Marcus Clark & Co Ltd v The Commonwealth

Marcus Clark & Co Ltd, a retail and manufacturing company, brought an action against the Commonwealth of Australia, its Treasurer, and the Attorney-General. The company sought to borrow £100,000 and issue new ordinary shares to fund necessary repairs and remodelling of its business premises, and to increase the volume of its operations to maintain profitability in light of increased wage liabilities. The Treasurer had refused consent to both the borrowing and the capital issue. The case was heard in the High Court of Australia.

The central legal issue before the court was whether section 4 of the Defence Preparations Act 1951 and the Defence Preparations (Capital Issues) Regulations, which empowered the Treasurer to control capital issues and borrowing by companies, were valid laws with respect to defence within the meaning of section 51(vi) of the Constitution. Specifically, the court had to determine if the restrictions imposed by the regulations on capital issues and borrowing, even when refused consent by the Treasurer, fell within the scope of the defence power, particularly in a period of apprehended danger rather than actual hostilities.

The majority of the High Court, comprising Dixon C.J., McTiernan, Webb, and Fullagar JJ., held that the Defence Preparations Act 1951 and the regulations were valid. They reasoned that the defence power extended beyond actual warfare to include preparations for defence in times of apprehended danger. The court distinguished this case from *Australian Communist Party v. The Commonwealth*, finding that the restrictions on capital issues were auxiliary to and consequential upon the diversion of resources to warlike purposes, a diversion that a country might undertake under the threat of war. The court concluded that the Treasurer's power to refuse consent, and the regulations' prohibition on capital issues without consent, were legitimate measures to control the economy and direct resources towards defence preparations. Williams and Kitto JJ. dissented.

The court dismissed the demurrers.