The Chief Prices Commissioner has asked for advice upon the following matter:

In April 1917 Regulations called the War Precautions (Rabbit Skins) Regulations were made which provided (regulation 2) that: 'The trade in rabbit skins shall be carried on as under normal conditions subject to the provisions contained in these Regulations'.

Regulation 4 provided that:

All rabbit skins shall, unless the Prime Minister otherwise directs, be forwarded to a Government Agent who shall, subject to these Regulations, be authorized to purchase such skins on behalf of the Commonwealth Government.

Regulation 5 fixes the prices which shall be paid by Government officers for the rabbit skins.

Regulation 9 provides that rabbit skins purchased by the Government Agents shall be disposed of as follows:

1. Local manufacturers shall be entitled to supplies to meet their requirements at the price set forth in regulation 5.
2. The remainder shall, unless the Prime Minister otherwise directs, be disposed of by public auction on behalf of the Commonwealth Government.

As a result of these Regulations the Hatters and Furriers Company Inc. of Connecticut, U.S.A. allege that they have suffered a loss of £16,087.2.10 and claim this amount against the Commonwealth Government as appears by their letter of 29 April 1918, attached, and which has been submitted to the Commonwealth Government by the American Consul-General under instructions from the Secretary of State, Washington.

The War Precautions Act 1914-1916, section 4 (1A) gives to the Governor-General power 'for the more effectual prosecution of the war, or the more effectual defence of the Commonwealth or of the realm' to prescribe and regulate (inter alia) 'the requisitioning of any goods articles or things of any kind'.

The opinion of the Attorney-General is required on the following points:

1. Do the Rabbit Skins Regulations annul the contract set out in the letter of the Hatters and Furriers Company?
2. If not, who is liable for the alleged loss sustained by the Hatters and Furriers Company?
3. In the circumstances disclosed is there any, and if so, what liability on the Commonwealth Government?

As this matter appears to have been already delayed I would be glad if this could now be treated as urgent as the American Consul desires to report to his Government.

My opinion upon the questions stated above is as follows:

1. The War Precautions (Rabbit Skins) Regulations do not of themselves annul contracts made for the supply of rabbit skins, although they may render a contract impossible of performance.
2. The question of liability for compensation in respect of the non-performance of the contract under consideration is a matter for the determination of the court. It would be open to Messrs Wilcox & Co. in any action brought against them on behalf of the American Hatters and Furriers Co. to allege impossibility of performance by reason of the operations of the War Precautions (Rabbit Skins) Regulations and it would be for the court to say whether the allegation was justified and afforded a defence to the action. I gather from the file, however, that the American Hatters and Furriers Co. have admitted and paid a claim by Wilcox & Co. for an amount representing the difference between the price obtained by Wilcox & Co. under the Regulations and the price which would have been obtained under the contract.

The American Hatters and Furriers Co. now seek to obtain as compensation an amount which includes the amount paid to Wilcox & Co. and the increase in price of the rabbit skins purchased to replace those which, but for the Regulations, would have been obtained under the contract.

In my opinion Wilcox & Co. are the only people against whom the American Company can have any claim for non-performance of the contract but it appears that the American Company by its action in paying the claim of Wilcox & Co. does not contemplate any action to recover compensation from the Company who contracted to supply the skins.

3. There is no liability on the Commonwealth to pay compensation in respect of the contract.

[Vol. 16, p. 220]