Appendix 2: The Crown's power to contract, with special reference to contracts for the purchase and sale of land
1. General power to contract
1.1 ". . . the general capacity of the Crown to enter into a contract should be regarded from the same point of view as the capacity of the King would be by the Courts of common law. No doubt the King had special powers, privileges, immunities and prerogatives. But he never seems to have been regarded as being less powerful to enter into contracts than one of his subjects".
Evatt J in New South Wales v Bardolph (1934) 52 CLR 455, 474-75.
1.2 At common law the plenary power was generally exercisable by the great officers of State, as "emanations of the Crown" (New South Wales v Bardolph, above, at 518), including the Principal Secretaries of State of whom each is "capable in point of law of performing the duties of all the departments". Harrison v Bush (1885) 5 El & BI 344, 352; 119 E.R. 509, 513. (See 2.3 below).
2. The New Zealand position
2.1 Whatever the reason for the New Zealand practice of including powers to contract among those conferred on Ministers by some departmental statutes, a general common law power of the Crown to enter into contracts undoubtedly exists in New Zealand. That appears to have been assumed by the majority of the Court of Appeal in Meates v Attorney-General [1983] NZLR 308, 347 and was referred to specifically by Cooke J in his dissenting judgment at 377 and by Davison CJ in the Supreme Court [1979] 1 NZLR 415, 462. (Davison CJ's view that, in the absence of statutory authority, a Minister could contract (in exercise the Crown's common law power) only if authorised "by Cabinet decision" appears untenable: Aronson & Whitmore, Public Torts and Contracts (1982) 190; F M Brookfield, "The Metes of Meates" [1980] NZLJ 174).
2.2 Currie, Crown and Subject (1953), in accepting the Crown's implied power to contract as applying id New Zealand, noted that in the United Kingdom the Crown's plenary powers of contracting must "be regarded as residing in Ministers of the Crown" (at p59) and that "Her Majesty's Dominion Ministers" were "on the same plane as those in the United Kingdom" (p60).
2.3 Section 7 of the New Zealand Constitution Act 1986 provides:
"Any function, duty, or power exercisable by or conferred on any Minister of the Crown (by whatever designation that Minister is known) may, unless the context otherwise requires, be exercised or performed by any member of the Executive Council'."
This, consistently with Currie's view, appears to recognise the Harrison v Bush principle (1.2 above) generally (and not merely in the interpretation of statutory provisions conferring ministerial powers, as under s25(e) of the Acts Interpretation Act 1924 which s7 replaces). Thus the Crown's common law power to contract is in New Zealand exercisable by any Executive Councillor, whether performing his or her own functions or those of another Minister of the Crown. (The legal position of New Zealand Ministers is thus equivalent to that of United Kingdom Secretaries of State.)
3. Possible limit on general power ("the Bardolph limit")
3.1 The one possible limit (if it is understood as such), on the Crown's power to contract, is that the contract must be "in the ordinary course of administering a recognised part of the government of the State" (New South Wales v Bardolph at 508). This vague limit has been criticised as unsatisfactory and unworkable - eg by Aronson & Whitmore, 187-188 and cf Hogg, Liability of the Crown (1971) 120-121, and E Campbell (1970) 44 ALJ 14. There could have been no such limit on the Sovereign at common law and English text books suggest none. Indeed Turpin, Government Contracts (1972) 19, citing Campbell's criticism, discounts the limit and writes that there appears:
"[no] reason to doubt that the Crown's capacity extends to ordinary commercial contracts, whether or not closely connected with traditional activities of government".
3.2 Nevertheless Currie, pp 57-58, thought that the Bardolph limit applied to the Crown's power to contract in New Zealand. Cooke J may possibly have had the Bardolph limit in mind when he said in Meates' case [1983] NZLR at 377 (emphasis added):
"We heard argument, with discussion of authorities, on whether the Prime Minister or other Ministers have implied powers to bind the Crown in contract. I accept that there are situations in which they do have such powers and that nothing in this case turns on any want of such powers:"
He may however simply have had in mind situations where no statutory powers are available but implied power is not statutorily excluded.
3.3 Perhaps the possibility of the vague Bardolph limit applying in New Zealand provides a reason for the practice of conferring by particular statutes contractual powers on Ministers of the Crown) or other Crown officers: see 6 below); though if so the practice should be general which it is not. The difficulty is of course that once a statutory power is conferred, the courts may well assume, if only from context, that parliament intended the common law power to be superseded by a still more limited power (perhaps by analogy with the rule in Attorney-General v De Keyser's Royal Hotel Ltd [1920] AC 508; and see Rich J in New South Wales v Bardolph at 496). The Court of Appeal apparently made such an assumption in Raynor v R [1930] NZLR 441 (see paras 4.1 and 4.2 below). The question then becomes, as in that case in relation to the Commissioner of State Forests, one of defining the limits of the statutory power. On the other hand, it may be possible in the particular circumstances for the court to treat the statutory provisions as facultative or permissive only and to uphold an exercise of the common law power; as in Northern Territory of Australia v Skywest Airlines Pty Ltd (1987) 48 NTR 20, 39-40, where the Northern Territory Court of Appeal applied the general principle of New South Wales v Bardolph (rather than any limit on it), despite non-compliance with specific statutory provisions for the making of contracts by the Territory government.
3.4 On the whole, there seems no good ground for maintaining the practice of including statutory provisions authorising contracts except where the general common law power is thought too wide and a more restricted power is preferred.
4. Contracts for the purchase of land
4.1 There is no reason for excepting contracts for the purchase of land from the above conclusion. Currie (writing in 1953) thought otherwise, considering that "assuming a prerogative power" for the Crown to contract for the acquisition of land existed, "it [might] be not exercisable in New Zealand, for lack of delegation to the Governor-General or anyone else" (p104). He also thought (ibid) that the judgments in Raynor v R (above) were based on the "fundamental assumption" that to be enforceable against the Crown such a contract must be founded on statute.
4.2 There are 4 points to make in showing that Currie's view cannot be correct (or at least cannot be correct today):
(1) Whether or not it is correctly described as a prerogative power, the Crown's power at common law to acquire land by conveyance from a subject (and to contract accordingly) was beyond doubt. No parliamentary authorisation was necessary: the Sovereign simply held the land so acquired in the same legal position as the vendor. See in Re Holliday [1922] 2 Ch 698, 712-713, 721. This Currie in effect acknowledges (though his use of the term "mesne" is confused or confusing). The discussion in Chitty, Prerogatives of the Crown (1820), pp 204-205, cited by Currie, puts the matter beyond doubt.
(2) If there was any doubt in 1953 about the authority of Ministers of the Crown in New Zealand to exercise the power, there can have been none since the making of the Letters Patent of 1983 Constituting the Office of GovernorGeneral (SR 1983/225), which formally established New Zealand Ministers of the Crown as in law what they had become at least by convention on the evolution of dominion status, the Sovereign's own responsible advisers in her government of New Zealand, in all relevant respects in the same legal position as her responsible advisers in the United Kingdom (cf 2.2 and 2.3 above).
(3) Currie's doubts are inconsistent with his treatment of the Crown's general power to contract (see 2.2 above). If, as Currie in fact felt able to accept, New Zealand Ministers were in the same position in 1953 as their United Kingdom counterparts, in that the Crown's plenary power to contract resided in the former as in the latter, there was no reason to put contracts for the acquisition of land into a special class in respect of which actual delegation was necessary.
(4) The "fundamental assumption" of the Court of Appeal in Raynor v R is not as Currie states it to be but rather that a ministerial contractual power conferred by statute operates in lieu or in restriction of the common law power. But see 3.3 above.
5. Contracts for the sale of land
5.1 Currie (pp 95-96) concluded generally that, except under statute, the Crown had no power in New Zealand to alienate the fee simple of land vested in it, for the following reasons:
(1) Section 5 of the Crown Lands Act 1702, if in force in New Zealand, would have that effect; but in any event
(2) Section 72 of the New Zealand Constitution Act 1852 empowered the General Assembly "to make laws for regulating the sale, letting, disposal, and occupation of the waste lands of the Crown in New Zealand"; the effect of which is, according to Currie, citing Blackwood v London Chartered Bank of Australia (1874) LR 5 PC 92, 112, and quoting Te Raihi v Grice (1886) NZLR 4 CA 219, 238 (which purportedly ,followed that case), that "Crown lands in the colony are held by Her Majesty only for disposition in accordance with the statute law".
5.2 Notwithstanding its apparently long acceptance, the latter view appears incorrect as does any suggestion that s5 of the Crown Lands Act 1702 might be in force in New Zealand. There are these points:
(1) If that provision was ever in force in New Zealand it is not now: see the Imperial Laws Application Act 1988.
(2) In Te Raihi the Court of Appeal may have assumed that the law laid down by the Privy Council in Blackwood applied exactly to New Zealand. Seeking to justify the assumption, Currie for his part assumes that the Blackwood decision rests upon an interpretation of words in s43 of the New South Wales Constitution Act 1855 "substantially the same" as those in s72 of the New Zealand Constitution Act 1852. (No equivalent to s72 appears in the Constitution Act 1986.) But despite that similarity, Currie's assumption was only partly correct, at least in light of judgments of the Privy Council and of Australian courts since Blackwood These show that the accepted Australian position (that Crown land can be disposed of only by virtue of statutory authority) rests rather upon a quite differently worded provision included in certain United Kingdom legislation, providing for the creation of the constitutions of New South Wales and other Australian colonies; but not included in the New Zealand Constitution Act 1852. Thus under s2 of the New South Wales Constitution Statute 1855 (UK) (which authorised the Queen to assent to the New South Wales Constitution Act just mentioned) "the entire Management and Control of the Waste Lands belonging to the Crown . . . [were] vested in the Legislature [of New South Wales]". Cf s2 of the Victoria Constitution Statute 1855 (UK) and s3 of the Western Australia Constitution Statute 1890 (UK). The general position, as stated by Knox CJ and Starke J in Commonwealth v New South Wales (1923) 33 CLR 1, 19, is that "the management and control of waste lands . . . have . . . by various Imperial Acts been conferred upon the legislative organs of the several states of Australia". Cf, recently, Cudgen Rutile (No 2) Ltd v Chalk [1975] AC 520, 533 (PC); State of Victoria v Rossignoli [1983] 2 V R 1; Nicholas v Western Australia [1972] WAR 168, 172.
(3) The power in s72 of the New Zealand Constitution Act 1852 may well have been sufficient, if exercised to that end, (i) to enable the prerogative power to grant land to be superseded by local legislation and (ii) thus to make the position in New Zealand the same as in the Australian jurisdictions. But indeed the Crown Grants legislation of the New Zealand Parliament has generally not purported so to supersede the prerogative power but has assumed that the power exists and has merely regulated its exercise by the Governor(-General). (There are a few contexts where the power was clarified or extended, as by the Crown Grants Act 1862 (No 2), considered in Re Native Land Court Act, 1894, and Native Land Laws Amendment Act, 1895 (1908) 28 NZLR 646). The point is well made in s8 of the Crown Grants Act 1908 which, in authorising facsimile signature by the Governor-General, assumes that officer's power to make grants of land "in the name and on behalf of Her Majesty". This may be contrasted with the expressly empowering provisions of s6 of the Crown Lands Consolidation Act 1913 (NSW), s12 of the Land Act 1958 (Vic), s5aa of the Crown Lands Act 1929 (SA) and s6 of the Land Act 1962 (Qd). (Each of those sections expressly empowers the Governor or Governor in Council to make grants of land, the prerogative power being or having been superseded).
(4) In Te Raihi (quoted in 5.1(2)) above, the phrase "in accordance with the statute law" must in the end mean no more than "subject to the statute law". In this context "in accordance with" does not mean "by virtue of". If it did the Crown Grants Act 1908 would be inadequate authority for the making of Crown Grants.
(5) Whatever the position may .have been with the earliest Governors (See Currie's footnote 28 on p96), it has long been so that the power of the Governor (-General) to make grants of land depends not on statute (save so far as regulated or affected by the Crown Grants and other legislation) but on a prerogative source, the successive sets of Letters Patent constituting the office of Governor (-General). See latterly the specific provision in clause VI of the Letters Patent of 1917 (NZ Gazette 1919 p1213) and now the general conferring of vice-regal power by the Letters Patent of 1983 (referred to in para 4.2(2) above). Stout CJ's obiter denial, in the Native Land Court case in 1908 (28 NZLR at 653), of any prerogative power in the Governor to grant land, even were it correct at the time, cannot stand against the Letters Patent of 1983.
(6) It is true that statutory provisions outside the Crown Grants Act 1908, viz s12 of the Land Transfer Act 1952 (providing for Governor-General's warrants in lieu of Crown Grants) and generally the provisions of the Land Act 1948, operate in place of the prerogative where they apply. But there is no reason why they should exclude the power of the Crown to alienate Crown land not subject either to the Land Act 1948 or to restrictions imposed by any other statute. That observation would extend, but for the difficulty now to be mentioned, to the sale of land held by the Crown under purchase at common law (which, when sold, would of course not be granted under the Crown Grants Act but transferred by the Crown as registered proprietor under the Land Transfer Act, presumably by issue of a warrant under s12, directing the issue of a new Certificate of title).
5.3 At present any land purchased by the Crown under common law power would be Crown land within the meaning of the Land Act 1948; and therefore not as easily and (perhaps) appropriately capable of being disposed of, as land which, having been purchased under any Act other than the Land Act, is generally not subject to the Land Act. See the relevant exception to the definition of "Crown land" in s2 of the latter Act!
"Crown land" means land vested in [Her Majesty] which is not for the time being set aside for any public purpose or held by any person in fee simple; . . . but does not include . . . any land held, taken, purchased, acquired, or set apart by 1/2Her Majesty] under any other Act, unless that Act declares that the land so held, taken, purchased, acquired, or set apart is Crown land subject to this Act or to any former Land Act".
5.4 It follows that an amendment to the Land Act would be necessary to exclude from its provisions land which the Crown has purchased under common law power and which it wishes to be free to sell under its prerogative or common law power of alienation. (Whether the power is correctly described as prerogative in this situation, as in the case of hitherto unalienated Crown land, need not be considered here).
6. Contractual powers of Crown officers other than Ministers
6.1 Subject to any statute relevant to the particular case, a Crown officer generally has power to contract at common law by independent authority in the regular discharge of his or her duties and on ministerial authority. See New South Wales v Bardolph, above, at 507.
6.2 With the necessary changes, the conclusions reached above in respect of Ministers of the Crown apply also to the other Crown servants in that the conferring of contractual powers by a departmental statute is unnecessary unless powers more restricted than the common law power (as it is stated in 6.1 above) are thought necessary.
6.3 The general conclusions in paras 6.1 and 6.2 apply to contracts for the purchase of land. As to contracts for the sale of land, they are subject to the difficulties discussed in paras 5.1 to 5.4
7. Summary
The Crown through its Ministers and Ether officers has a general power at common law to make contracts. This power includes contracts for the purchase of land. In the case of contracts for the sale of land purchased under that power, there is the difficulty that such land at present is subject to the Land Act 1948, making necessary an appropriate amendment to that Act if the power to sell is to be freely available.