THE COMMONWEALTH AND ANOTHER Constitutional Law (Cth.)-Legislative power of Commonwealth-Implied limitation
Interference with governmental functions of States--Banking--" State bank- ing Statute-Validity-Banks not to "conduct any banking business for State or for any authority of a State, including a local-governing authority' MELBOURNE, except with consent of Commonwealth Treasurer--Banking Act 1945 (No, 14 July 15, 16. of 1945), 8. 48.
Section 48 of the Banking Act 1945 provides that Except with the consent furstville CC
in writing of the Treasurer, a bank shall not conduct any banking business for a State or for any authority of a State, including a local governing authority."
Held, by Latham C.J., Rich, Starke, Dixon and Williams JJ. (McTiernan J. dissenting), that this section was not a valid exercise of the power in relation to "banking conferred upon the Commonwealth Parliament by S. 51 (xiii.) of the Constitution which does not authorize legislation directed to the control or hindrance of the States in the execution of their governmental functions.
Held, further, by the whole Court, that "State banking' in S. 51 (xiii.) of the Constitution means the business of banking engaged in by a State as DEMURRER.
In an action in the High Court by the municipality of the city of Melbourne against the Commonwealth and its Treasurer, the Right Honourable Joseph Benedict Chifley, the plaintiff's statement of claim was substantially as follows
1. The plaintiff is and was at all material times a body corporate constituted by statute.
HIGH COURT 2. The defendant the Right Honourable Joseph Benedict Chifley 1947.
is the Treasurer of the Commonwealth.
3. By virtue of various statutes the council of the plaintiff corpor- ation is empowered to make by-laws and regulations for the good rule and government of the City of Melbourne and for other purposes connected with the administration of the affairs of the said city, and the plaintiff is authorized to carry on and carries on various under- takings, including the City Abattoirs, the City Cattle Market, the Queen Victoria Market, the Fish Market, four public baths, a refrig- erator, weighbridges and electric supply and hydraulic power supply undertakings.
4. The plaintiff also controls and maintains various properties, including the Town Hall Chambers, Eastern Market, Hay Market, Western Market and warehouses and stores at the Wharf Market and is responsible for the maintenance of park lands, reserves, streets and footways within the city limits.
5. The plaintiff also administers the Health Acts within the City of Melbourne, the Uniform Building Regulations and the licensing and control of hackney carriages and motor omnibuses within the metropolitan area.
6. In the course of the activities referred to in pars. 3, 4 and 5 hereof, the plaintiff receives sums of money amounting to upwards of £1,800,000 per annum and makes payments (including appropri- ations to sinking funds, reserves and payments of a like character) amounting to a similar sum.
7.…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Melbourne Corporation v The Commonwealth [1947] HCA 26
Case
[1947] HCA 26
Decision Date
CaseChat Overview and Summary
The case of *Melbourne Corporation v The Commonwealth* was heard in the High Court of Australia. The dispute arose between the City of Melbourne (the plaintiff) and the Commonwealth of Australia and its Treasurer (the defendants) concerning the validity of section 48 of the *Banking Act 1945* (Cth). Section 48 prohibited banks from conducting banking business for a State or any State authority, including local governing authorities, without the consent of the Commonwealth Treasurer. The City of Melbourne, a local governing authority, sought a declaration that this section, and indeed the entire *Banking Act 1945*, was beyond the legislative powers of the Commonwealth Parliament.
The High Court was required to determine several legal issues. Primarily, the Court had to decide whether section 48 of the *Banking Act 1945* was a valid exercise of the Commonwealth Parliament's legislative power with respect to "banking, other than State banking" under section 51(xiii) of the Constitution. This involved considering whether the section was genuinely a law with respect to banking, or if its true purpose and effect were to interfere with the governmental functions of the States. A further issue was the interpretation of "State banking" within section 51(xiii), specifically whether it encompassed a State acting as a customer of a bank, or only a State acting as a banker. The Court also considered whether, even if section 48 was a law with respect to banking, it was invalid due to an implied prohibition against Commonwealth legislation unduly impeding the essential governmental functions of the States.
A majority of the High Court, comprising Latham C.J., Rich, Starke, Dixon, and Williams JJ. (with McTiernan J. dissenting), held that section 48 of the *Banking Act 1945* was not a valid exercise of the Commonwealth's power under section 51(xiii) of the Constitution. The Court reasoned that while the power to legislate with respect to "banking" is granted, this power does not extend to legislation that directly controls or hinders the States in the execution of their governmental functions. The majority found that section 48, by restricting the ability of State authorities to conduct banking business with private banks and effectively compelling them to use the Commonwealth Bank, interfered with the States' governmental operations. The Court also affirmed that "State banking" in section 51(xiii) meant the business of banking engaged in by a State, whether as banker or customer, and that the prohibition in section 48 was directed at the State as a customer. The Court applied the principle that the federal structure of the Constitution implies limitations on legislative power to prevent one level of government from unduly interfering with the essential functions of the other.
The demurrer filed by the defendants was overruled, and the plaintiff was granted the declaration sought. The Court declared section 48 of the *Banking Act 1945* to be invalid as an exercise of the Commonwealth's legislative power.