Project No 51
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THE LAW REFORM COMMISSION OF WESTERN AUSTRALIA Project No 51 Unclaimed Money REPORT DECEMBER 1980 The Law Reform Commission of Western Australia was established by the Law Reform Commission Act 1972-1978. The Commissioners are - Mr D K Malcolm , QC , Chairman Mr E G Freeman Mr H H Jackson Mr C W Ogilvie Mr L L Proksch. The Executive Officer and Director of Research is Mr P H Clarke. The Commission's offices are on the 16th floor, City Centre Tower, 44 St George's Terrace, Perth, Western Australia, 6000. Telephone: 325 6022. To: THE HON I G MEDCALF, QC, MLC ATTORNEY GENERAL In accordance with the provisions of section 11(3)(b) of the Law Reform Commission Act 1972-1978, I am pleased to present the Commission's report on unclaimed money. (Signed) David K Malcolm, QC Chairman 19 December 1980 CONTENTS Paragraph TERMS OF REFERENCE AND WORKING PAPER CHAPTER 1 - THE LAW AND PRACTICE IN WESTERN AUSTRALIA RELATING TO UNCLAIMED MONEY 1.1 The Unclaimed Moneys Act 1.2 Money Which Has Been Lost 1.8 Other Statutory Provisions Dealing with Unclaimed Money in Specific Circumstances 1.9 Unclaimed Trust Money 1.13 CHAPTER 2 - THE LAW IN OTHER JURISDICTIONS RELATING TO UNCLAIMED MONEY 2.1 CHAPTER 3 - PAYMENT OF UNCLAIMED MONEY TO THE TREASURER 3.1 COMPULSORY PAYMENT OF UNCLAIMED TRUST MONEY TO THE TREASURER 3.2 COMPULSORY PAYMENT OF UNCLAIMED MONEY OTHER THAN TRUST MONEY TO THE TREASURER 3.9 The Limits Of Compulsory Provisions 3.20 Money Held On Behalf Of Others By Persons In A Similar Position To Trustees 3.26 Money Borrowed In The Course Of Business 3.30 Wages Owed By Companies 3.31 Company Dividends 3.33 Exceptions To Compulsory Provisions 3.34 Deposits In Savings Banks 3.34 Deposits In Trading Banks 3.37 Deposits In Building Societies 3.39 Travellers Cheques 3.42 CONSOLIDATION OF LEGISLATION : A REVISED UNCLAIMED MONEYS ACT 3.45 THE COMMISSION'S RECOMMENDATIONS ON PAYMENT OF UNCLAIMED MONEY TO THE TREASURER 3.46 CHAPTER 4 - THE PROCEDURE FOR PAYMENT OF UNCLAIMED MONEY TO THE TREASURER AND OTHER MATTERS 4.1 Exemption Of Small Amounts From Compulsory Provisions 4.3 The Time For Payment To The Treasurer 4.9 Avoidance Of Conflicting Liability 4.14 Advertising 4.16 Use Of Unclaimed Money For Public Purposes 4.28 Claims To Money Which Has Been Paid To The Treasurer 4.32 Recovery Of Interest 4.42 CHAPTER 5 - EFFECT OF A REVISED UNCLAIMED MONEYS ACT ON OTHER STATUTORY PROVISIONS IN WESTERN AUSTRALIA DEALING WITH UNCLAIMED MONEY 5.1 CHAPTER 6 - MONEY WHICH HAS BEEN LOST, AND FOUND BY SOMEONE OTHER THAN THE OWNER 6.1 CHAPTER 7 - UNCLAIMED MONEY OWING TO ABORIGINES 7.1 CHAPTER 8 - INCIDENTAL REFORMS 8.1 Orders Under Section 66 Of The Trustees Act 1962 8.2 Payment To The Treasurer In The Absence Of Beneficiaries 8.6 CHAPTER 9 - SUMMARY OF THE COMMISSION'S RECOMMENDATIONS APPENDIX I - The Unclaimed Moneys Act 1912-1947 APPENDIX II - Details of unclaimed money paid to the Treasurer during the period 1 January 1974 to 30 June 1976 APPENDIX III - Legislation dealing with unclaimed money in specific circumstances APPENDIX IV - Analysis of comparable legislation relating to unclaimed money in other jurisdictions APPENDIX V - Legislation in Western Australia dealing with unclaimed trust money APPENDIX VI - Persons who commented on the Working Paper. Report on Unclaimed Money / 1 TERMS OF REFERENCE 1. The Commission was asked to consider and report upon the subject of unclaimed money. WORKING PAPER 2. On 28 October 1976 the Commission issued a Working Paper. The Working Paper contained the following appendices - I The Unclaimed Moneys Act 1912-1947 II Details of unclaimed money paid to the Treasurer during the period 1 January 1974 to 30 June 1976 III Legislation dealing with unclaimed money in specific circumstances IV Analysis of comparable legislation relating to unclaimed money in other jurisdictions V Legislation in Western Australia dealing with unclaimed trust money. These appendices are reproduced as appendices I to V to this Report. Appendices containing details of legislation have been updated to include amendments made up to the date of this Report. The information in Appendix II continues to be relevant by illustrating typical circumstances where unclaimed money arises. The Working Paper itself is not annexed to this Report. Copies are available, however, free of charge, at the Commission’s office. The names of those who commented on the Working Paper are listed in Appendix VI to this Report. 2 / Report on Unclaimed Money CHAPTER 1 THE LAW AND PRACTICE IN WESTERN AUSTRALIA RELATING TO UNCLAIMED MONEY 1.1 The law in Western Australia relating to unclaimed money can be divided into four separate categories, each depending on the circumstances in which the money is owed. These categories are - * money owed, normally in the form of a debt,1 which is governed by the Unclaimed Moneys Act 1912-1947;2 * money which has been lost but found, which is governed largely by legal principles derived from decided cases; * unclaimed money owing in certain special circumstances, which is governed by a number of specific statutory provisions; * money owed by a trustee to a beneficiary or in circumstances analogous to a trustee/beneficiary relationship. It is convenient to deal with each category separately. The Unclaimed Moneys Act 1.2 In the absence of any statutory provision to the contrary if a claim by a creditor for money owed to him is not made within the appropriate limitation period,3 the debtor has a defence to any subsequent claim to the money. This applies where the money is owed in the form of a specified liquidated sum, such as money agreed to be paid under a contract. Similar principles apply where money is owed as unliquidated damages, such as might arise from liability for negligence or for breach of contract. The law is based on the expectation that a 1 The word "debt" in the Unclaimed Moneys Act has a wider meaning than is commonly understood. The Act applies to "all principal and interest money, and all dividends, bonuses, profits and sums of money whatsoever, which have been owing to any person..." : s 2. Thus unpaid wages and dividends are included in the term "debt". 2 Hereinafter referred to as The Unclaimed Moneys Act. 3 Limitation Act 1935. The period allowed for claims in contract and in tort is six years - s 38(1)(c)(v) and (vi). Report on Unclaimed Money / 3 creditor or claimant, as the case may be, should take the initiative and in his own interests take steps to recover money owed to him. 1.3 The Unclaimed Moneys Act provides a statutory departure from this principle. It is not unique to Western Australia. Similar legislation can be found in all other jurisdictions in Australia and in New Zealand, but with significant differences in its application. 4 The Act was passed in the belief that money held in trading bank accounts could be retained by the banks concerned if a period representing the relevant limitation period expired and the customer either made no claim for his money or did not operate on his account. This belief5 no longer provides a justification for the Act because money held in trading bank accounts, other than with the Rural and Industries Bank of Western Australia, is governed by Commonwealth legislation. 6 Although there is no express provision in this legislation dealing with unclaimed money held by private savings banks,7 it is not clear whether the Unclaimed Moneys Act applies to such money. 8 1.4 The Unclaimed Moneys Act provides for "unclaimed money", that is money owed and unclaimed for six years, to be paid to the Treasurer.9 The object of the Act is that such money should always remain available to the creditor if and when he seeks payment. The Act is selective in its operation. It only applies to companies incorporated in or carrying on business in Western Australia.10 The word "companies" has an extended meaning in the Act and includes every "person or firm carrying on business as traders in Western Australia, and acting as agents or private bankers for individuals or companies" and also includes banks, life 4 Appendix IV contains an analysis of comparable legislation in other Australian jurisdictions and in New Zealand. 5 Which in any case was probably misconceived. The limitation period does not begin to run until the customer has made a demand on the banker: see Joachimson v Swiss Bank Corporation [1921] 3 KB 110. See also Working Paper, 36 footnote 2 6 Banking Act 1959 (Cwth), s 69. The R & I Bank is not covered by this Act; trading accounts with that bank are governed by the Unclaimed Moneys Act. See generally, paras 3.37 and 3.38 below. 7 Unclaimed money held in a savings account with the Rural and Industries Bank of Western Australia (the "R & I Bank") is governed by the Rural and Industries Bank Act 1944 (WA), s 65V; unclaimed money held in a savings account with the Commonwealth Savings Bank of Australia is governed by the Commonwealth Banks Act 1959 (Cwth), s 53. 8 If the Banking Act 1959 (Cwth) "covers the legislative field" the Unclaimed Moneys Act would be inconsistent with it and therefore, because of s 109 of the Commonwealth Constitution, inapplicable to private savings banks: see P H Lane, The Australian Federal System (2nd ed, 1979), 863-898. This may be so even though s 69 of the Banking Act 1959 (Cwth) refers only to trading banks. In addition, money held in a savings account may not be "owed" or "payable" for the purposes of the Unclaimed Moneys Act until a withdrawal form signed by the customer is presented to the bank: see para 1.6 below.