Pauls Victoria Ltd v Dwyer

[2000] QSC 497

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

DOUGLAS J

No 8241 of 2000

PAULS VICTORIA LIMITED (ACN 004 124 118)	Applicant
and
JENNIFER MARY DWYER and OTHERS	Respondents
BRISBANE
... DATE 22/12/2000

JUDGMENT
HIS HONOUR: This application involves an attack on the constitutional validity of Part 6A

2 of the Corporations Law as it applies as a law of Victoria and of the other States and

Territories. It is, in effect, an attack on the whole of the Corporations Law.

As submitted by the respondent, Pauls Victoria Limited, the application involves two separate

contentions:

(a)	because section 7 Corporations Law Victoria Act 1990 adopts in an ambitulory fashion the template legislation enacted by the Commonwealth as part of the law of the Australian Capital Territory as amended from time to time, this amounts to an impermissible delegation of State power to the Commonwealth and is therefore invalid; and
(b)	because the template ACT legislation in Part 6A 2 does not provide for the acquisition of shares “on just terms”, it is invalid, and therefore so is the State legislation which adopts it.

The submissions made on behalf of the applicant, Mrs Elkington, by Mr Cotman SC, are

complex but lucid and, one suspects, are designed for a prospect that these proceedings may

move further than this Court. However, once it is established that the Parliaments of the

States have plenary power in respect to legislation as does the Commonwealth in respect of

Territories, section 22 of the Constitution, the question becomes easier.

Section 7 of the Corporations (Victoria) Law which is referred to, states:

“7.

The Corporations Law set out in section 82 of the Corporations
Act as in force for the time being:

(a)	applies as a law of Victoria; and
(b)	as so applying, may be referred to as the Corporations Law of Victoria.”

The same provision appears in each of the relevant State and Territory

legislations.
The history of the legislation is that, following the decision of the High Court of

Australia in New South Wales v The Commonwealth (1990) 169 CLR 482, an

agreement was reached, known as the Alice Springs Agreement, between the

Commonwealth and the States, whereby the Commonwealth legislation (the

Corporations Act 1989) was enacted as a law of the Australian Capital Territory

pursuant to section 22 of the Constitution. Each of the States thereafter enacted

mirror legislation adopting the Commonwealth template.

There has been no delegation by the State of Victoria or any of the other States for

that matter of this legislative power to the Commonwealth. There can be, as was

submitted by Pauls, no argument that a State such as Victoria has the plenary

power to enact legislation in identical terms to the Corporations Act 1989

Commonwealth (see Union Steamship Company of Australia Proprietary Limited

v King (1988) 166 CLR 1 particularly at 9-10).

Clearly, such a law was within the plenary powers of the State of Victoria. It has

merely adopted the text of legislation passed elsewhere. There can be no

objection, and the applicant in this application does not seem to assert to the

contrary, to a State Parliament making a law by adopting as a law of the State a

text which emanates from a source other than the Parliament. For instance, there

is no reason why legislature of Victoria or Queensland or any other State could

not adopt the text of a statute which arose, for instance, in Canada.
By the adoption, that law becomes the law of say Victoria or Queensland (see

Western Australia v The Commonwealth 195 183 CLR 373 at 484-485 which

applied Hooper v Hooper (1995) 91 CLR 529. The law of the State of Victoria

passed in 1990 was its own law and not a delegation of its right so to do.

The next step seems to be that there can be no objection to a State enacting

legislation pursuant to a Commonwealth State co-operative legislation scheme as

was considered in R v Duncan Ex Parte Australian Iron and Steel Proprietary

Limited (1983) 158 CLR 535.

What does section 7 of the Corporations Victoria Act do? All it does is pick up

amendments identical in terms. If in fact the State of Victoria, for instance,

wished not to pick up a particular amendment, it could do so because of the fact

that it has reserved to itself the right to amend or repeal the law. There can be no

suggestion, in my view, that by this scheme the State of Victoria has abdicated its

responsibility for the law making power. Section 7 of that State’s Act and every

other State’s similar legislation does not involve a delegation of legislative power

because, as I said, each State Parliament may alter the operation of the

Corporations Law in respect of that particular State.

Even if the mechanism adopted by the States in the enactment of mirror

legislation involves some form of delegation, that is not impermissible provided

each State reserves the right to amend or repeal its own legislation (see Capital

Duplicators Proprietary Limited v Australian Capital Territory (1992) 177 CLR

248 at 264-265.
I do not understand a submission, in light of the authorities, that a delegation of

legislative power can only be effected by reference to the Commonwealth under

section 51 placitum (xxxvii) of the Constitution.

Extensive reference was made by Mr Cotman to the decision of the High Court in

Gould v Brown (1998) 193 CLR 346. That was the case which involved a

consideration of the mirror legislation between the Commonwealth and the States

known as the cross-vesting legislation.

Kirby J, in that case, dealt with the validity of section 7 of the State Act, correctly,

in Gould v Brown supra at 585 where his Honour said:

“Care must be observed in the application of these rules to co- operative legislation schemes within Australia whereby the several legislatures of the Nation, in pursuit of the desirable objective of uniform laws, agree to adopt a common standard and to co-operate in its modification and improvements from time to time. This is not a relinquishment of legislative responsibilities. It is the exercise of them. It is not the creation by one legislature of a new and different legislative authority (which would be forbidden). It is the decision of that legislature to exercise its powers in a particular way. A legislature, such as a State Parliament, may delegate legislative power so long as it does not abdicate it.”

After referring to Capital Duplicators Proprietary Limited v The Australian

Capital Territory (1992) 177 CLR 248 at 265, his Honour continued in relation to

section 7 of the State Act:

“There is no suggestion in the State Act that the State Parliament abandoned or renounced its power, at any time, to amend or repeal that Act. Detailed provisions are contained in the Act to integrate the uniform law into the law of the State. This Court has made it clear several times that no objection arises as to the Commonwealth’s making a law “by adopting as a law of the Commonwealth a text which emanates from a source other than the Parliament”. The same is true of a Parliament of a State. It could scarcely be otherwise with the one federation where the entities constituting the federation must necessarily co-operate in many ways to achieve peace, welfare and good government for the people within their respective jurisdictions. It follows that the argument of abandonment of legislation power should be rejected.”

In my respectful view, that deals with the first argument of the applicant here. It

is, in my view, clear beyond argument on the present state of authorities that the

Corporations Law is a valid enactment of the State of Victoria and that, in

particular, Part 6A 2 is valid.

The second limb of the argument before me was that the acquisition must be on

“just terms”. In my view, that again is fundamentally in error. Section 122 of the

Constitution gives the Parliament or the Commonwealth of Australia plenary

power with respect to legislation enacted in respect of the Territories. (See Teori

Tau v The Commonwealth of Australia (1969) 119 CLR 564 particularly at 569,

570. See also the discussion in the Court of Appeal of the Supreme Court of New

South Wales in Durham Holdings Proprietary Limited v State of New South

Wales (1999) 47 NSWLR 340 particularly at 364 where the Court discusses the

decision in Tau referred to above.).

Once it is established that the Commonwealth has plenary power in respect of the

Territories, then there can be no argument that the Corporations Law in respect of

the Australian Capital Territory is a valid enactment of the Commonwealth. More

fundamentally, the legislative scheme pursuant to which the acquisition is made is

enacted by a State which has plenary power, that is, the State of Victoria.
Victoria can legislate to allow for acquisition on any terms it likes. The

requirement for compensation by way of just terms or fair compensation is

something which has arisen by statute.

The contention made by the applicants in this application, as expressed by Mr

Cotman SC (if it is correct) is far reaching in its import, as pointed out by counsel

for Pauls Victoria Limited. If they are correct, not only is Part 6A 2 of the

Corporations Law ineffective so is the following legislation passed since 1990:

·	Corporate Law Reform Act 1992
·	Corporation Law Reform Act 1994
·	First Corporate Law Simplification Act 1995
·	Company Law Review Act 1998
·	Managed Investments Act 1998
·	Financial Sector Reform (Amendments and Transitional Provisions) Act 1998
·	Financial Sector Reform (Amendments and Transitional Provision) Act (No 1)
1999
·	Corporate Law Economic Reform Program Act 1999

In the upshot, I declare that, insofar as the terms of Part 6A 2 of the Corporations

Law relates to the present application, it is valid.

...

HIS HONOUR: I reserve the question of costs to the trial which is to commence

on 15 January.

...

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