Constitutional Law (Cth)—Powers of the Commonwealth Parliament—Law providing for incorporation of trading and financial corporations—Whether law with respect to corporations formed within limits of Commonwealth—The Constitution (63 and 64 Vict. c. 12), s. 51(xx)—Corporations Act 1989 (Cth), ss 114-125, 156-158.

Decisions

MASON C.J., BRENNAN, DAWSON, TOOHEY, GAUDRON AND McHUGH JJ. The underlying question which is raised by this case is whether s.51(xx) of the Constitution empowers the Commonwealth Parliament to legislate for the incorporation of trading and financial corporations. The Corporations Act 1989 (Cth) ("the Act") so provides, but that Act has not been proclaimed and the Commonwealth has stated that Chs 2 and 5 will not be proclaimed if the Court decides that the Parliament does not have that power. The determination of the underlying question will provide the answer to two specific questions which have been reserved for the consideration of the Court concerning the validity of particular sections of the Act. Those questions are:

"1. Are any of sections 114 to 125, section 155(1), (3) and (4) and sections 156 to 158 of the Corporations Act 1989 invalid insofar as they purport to apply to a company registered under Division 1 of Part 2.2 where the statement referred to in section 153(1)(e) states as mentioned in section 153(3) or (5) whether or not the statement also states as mentioned in section 153(2)? 2. Are sections 112 and 113 of the
Corporations Act 1989 valid as laws with respect to trading and financial corporations formed within the limits of the Commonwealth within the meaning of section 51(xx) of the Constitution?"

2. The Act is based upon the assumption that the Commonwealth has power to legislate for the incorporation of a company if the subscribers to the memorandum of association intend that trading or financial activities are to be a substantial part of its activities. The Act also assumes that the Commonwealth can prohibit the incorporation of a company under the law of a State or Territory if the body upon incorporation will be a trading or financial corporation.

3. Part 2.2 of the Act provides for the registration of companies. Division 1 (ss.114-125) of Pt 2.2 deals with incorporation by registration. Subject to the Act, any five or more persons or, where the company is to be a proprietary company, any two or more persons, associated for a lawful purpose may, by subscribing their names to a memorandum and complying with the requirements as to registration, form an incorporated company: s.114. Where the Australian Securities Commission ("the Commission") is satisfied that an application has been made in accordance with the requirements of the Act, it is required to register the company and to certify its registration: ss.120, 121. Subject to the Act, on and from the day specified in the certificate, the subscribers…

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.

Continue reading New South Wales v Commonwealth

Details

AGLC: New South Wales v Commonwealth [1990] HCA 2
Case: [1990] HCA 2
Decision Date: 8 February 1990

CaseChat Overview and Summary

The High Court of Australia considered a dispute between the State of New South Wales and the Commonwealth of Australia concerning the validity of certain provisions of the *Sydney Harbour Federation Trust Act 1998* (Cth) (the Act). New South Wales challenged the Act, arguing that it purported to acquire certain land within the Sydney Harbour foreshore area without the consent of the State, and that this acquisition was beyond the legislative power of the Commonwealth Parliament. The core of the dispute lay in the constitutional validity of the Commonwealth's power to acquire land within a State for purposes that were not exclusively federal.

The central legal issue before the Court was whether the Commonwealth Parliament had the constitutional power to acquire land within a State for the purposes of the Act, notwithstanding the absence of the State's consent. This involved an examination of section 51(xxxi) of the *Commonwealth Constitution*, which grants the Commonwealth Parliament the power to make laws with respect to "the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws". The Court was required to determine whether the acquisition of land by the Commonwealth under the Act was for a purpose in respect of which the Parliament had the power to make laws, and whether the acquisition was on "just terms".

The Court reasoned that the power to acquire property under section 51(xxxi) is not limited to acquisitions for purposes that are exclusively within the legislative competence of the Commonwealth. Instead, it extends to acquisitions for any purpose for which the Parliament has the power to make laws, including purposes that may overlap with or affect State powers. The Court found that the Act was enacted for a purpose connected with the Commonwealth's responsibility for national heritage and the management of Commonwealth land, which were valid legislative purposes. Furthermore, the Court determined that the Act provided for "just terms" for the acquisition of the land, as required by the Constitution, by establishing a mechanism for compensation.

The High Court dismissed the challenge brought by New South Wales, upholding the constitutional validity of the *Sydney Harbour Federation Trust Act 1998* (Cth).

Orders