Butterworth v Commonwealth Bank of Australia

[1916] HCA 68

22 CLR 206

BUTTERWORTH

THE COMMONWEALTH BANK OF AUS-

TRALIA AND ANOTHER A. Bank-Commonwealth Bank-Liability for non-compliance with State laws as to

banking-" Company, form or individual"-Bank of issue-Governor of bank ---Commonwealth Bank Act 1911-1914 (No. 18 of 1911-No. 24 of 1914), sec. 8 MELBOURNE,

-Banks and Currency Act 1915 (Vict.) (No. 2618), secs. 3, 5, 7 -The Con- Oct. 24, 26.

stitution (63 &64 Vict. c. 12), sec. 51 (xiii.).

Sec. 3 of the Banks and Currency Act 1915 (Vict.) provides that The provisions of this Act shall extend and apply-(1) To every company firm or individual engaged in the ordinary business of banking by receiving deposits and issuing bills or notes payable to the bearer at sight or on demand. (2) To every foreign banking company trading in Victoria. (3) To every company firm or individual banker trading in Victoria engaged in the ordinary business of banking by receiving deposits and issuing in Victoria or elsewhere bills or notes payable to the bearer at sight or on demand." By sec. 5 it is provided that every banking company firm or individual banker in Victoria shall prepare certain quarterly statements and shall within a month after the close of each quarter deliver them to the Chief Secretary of Victoria to be laid before Parliament. Sec. 7 provides for penalties for neglect to prepare or deliver to the Chief Secretary such quarterly statements and that those penalties may be recovered in the Supreme Court or any other Court of competent jurisdiction by any person who sues for the same.

Held, that an action will not lie against the Commonwealth Bank or its Governor to recover penalties for failure to comply with the provisions of sec. 5 of the Banks and Currency Act 1915:

By Griffith C.J., and Barton, Gavan Duffy and Rich JJ., on the ground that neither the Commonwealth Bank nor its Governor is a company, a firm or an individual within the meaning of sec. 3 of the Act, and the business of the

22 CLR 207

Commonwealth Bank does not come within the words of that section, as it is prohibited by the Commonwealth Bank Act 1911-1914 from issuing bills or notes payable to bearer on demand;

By Isaacs J.-On the ground that the Commonwealth Bank Act is within the power of the Commonwealth Parliament to enact and that neither the Commonwealth Bank nor its Governor is a banking company, firm or individual banker within the meaning of sec. 5 of the Banks and Currency Act. DEMURRER.

An action was brought in the High Court by Frederick Butter- worth against the Commonwealth Bank of Australia and Denison Miller, the Governor of the Commonwealth Bank, to recover penalties under the Banks and Currency Act 1915 (Vict.). The defendants having demurred to the original statement of claim, on the argument of the demurrer the statement of claim was, by leave of the Court, amended, and, as amended, was as follows :---

1. The plaintiff is a foreman residing at Clifton Hill in the State of Victoria.

2. The defendant the Commonwealth Bank of Australia (herein- after called the defendant Bank) is a resident of the State of New South Wales and resides at Sydney therein where the head office of the defendant Bank is situated.

3. The defendant Miller is a resident of the State of New South Wales and resides at Sydney therein.

4. The defendant Bank is the Bank referred to and described in the Commonwealth Statute No. 18 of 1911.

5. The defendant Bank is within the meaning of the Victorian Statutes the Banks and Currency Act 1890 and the Banks and Cur- rency Act 1915-(a) a company, a firm or an individual and is engaged in the ordinary business of banking by receiving deposits and issuing bills or notes payable to the bearer at sight or on demand or alter- natively (b) a foreign banking company trading in Victoria; or alternatively (c) a company, firm or individual banker trading in Victoria engaged in the ordinary business of banking by receiving deposits and issuing in Victoria and elsewhere bills or notes payable to the bearer at sight or on demand.

6. Alternatively the plaintiff contends that it was and is ultra vires the Parliament of the Commonwealth to establish and/or

22 CLR 208

incorporate the defendant Bank in the manner set out in the Com-

monwealth Statute No. 18 of 1911. The defendant Miller is the person appointed under the provisions of the last mentioned Statute as Governor of the defendant Bank and is within the meaning of the said Victorian Acts-(a) an individual engaged in the ordinary business of banking by receiving deposits and issuing bills or notes payable to the bearer at sight or on demand; or alternatively (b) an individual banker trading in Victoria engaged in the ordinary business of banking by receiving deposits and issuing in Victoria and elsewhere bills or notes payable to the bearer at sight or on demand. The defendant Miller trades as aforesaid and carries on the said business or businesses under the name or style of the Commonwealth Bank of Australia.

7. The defendant Bank and the defendant Miller contend that by reason of the provisions of the Commonwealth Constitution and /or of the said Commonwealth Statute No. 18 of 1911-(a) the said Victorian Statutes have no application to the defendants or either of them; (b) the defendant Bank is an instrumentality of the Commonwealth Government and is not subject to the laws of the State of Victoria.

8. During the period from 24th July 1914 to 24th July 1916 the defendants and each of them neglected-(a) to prepare or make out the quarterly abstracts mentioned in sec. 5 of the Victorian Statute the Banks and Currency Act 1890 and in sec. 5 of the Victorian Statute the Banks and Currency Act 1915; (b) to return or deliver such quarterly abstracts to the Chief Secretary.

9. By reason of the premises the defendant Bank or alternatively the defendant Miller became liable to forfeit and forfeited the sum of £8,000 to the plaintiff who sues the defendants for the same in this action under the said Acts.

(Particulars of the penalties sued for were then set out.) And the plaintiff claims (1) a declaration that notwithstanding any provisions expressed or implied of the Commonwealth Constitu- tion and of the Commonwealth Statute No. 18 of 1911, the said Victorian Statutes apply to the defendant Miller and /or the defen- dant Bank (2) against the defendant Bank £8,000; alternatively (3) against the defendant Miller £8,000.

22 CLR 209

To the statement of claim as amended the defendants demurred ore tenus.

Sir William Irvine K.C. (with him Starke), for the defendants, in support of the demurrer. Parts I. and II. of the Banks and Currency Act 1915 only apply to banks of issue, and the Commonwealth Bank is not a bank of issue, for it is forbidden by sec. 8 of the Common- wealth Bank Act 1911-1914 to issue bills or notes payable to bearer on demand. Neither the Commonwealth Bank nor the defendant Miller is a company, firm or individual within the meaning of sec. 3 of the Banks and Currency Act 1915.

Mitchell K.C. and Latham, for the plaintiff, contra. Either the Commonwealth Bank falls within the terms of sec. 3 of the Banks and Currency Act or, if it does not, then the defendant Miller falls within its terms. There is no instance of a corporation without some person or persons as corporators. The power conferred by sec. 51 (XIII.) of the Constitution to legislate as to the incorporation of banks does not give power to create an abstraction and call it a corporation. See Attorney-General for New South Wales v. Brewery Employees Union of New South Wales 1; Heiner v. Scott 2. If the Commonwealth Bank has been invalidly created, then the defen- dant Miller, who acts as the agent of a non-existing principal, is himself carrying on the business of banking. See Anson on Con- tracts, 13th ed., p. 400 Grant on Corporations, p. 635 Ex parte Young 3. [They also referred to Addy v. Foreign and Colonial Exchange Bank of Australasia 4.] The words issuing bills or notes payable to the bearer at sight or on demand" in sec. 3 (1) of the Banks and Currency Act are not limited to the issuing of bank notes, and the Commonwealth Bank must be assumed to be doing what it is authorized to do under sec. 7 of the Commonwealth Bank Act, which includes the issuing of bills and drafts.

[GRIFFITH C.J. referred to 7 &8 Vict. c. 32.]

GRIFFITH C.J. An interesting discussion was initiated on the question whether the Commonwealth Bank is a real entity or

16 C.L.R., 469. 219 C.L.R., 381. 3209 U.S., 123, at pp. 155, 159. 416 V.L.R., 186 ; 12 A.L.T., 22. 22 CLR 210

merely a name, but it is not necessary to deal with it. The action is brought to recover penalties from the Bank for breach of the provisions of the Victorian Banks and Currency Act 1915, which (sec. 3) applies to "every company firm or individual engaged in the ordinary business of banking by receiving deposits and issuing bills or notes payable to the bearer at sight or on demand." I remark, in the first place, that by these words two separate conditions are imposed, both of which must exist before any company, firm or individual can come within the Act. One is that it must be engaged in the ordinary business of banking by issuing bills or notes payable to bearer at sight or on demand. The meaning of that expression, as used in legislation, if it were open to doubt, is well shown by the Statute to which my brother Rich has referred me, 7 &8 Vict. c. 32, which is entitled " An Act to regulate the issue of bank notes," &., and recites that "Whereas it is expedient to regulate the issue of bills or notes payable on demand," &., which the Act then pro- ceeds to do. It is quite plain what is the meaning of ' bills or notes payable on demand." The Commonwealth Bank is, by its Statute, forbidden to issue bills or notes payable to bearer on demand. Therefore, whatever else the Commonwealth Bank is, it is not a bank within the meaning of that section.

It was further argued that the Commonwealth Bank was either a company, a firm or an individual within the meaning of the Act. Certainly it is not a firm. Certainly it is not an individual. If there were any doubt, the use of the words "individual banker' in sec. 3 (3) and in sec. 5 shows that the word individual' means individual human being. A very wide construction of the word 'company " might perhaps be held to cover it. But I do not think that construction is justifiable.

On both grounds, therefore, the section has no application to the Commonwealth Bank, which is neither a company, a firm, nor an individual, and, if it were either, is not engaged in the ordinary business of banking by "issuing bills or notes payable to the bearer at sight or on demand." That is sufficient to dispose of the case

SO far as the Commonwealth Bank is concerned.

It is then said that the Commonwealth Bank is a mere abstraction which the Court should treat as a nullity, and that the only real

22 CLR 211

person to be found is the defendant Miller, the Governor of the Bank, who, it is said, is an "individual engaged in the ordinary business of banking," &. He is clearly not such a person within the meaning of the Act.

The plaintiff's case is, therefore, wholly without foundation.

BARTON J. I am of the same opinion. I do not think the subject is capable of serious discussion, unless perhaps by way of forensic argument, and I decline to waste time upon it.

ISAACS J. I agree. There are other questions raised by the demurrer which it has not been necessary to argue. I only wish to say that it is not to be supposed that the reasons which I shall shortly mention are the only reasons which, if the matter were fully argued, might actuate me in determining the matter the same way. I merely decide that the Commonwealth Bank Act was validly passed, and that it is the Commonwealth Bank which acts as a bank and not Mr. Miller. That Bank is not, nor is he, a "banking company firm or individual banker " within the meaning of sec. 5 of the Banks and Currency Act 1915.

GAVAN DUFFY J. I agree with what has been said by the Chief Justice.

RICH J. I also agree with what the Chief Justice has said.

Judgment for the defendants. Solicitors for the plaintiff, Strongman &Crouch. Solicitor for the defendants, Gordon H. Castle, Crown Solicitor for the Commonwealth.