking, not even that the money was stolen, nor that any person did anything, or left anything undone which amounted to negligence. It would appear that the Court had in mind K.R.908 or Australian Military Regulation 305, and, for anything that appears in the proceedings to the contrary, it may be that it went on the assumption that those regulations make an officer entrusted with public moneys absolutely responsible for same, and liable for their loss irrespective of negligence. That view would be incorrect, but it must not be assumed that the Court acted on an incorrect view, and I think that their proceedings are consistent with the proper view, and that presumptions should be made rather to uphold than to upset. In any case the opinion of the Court, where there is no conflict of evidence, is not so important, and the final military authority is in as good a position to form its own conclusion as the Court before which the evidence was given.

The case against this officer could hardly have amounted to much more than proof that he had the money, and has not accounted for it satisfactorily. To rebut a defence based on the money having been stolen, it might have been proved that there were precautions which he could and ought to have taken, but before there is any necessity to adduce such proof, the onus is on the officer to give a satisfactory explanation, which in this case would have entailed proof that the money was stolen or lost despite the fact that he took all the precautions which a reasonable man would have taken in the circumstances. I think an officer is in a position similar to that of a bailee for reward for he is a paid officer, and the responsibility of paying officer is one of his duties; he has also under the Regulations (K.R.I 12 and 908) the obligation of exercising the utmost care of public funds that circumstances will permit. He is bound to exercise such care as a careful and vigilant man would exercise in the custody of his own money. It is not sufficient that he exercises the same care of the public money as of his own, if as regards his own he is reckless or careless; but the test is not what a particular man does, but what a reasonable man would do (Halsbury, Laws of England, Vol. 21, p. 431; Beven, Negligence in Law, 2nd edn, p. 897). Though loss by theft does not in English law necessarily raise a presumption of neglect, it depends on circumstances, and I think the circumstances here of the loss of this sum, £63.10.0 in a training camp in England, do throw on the officer the onus of giving a satisfactory explanation (Beven, pp. 901-2).

The officer's explanation amounts to little, if anything, more than that on 14 June he had the money, and on the 15th he had it not. It does not appear whether he left his cubicle while the money was in his tunic, nor does it appear how far from him the money was during the night. A sum of £63.10.0 is not an unduly uncomfortable bedfellow, but he does not say he took it to bed. He does not say whether he expected to pay out the balance of £63.10.0 on the 15th, or whether it was in excess of his requirements, or how long might be expected to elapse before it could be paid out. From his own words, 'I considered my cubicle the safest place to keep the money overnight', it would appear that he considered the cubicle sufficient, and that it was not necessary to keep the money on himself. As a judge I should say this was sufficient evidence of negligence to go to a jury, and as a juryman I should say this degree of care was not such as a reasonable, careful and vigilant man would take of his own £63.10.0, and therefore that the officer was guilty of negligence. It is unfortunate that of the three means of safe custody suggested by Lieut. F.G.H., one, that of locking the cubicle, appears impracticable in the absence of a key, and another, that of entrusting to the Mess Sergeant, would be in direct disobedience to K.R.I 12.

Of course, as pointed out by the Crown Solicitor, the question of whether there was negligence or not, is one for the final military authority, and I have only expressed the view I should myself take as a juryman on the materials available, as I understand that on account of the differences of opinion, definite advice on this question is desired. Negligence is a negative thing-thing—the omission to do something which a reasonable man would do—and one cannot expect to find positive evidence of it. The onus being on Lieut. C. to show that he omitted nothing a reasonable man would have done, I think he fails, for in my opinion a reasonable man would have either returned the money he could not pay out, or have kept it on his person.

As regards the general question as to the liability of imprest holders and paying officers, and the right to debit their accounts with deficiencies, I think the position is as follows:

The personal responsibility of officers entrusted with public money expressed in K.R.908, and Australian Military Regulation 305 is one which imposes on them the obligation to personally take every reasonable precaution, and not merely hand the matter over to subordinates, but I do not think it makes the officers insurers of the public money, liable to replace it if it is stolen despite all reasonable precautions. If liable for theft irrespective of negligence, then surely liable for loss by highway robbery, by fire or storm, or action of the enemy. This is in conflict with the whole scheme of the Act, as well as contrary to reason and practice.

Field Service Regulations, Part II, reg. 127 (4) speaks of imprest holders being responsible for money ‘until it has been satisfactorily accounted for’. This does not mean that no accounting for by loss could be ‘satisfactory’, but that it must be shown to have reached its destined channel, or that explanation must be given that the failure was due to no default or negligence. This appears from Australian Military Regulation 726 (2) applying regulations 718-24 to losses by theft, where it appears that (a) where loss is found to be due to breach of Act or Regulations, the officer may be tried by court-martial, removed, or allowed to pay the loss, (b) where not due to an offence, but no satisfactory explanation has been given, he may be removed, superseded, or allowed to pay the loss, and (c) where a satisfactory explanation has been given, the loss may be struck off. Thus it appears that F.S. Regulations, Part II, are not inconsistent with the Act, but, if they were the Act and Regulations would override them.

F.S. Regulations are intended for instruction and as a guide, but they do not have the force of law. Although they lay it down that imprest holders are ‘usually’ officers commanding companies etc., they do not make it obligatory. In a training battalion it might be that the balance of convenience was in favour of the C.O. of the battalion being the imprest holder and F.S. Regulation 128 draws a distinction between ‘an officer issuing pay’ and an ‘imprest holder’; and in any case, there is no impropriety in it. As imprest holder Lieut.-Col. E. came within F.S. Regulations Part II, reg. 127, and became subject to the obligations set out in K.R.908 and Australian Military Regulation 305 as an officer ‘entrusted with public money’. It does not follow that he is also an ‘officer charged with the duty of making payments’ to individual soldiers. As already stated, he is not made an insurer liable for loss however occurring, but I think his responsibility for his subordinates is similar to that of a C.O. under Australian Military Regulation 722—to give and exercise all necessary instructions and supervision such as might reasonably have been required of him in the circumstances—and in this connection the wording of this regulation ‘personally liable for loss’ may be contrasted with the wording of regulation 305 ‘personally responsible’. As K.R. 112 and F.S. Regulations 127, 128 show, the Company Commander was the normal person to entrust with the money.

If Lieut.-Col. E. neglected or omitted any necessary instructions and supervision such as might reasonably have been required of him in the circumstances, and it appears that the loss was occasioned by such neglect, I think he might be held liable but before his account could be charged with the loss there would have to be another inquiry, at which full opportunity would have to be given for him to be present to defend himself (Australian Military Regulation 713 (3); Rules of Procedure 1907, rule 124 (F); K.R.666). On the present materials there is no justification for holding Lieut.-Col. E. liable for the loss; and even if he could be made liable as above, his liability would not exclude the liability of Lieut. C.

As regards the right to debit the account of an officer held liable with the amount of the loss, I think this may legally be done. Australian Military Regulation 726 (2) applies to all losses by theft the provisions of regulations 718-24, which would in such a case as this only allow the debiting of the loss as an alternative to removal. But this is primarily applicable to times of peace. Regulation 490 applies the Army Act to the Military Forces on active service ‘save so far as . . . contrary to or inconsistent with . . . the Defence Act’ (vide Defence Act 1903, sections 54A and 55), and the Army Act, section 137 (4), permits the deduction from the pay of an officer ‘The sum required to make good any loss . . . which, after due investigation, appears to the Army Council . . . to have been occasioned by any wrongful act or negligence on the part of the officer’. As the Adjutant-General points out, the position as regards payment is different between the British and the Australian forces, as the former have not, while the latter have, the right to sue. But the Army Act, section 136, gives the British forces protection against arbitrary deductions; and the Australian Defence Act 1903, section 12, only gives the right to sue after the plaintiff may have ceased to be a member of the Defence Force. In the meantime, while he is a member, I see no reason why the provisions of the Army Act should not be applicable. In any case, I think that the Department, having an account with the officer, and having after due investigation determined to charge him with a loss held to have been occasioned by his negligence, may properly debit his account with the amount of loss. If, after his discharge, he should bring an action for the money, I see no reason why a jury or a court should come to a different conclusion on the question of his negligence than that come to by the Court of Inquiry, and the officers who have reviewed the case.

From the above it will be seen that I think the specific questions submitted should be answered as follows:

1. The responsibility for the safe custody of this money lay with Lieut. C. It is for him to account for it satisfactorily; and if he alleges it was stolen, it is for him to show that he took all the precautions a reasonable man would have taken to guard it. Failing this he is liable to make good the loss.

Lieut.-Col. E. was also responsible for the safe custody of this money in the sense that it was his duty to exercise such care and supervision as might reasonably have been required of him in the circumstances. I think that handing the money over to a company commander to pay his company is prima facie a satisfactory accounting by the battalion C.O., and the onus is on anyone seeking to charge him to show that he did or omitted to do something that a reasonable man would not have done or omitted, as the case might be. I do not think he could be made liable on the present materials.

2. I think that since after due investigation it has appeared to the proper military authorities that this loss was occasioned by the neglect of Lieut. C., the deficiency may legally be debited to his account and recovered by withholding an amount due to him as military pay.

[Vol. 16, p. 8]