R v Trade Practices Tribunal; Ex parte St George County Council

[1974] HCA 7

HIGH COURT OF AUSTRALIA

. Barwick C.J., McTiernan, Menzies, Gibbs and Stephen JJ.

THE QUEEN v. TRADE PRACTICES TRIBUNAL; Ex parte ST. GEORGE COUNTY COUNCIL.

(1974) 130 CLR 533

4 March 1974

Restraint of Trade

Restraint of Trade—Restrictive Practices—Local government body engaging in examinable trade practice—Sole function of body to supply electricity and electrical appliances within its district—Whether a "trading corporation"—Jurisdiction of Trade Practices Tribunal—Prohibition—Restrictive Trade Practices Act 1971-1972 (Cth), s. 5*—Local Government Act, 1919 (N.S.W.), s. 419**. * Section 5 of the Restrictive Trade Practices Act 1971-1972 (Cth) provides that " 'Corporation' means a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed". ** Section 419 of the Local Government Act, 1919 (N.S.W.) provides : "Subject to the provisions of this Act, and in particular to making proper provision for depreciation and obsolescence of assets, and for reserves and for the payment of principal, interest, and expenses in respect of moneys borrowed for the purposes of the undertaking , the council shall endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible."

Decisions

1974, March 4.
The following written judgments were delivered :-
BARWICK C.J. The applicant for a writ of prohibition to restrain proceedings pending before the Trade Practices Tribunal is a county council created and incorporated under the provisions of Pt XXIX of the Local Government Act 1919 (N.S.W.) (as amended) (the Act). The ground on which the writ is sought is that the applicant is not a trading corporation formed within the limits of the Commonwealth within the definition of "corporation" in s. 5 of the Restrictive Trade Practices Act 1971 (No. 138 of 1971) and therefore not subject to the jurisdiction of the Trade Practices Tribunal set up by s. 7 of that Act. The Court gave leave to the States of New South Wales, Victoria and Queensland to intervene in the argument before the Court upon the footing that a decision whether or not the applicant is such a corporation would bear on the meaning of the power of the Parliament under par. (xx.) of s. 51 of the Constitution, in so far as it rested on the inclusion of "trading . . . corporations formed within the limits of the Commonwealth" in that paragraph. (at p536)

2. Corporation is defined in s. 5 as meaning a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed. (at p536)

3. Under s. 561 of the Act the Governor by proclamation may constitute a county district composed of the whole or part of a group of municipalities or shires, or of both or of a combination of each. In proclaiming such a county district it is sufficient for the proclamation to say that it is constituted for local government purposes without indicating the particular purposes of its formation. (at p537)

4. By s. 562 it is provided that in respect of a county district there shall be a county council composed of delegates elected as provided by that section. By s. 563 (1) the county council is incorporated with power, amongst other things, to purchase and dispose of real and personal property. (at p537)

5. Section 564 empowers a county council to undertake any function delegated to it in accordance with the Act for the joint benefit of the local government areas of which the county district is composed. Under that section the councils of the local government areas included in the county district may request the Governor to delegate to the county council the power to exercise or perform for the benefit of the county district any power which by law those councils may exercise or perform. (at p537)

6. Having received such a request conforming to the requirements of the section by a majority of such local government bodies, the Governor may by proclamation delegate (which, by definition, means "transfer", see s. 560) to the county council the powers so requested to be delegated : but such transfer to the county council does not preclude the exercise of such powers by any of the constituent councils within their respective areas. (at p537)

7. Upon the proclamation of the delegation the county council shall have full power to exercise the delegated powers for the benefit of the county district. If so mentioned in the delegation the county council shall have the power to borrow and to levy loan rates : that is to say, if so mentioned in the proclamation, the power described in s. 124 can be exercised by the county council. Equally in those circumstances it may borrow within the limits and in accordance with the provisions of Div. 4 of Pt VII of the Act. (at p537)

8. Part XVII of the Act under the heading "Trading" empowers a council, which expression does not include a county council (see s. 4), "to establish . . . and conduct trading undertakings" of the kind described in s. 418. These include, in a miscellaneous list of trading activities, "the supply of electricity and the supply and installing of electrical fittings and appliances". (at p537)

9. By proclamation made on 26th October 1920, the St. George County District was constituted and the powers of the local government bodies whose areas the county district comprises under ss. 416 to 419 of the Act relating to the supply of electricity and the supply and installing of electrical fittings and appliances were transferred to the applicant with power to borrow under and subject to the provisions of s. 181 of the Act within an upward monetary limit and with power to levy a loan rate under and subject to the provisions of ss. 181 and 124 in connexion with a loan borrowed under and within the limits of the Act and delegation. By later proclamations incidental powers were given to the applicant. (at p538)

10. The reservation by s. 564 (4A) (a) of the powers of the local government bodies, in my opinion, has no significance in this case. Moreover, from its nature in the local circumstances, a monopoly of the supply of electricity by the applicant was clearly intended. (at p538)

11. The question raised by the case involves the construction of the expression "trading corporation formed within the limits of the Commonwealth" as it appears in the Act through the definition for the purposes of the Act of a "corporation". Because of identity of language and the fact that the statutory formula is designed to keep the Act within constitutional power, that construction would be applicable to the words of the Constitution, a circumstance which must influence the construction placed on the statutory formula. (at p538)

12. I ought to point out at the outset that the ultimate question in the case is to be answered in relation to the applicant and not as to all county councils. The powers and functions which under the Act may be transferred to a county council are diverse (cf., e.g. s. 564 (1) and (2) ). Consequently, considerations which, in my opinion, are definitive in this case may not be so in the case of other county councils with different powers and activities. (at p538)

13. No question of the validity of the Act is raised in this case. The prohibition is sought on the single ground that the applicant does not fall within the definition of "corporation" in the Act. Thus it has been unnecessary for me to consider whether or not any particular power, right or duty which the Act purports to grant or impose can properly be granted or imposed with respect to or upon the applicant. (at p538)

14. It should then be said that the expression "formed within the limits of the Commonwealth" is satisfied, in my opinion, by incorporation under Commonwealth, State or Territorial laws. The expression is not confined to corporations existing at the date of the commencement of the Commonwealth but includes corporations whenever and however they have been or may be so incorporated. (at p538)

15. It is clear that the applicant does trade. It does not generate electricity. It buys it in bulk and reticulates it within the county area, charging what is, in substance, a retail price for its supply to the consumer. The applicant is none the less trading, though it has in fact a monopoly of the supply of electricity. It also buys and sells electrical appliances and performs for reward services by way of installing and repairing such appliances in competition with other persons and bodies selling and servicing such appliances. If it matters, it is clear that such trading activities constitute the purposes of its incorporation. They exhaust the principal power which was given to it, all other transferred powers being incidental to the exercise of such principal power. However, as I will later indicate, the description "trading corporation", in my opinion, refers not to the purpose of incorporation but to the activities of the corporation at the relevant time. (at p539)

16. So far then the applicant is evidently a corporation which has been formed within the Commonwealth. It trades in the supply of electricity, of electrical appliances and of electrical services. It has no other purpose or activity. (at p539)

17. Two other aspects of the incorporation of the applicant, however, should be mentioned. It is directed to supply electricity as cheaply as possible to the residents of the county district (s. 419). That direction, however, in my opinion, does not deny an intention that the applicant should trade at a profit. Indeed, the annual report of the county council included in the evidence in the case clearly demonstrates that in fact the operations of the county council are and have been highly profitable. But the direction does mean, of course, that the applicant may not be motivated by an uninhibited commercial desire to make the utmost profit attainable. That circumstance, however, does not mean, in my opinion, that its activities in selling electricity and electrical appliances and in servicing electrical installations are not essentially trading activities. Though profit-making is perhaps not of the essence of trading, it is a usual concomitant, and it can be said that the applicant trades at a profit. (at p539)

18. The second feature is that the applicant has been given a power to levy a loan rate in the same manner and to the same extent that a municipal or shire council may do so, i.e. in conformity with ss. 181 and 124 of the Act. As I have mentioned, a ceiling was placed on the applicant's borrowing power. There is no suggestion that the applicant has in fact levied a loan rate or that such a rate is in contemplation. Certainly its balance sheet, as in evidence, would not suggest any such need. But it is the existence of the power to rate on which the applicant's counsel places reliance. (at p539)

19. The applicant submits that, notwithstanding its activities and the evident purpose of its incorporation, it is not a trading corporation formed within the limits of the Commonwealth because of four principal facts. First, the source of the incorporation, i.e. the Act as an Act providing for local government ; second, the power to levy a loan rate ; third, the limitation on profitability with the object of ensuring that the applicant performs a public service for the county district ; and, fourth, that, in reticulating electricity to the residents of the county district, it is merely performing a public service, which assertion is intended to deny that the applicant is or could be regarded as a trading body. (at p540)

20. These submissions are combined in the submission that the applicant should be "characterized" as a "municipal" corporation or, at any rate, as a corporation not having the character of a trading corporation. (at p540)

21. Along with these submissions there was the suggestion that the description of the subject matter in s. 51 (xx.) of the Constitution and the definition of a "corporation" in the Act require the corporation, if it is to fall within the form and scope of the Act, to be of its nature as distinct from the range of its current activities one of what are said to be three distinct categories of corporation in the definition : and that to be of that nature the corporation must be formed as such, i.e. placed from and by its inception into one of those categories. It is then said that the four features of the applicant which I have mentioned combine to deny the possibility that the applicant was so incorporated and is by its nature such a trading corporation. Much emphasis was laid upon the fact that electricity, being almost indispensable to domestic and industrial life in an area such as the county district, its supply is a service to the community which, when performed by a body such as the applicant with what I might call a local government affiliation, cannot be regarded as a trading activity. (at p540)

22. To consider these submissions, I turn first to the construction of the statutory formula bearing in mind its relationship to the terms of s. 51 (xx.) of the Constitution. The words should therefore be construed according to the principles of construction appropriate to the construction of the Constitution. Thus, the words must be given their full import without any constraint derived from the circumstance that so construed the constitutional power they express will affect State power, legislative or executive, or that the exercise of the constitutional power so construed will or may affect the exercise of State power. The reserved powers doctrine of the past has been fully exploded : but care needs to be taken that it does not still in some form or another infiltrate one's reasoning when construing Commonwealth powers or Acts of the Parliament. This aspect of constitutional interpretation was recently discussed, see Strickland v. Rocla Concrete Pipes Ltd. (1971) 124 CLR 468 . (at p541)

23. Further, if the terms of an Act expressed in the language of the constitutional power properly construed embrace a government or local government instrumentality or agency, the connexion of the corporation with the government of a State will not of itself place the corporation outside the scope of the power or the statute : Victoria v. The Commonwealth (1971) 122 CLR 353 . Thus, in my opinion, there can be no objection to the inclusion of the applicant within the scope of the Act founded merely on its association with local government in the State if it otherwise satisfies the description of "corporation" in the Act. (at p541)

24. Further, the words to be construed being drawn from an organic instrument, the purpose of the vesting of the power in the Parliament must bear on the assignment of meaning to the cryptic expressions of the instrument. (at p541)

25. Of course, it must be recognized that words which were generally used with an artificial meaning in the period of the formation of the Constitution may in some circumstances need to be given that meaning now. But nothing of that kind, in my opinion, is present in this case. No doubt during and at the end of the nineteenth century, corporations were classified for various purposes and, on occasions, special rules made applicable to corporations in one category which were not applicable to corporations in another. Trading corporations were both known and referred to as such. But there does not appear to have been any generally accepted definition of a trading corporation. It was assumed, I think, that such a corporation could be identified by its activities. If its nature was being sought, it was to be found in what it did. It seems to me that no assistance in the solution of the present problem is to be derived from the undoubted statement that, as at 1900, there were trading and non-trading corporations or that consequences were attached to such descriptions or classifications. But it is certain that the community of that day were aware of the influence which the activities of foreign and local trading and financial corporations could have on the Australian community and its affairs. The framers of the Constitution appear to have concluded that the power to control those activities should be included in the powers given to the Parliament concurrently with the residual powers of the several States. Thus, the question in this case should be approached bearing in mind the purpose of the grant of the power and without any special or technical meaning of the description "trading corporation" derived from nineteenth century usage. (at p542)

26. The qualification "formed within the limits of the Commonwealth" is used, in my opinion, in contrast to the word "foreign". It serves to require local incorporation, the locality being any part of Australia. Though only some local corporations are to fall within the power, the qualification "formed within the limits of the Commonwealth" is not part of the description by which those local corporations, which fall within the power as distinct from those which are outside the power, will be identified. Thus it would be, in my opinion, a misreading of the relevant parts of the definition or of the terms of s. 51 (xx.) to treat those words as requiring that the corporation be formed for a purpose, i.e. for trading or financial purposes. In my opinion, it is not necessary, if the corporation is to fall within one of the descriptions in s. 51 (xx.) or the definition, that the corporation was formed as such, e.g. as a trading corporation, though, of course, because of its corporate condition, the power to trade must be within the corporate charter, whether expressly or by implication. But to conclude that the purpose of its incorporation was to trade is quite another matter. It is, in my opinion, only necessary to recall the wide spread of the objects of a company formed under the Companies Acts as expressed in its memorandum of association, particularly in days when the doctrine of ultra vires was more readily applied, to appreciate the difficulties encountered in attempting in all cases to attribute purpose to incorporation. Material extrinsic to the memorandum might for some purposes be resorted to, to decide why and to what end a body was incorporated. But it would be, to my mind, most unsatisfactory to have to follow such a course in order to identify the subject matter of constitutional power. Further, even if an object of a company seemed dominant at the date of incorporation, in the course of the company's existence it may cease to have significance and an object which seemed incidental at incorporation may become central to its current activities. In days of "diversification" in corporate industry this may prove a frequent phenomenon. (at p542)

27. The power quite obviously, in my opinion, is given to the Parliament to enable it by legislation to control amongst other things at least some of the activities of corporations which fall within its description. It seems to me that the activities of a corporation at the time a law of the Parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description. Thus, in my opinion, the identification of the corporation which falls within the statutory definition will be made principally upon a consideration of its current activities. (at p543)

28. To say that a corporation's description for relevant purposes will be determined by its activities does not mean, of course, that a corporation which to any extent engages in trade is a trading corporation. It is evident that the legislative power given by s. 51 (XX.) is not a power to legislate with respect to trading. It is a legislative power with respect to some corporations. But a corporation whose predominant and characteristic activity is trading whether in goods or services will, in my opinion, satisfy the description : and a corporation which does nothing but trade and, if it matters, was incorporated so that it could trade, i.e. exercise the trading powers of the constituent local government councils, is, in my opinion, properly described as a trading corporation within the constitutional power. It seems to me that the reason why a corporation trades as its sole or predominant and characteristic activity is irrelevant to the description of the corporation for present purposes, that is to say, the ends which such a corporation seeks to serve by trading are irrelevant to its description. As I have indicated, the purpose of the grant of legislative power includes the control of the corporate activities of the corporation : it is not so concerned with the motives which prompt those activities, nor the ultimate ends which those activities hope to achieve. If, upon that consideration, the corporation can fairly be described by reason of those activities, their extent and relative significance in the affairs of the corporation as a "trading corporation" it will, in my opinion, be nothing to the point that it is also a government or State or municipal corporation. The effect of the trading activities of such a corporation upon and in the community will not be lessened or necessarily affected by the fact that it is a State or municipal instrumentality. (at p543)

29. However, it was said that for a body such as the applicant to reticulate electricity bought by it in bulk is to perform a public service and not to trade. Of course, one of the justifications put forward for the entry of government into manufacture, trade or commerce is that the public will be better served by the government corporation than it would be by a non-government body seeking only profit or gain. But whatever the merit of such a claim, the fact that government, or a "government" corporation, conducts activities which are of their nature manufacturing, trading or commercial activities does not, in my opinion, alter the nature of those activities. This must particularly be so in relation to an Act made under a constitutional power which extends to enable the control of such activities conducted by government, or "government" corporations. Were it not for the express exception in s. 51 (xiii.) of the Constitution, the financial activities of a State bank which fell within the scope of banking would have fallen within the scope of that power. Nor could it, in my opinion, be denied that an incorporated State bank is a financial corporation within s. 51 (xx.) and, apart from any limitations which may flow from the exceptions in s. 51 (xiii.), may fall within the scope of Commonwealth power. Rich and Williams JJ. appeared so to think : see Bank of New South Wales v. The Commonwealth (1948) 76 CLR 1, at p 256 . Of course, it may be said that a State bank performs a public service, employing its funds directly for the benefit of the community rather than for the benefit of individual shareholders in its capital as in the case of what we call a "private" bank. But so to speak does not deny that it is a financial corporation or that its activity is banking. So, in the case of the applicant, to say that it performs a public service by reticulating electricity does not deny that it trades and, because of the extent of its trading activities, is a trading corporation. (at p544)

30. It was said that the prices for electricity charged by the applicant were minimal but of this in fact there was no evidence. Indeed, as I pointed out earlier, the large profits made by the applicant seemingly with regularity over a long span of years, make it difficult to believe that charges for electricity made by the applicant are either minimal or uneconomic, though they may be less than might have been or be charged if the applicant were not restrained by s. 419 (1) of the Act. But, although of assistance to denominate the applicant as a municipal corporation, the fact that the applicant the applicant as a municipal corporation, the fact that the applicant is to benefit the county district by its efforts - as I think, its trading efforts - does not, in my opinion, preclude its description as a trading corporation. (at p544)

31. It may be granted that the applicant may properly be styled a "municipal" corporation ; it is both the creature and servant of "local government" : but it is, none the less, in my opinion, a trading corporation within the statutory definition. It is easily demonstrated that the purpose of the applicant's incorporation and of its activities is the performance of what has come to be regarded as a local government function, its charter being to provide electricity at low cost to the ratepayer. But it is to achieve and satisfy this purpose by trading, both in electricity and in electrical goods and services. It buys and sells - an activity recognized by the Act itself as "a trading undertaking" (s. 418 (1) and (2) ). To say that it is a "municipal" corporation is, in my opinion, to say no more than that it is a government, or local government, agency ; or, put another way, that it is a municipal trading corporation. (at p545)

32. The power to levy a rate is pointed to as itself an indication that the applicant is not a trading corporation. I am unable to agree. Governments may enter into almost any field of commerce or industry. We have had experience in Australia of various examples of such government endeavours. When governments do so through corporate agencies - as, indeed, they usually do - capital may be provided by grant or loan out of general government funds or arrangements may be enacted to cast the capital burden on some section of the community thought to derive particular benefit from the corporation's activities. (at p545)

33. At times the corporate agency may be given power to levy rates or tolls as a means of drawing its finance for capital or recurrent needs from a part of the community which the activities of the corporation are meant to serve. The existence of such a power will not, in my opinion, determine the description which should be applied to the corporate agency according to its current activities. Consequently, the fact that the applicant is empowered to look to the ratepayer for contributions to its capital by means of a loan rate does not deny the trading character of the activities of the applicant or prevent it being described as a trading corporation. (at p545)

34. In my opinion, the power to borrow and the power to levy a rate for the repayment of moneys borrowed, whilst no doubt emphatic of the close association of the applicant with local government, does not require the conclusion that the buying and selling of electricity and electrical appliances and the servicing for reward of electrical installations and appliances, even at the cheapest rates, are not trading activities or the applicant which engages in these activities as its exclusive function is not a trading corporation. (at p545)

35. In my opinion, because of these considerations, the applicant is at the present time a trading corporation formed within the limits of the Commonwealth within the meaning of the Act. I would discharge the rule nisi. (at p545)

McTIERNAN J. This matter is an application for a writ of prohibition. The High Court has jurisdiction in the matter under s. 75 (v) of the Constitution. The application relates to proceedings pending in the Trade Practices Tribunal instituted by the Commissioner of Trade Practices. They are instituted in respect of alleged monopolization by the St. George County Council (prosecutor). The Commissioner joined this Council as a party to the proceedings. The corporate name of the Council, under s. 573 (1) of the Local Government Act, 1919 (N.S.W.), is "The St. George County Council" (the "Council"). (at p546)

2. The proceedings purport to be based upon s. 37 (2) (a) of the Restrictive Trade Practices Act 1971 (Cth). Section 37 is applicable only to "a corporation". By s. 5 of the Restrictive Trade Practices Act 1971, "'corporation' means a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed". The Council is not a foreign corporation or a financial corporation. It was formed within the limits of the Commonwealth. The question at issue is whether the Council is a "trading corporation" to which the legislature intended that the provisions of the Act, in which the words, "a corporation" are used, would be applied. The Act puts no express restriction on the application of the definition of "corporation". (at p546)

3. In the case Bradlaugh v. Clarke, it is said (per Lord Blackburn) (1883) 8 App Cas 354, at p 372 :

"All statutes are to be construed by the courts so as to give effect to the intention which is expressed by the words used in the statute. But that is not to be discovered by considering those words in the abstract, but by inquiring what is the intention expressed by those words used in a statute with reference to the subject matter and for the object with which that statute was made ; it being a question to be determined by the court, and a very important one, what was the object for which it appears that the statute was made."

The words of the definition are "a trading corporation" not any trading corporation. It can hardly be contended that the legislature intended any corporation which trades. The preamble of the Restrictive Trade Practices Act 1971 (Cth) expresses an object with which the Act was made. The object is : "To preserve Competition in Trade and Commerce to the extent required by the Public Interest". This is naturally an object directed to - that is, pertaining to - private enterprise. (at p546)

4. Turning to s. 35, the sort of business to which the provisions of the section seem to me to be applicable is private business, not a public undertaking supplying goods or services. I think the same comment can be made about s. 36. A limitation upon the general words "a trading corporation" in the definition of corporation arises from the context of ss. 35 and 36 respectively. I think that in each of those sections Parliament intended to legislate with respect to a free enterprise corporation and this ought to be so in the case of s. 37 - it is difficult to infer from the wording of the latter section that the words "a corporation" are not used in the same sense as in ss. 35 and 36. Where by legislation a body within the central government of a State, or a local authority, is supplier of goods or services within the State, I think it is too remote a deduction to draw from the general words "trading corporation" that the legislature intended to make such body amenable to the jurisdiction of the Trade Practices Tribunal to determine whether, in any of the respects covered by ss. 35, 36 or 37 of the Act, such body is acting contrary to the public interest ; thus putting it on the same footing as a private enterprise company supplying goods and services. (at p547)

5. The St. George County Council conducts an undertaking of the kind designated by the Local Government Act, 1919 (N.S.W.) as a "trading undertaking". It has been conducting the undertaking for many years. The undertaking was established for the benefit of the ratepayers of the municipalities that are the constituents of the Council's own area - the St. George County District. The undertaking is of the class described in the Local Government Act as the supply of electricity and the supply and installing of electrical fittings and appliances. When the Council was established the executive, pursuant to authority conferred by the Local Government Act, vested the Council with the powers and duties of a municipal council under the Act to establish, acquire and conduct "trading undertakings". The power does not extend to the supply and installing of electrical fittings and appliances as a separate undertaking. It includes power to purchase electricity and electrical fittings and appliances for the purposes of sale or hire. The Council obtains what it supplies in the course of its business from the State Electricity Commission. Section 419 of the Local Government Act, 1919 (N.S.W.) provides as follows :

"(1) Subject to the provisions of this Act, and in particular to making proper provision for depreciation and obsolescence of assets, and for reserves and for the payment of principal, interest, and expenses in respect of moneys borrowed for the purposes of the undertaking, the council shall endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible.

(2) Except with the approval in writing of the Minister, the council shall not supply electricity to any person in any part of its area upon terms or at rates different from those upon which it supplies electricity in similar circumstances to other persons within that part of its area."

(at p548)

6. The allegation of monopolization in the proceedings in relation to which the application for prohibition relates is made in respect of the supply of goods within the category of "electrical fittings and appliances". In my opinion the fact that the Council supplies electricity and other goods and is a corporate body does not expose any practice it carries out in the conduct of the business to the liability of being made the subject of proceedings under s. 47 of the Restrictive Trade Practices Act 1971 (Cth). The proceedings now in question were instituted under s. 47 (2) on the footing that the Council is the kind of corporation to which s. 37 applies - "a trading corporation formed within the limits of the Commonwealth". The Council conducts a municipal trading undertaking. This is not sufficient to put into the category of a "trading corporation" - a trading company which is incorporated. The Council does not supply electricity or electrical goods purposely to win sums of money as profits. If the Council's operation of the undertaking is revenue-producing that does not change the character of the enterprise from public to private. (at p548)

7. In my opinion the Trade Practices Tribunal does not have jurisdiction to deal with the proceedings in respect of which prohibition is sought for the reason that the Council is not a "corporation" within the meaning of the Act. The jurisdiction of the Tribunal conferred by s. 49 (1) does not extend to the proceedings. The Trade Practices Tribunal is an arbitral tribunal. A writ of prohibition lies against the Tribunal on any proper ground for the issue of the prerogative writ of prohibition. One such ground is lack of jurisdiction in the inferior court. This ground is applicable to an administrative tribunal. The Trade Practices Tribunal has commenced the hearing of the proceedings. It seems to me that there is a proper ground - lack of jurisdiction - for granting the present application. I would order that the order nisi granted by Mason J. be made absolute. (at p548)

MENZIES J. Under the Restrictive Trade Practices Act 1971-1972 (Cth), for a corporation to engage in the practice of monopolization is an examinable trade practice. The Commissioner for Trade Practices instituted proceedings under the Act before the Trade Practices Tribunal against the St. George County Council (the Council) claiming that by giving concessions by way of discount or subsidy upon the sale of electrical water heaters the Council was engaging in what the Act defines as "monopolization". The Council seeks prohibition against the Commissioner and the Tribunal on the ground that it is not within the terms of the Act because it is not a "corporation" as defined in s. 5, namely :

"'Corporation' means a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed ;"

a definition in which the draftsman obviously had regard to the terms of s. 51 (xx.) of the Constitution. In this case, however, no question arises as to the validity of the Act or of the constitutional powers of the Commonwealth. The question is simply whether the Council is a "trading corporation" within the meaning of s. 5 of the Act. (at p549)

2. It is, I think, of primary importance to examine the law under which the St. George County Council was established on 29th October 1920. It is Pt XXIX of the Local Government Act, 1919 (N.S.W.) which makes provision for the establishment of county councils in New South Wales. The procedure is for the Governor by proclamation to constitute municipalities or shires or parts thereof "as a county district for local government purposes" and to define the boundaries of the county district so constituted. It is expressly provided that it is sufficient that such a district is expressed to be for "local government purposes" without further definition : s. 561. For each county district so constituted there is a county council comprised of elected delegates : s. 562. It is provided by s. 563 (1) as follows :

"563. (1) A county council shall be a corporate body with perpetual succession and a common seal, and the provisions of subsection two of section twenty-two of this Act shall, mutatis mutandis, apply thereto. The body corporate shall continue to exist notwithstanding any vacancy or vacancies in its membership."

A county council must report annually to the Minister and to each shire and municipal council within its district : s. 563 (9). The functions of a county council are stated in s. 564 (1) as follows :

"564. (1) A county council may undertake any function delegated to it in accordance with this Act for the joint benefit of the areas included within the county district."

It follows that all county council powers are powers derived from shires and municipalities. Provision is made for the delegation of any of the powers of councils of constituent municipalities or shires to be exercised by a county council "for the benefit of the county district" : s. 564 (2) (2A) and (3) . Section 564 (4) (a) is as follows :

"Upon the proclamation of the delegation of powers or duties the county council shall have full power to exercise the powers and shall perform the duties so delegated ; and for that purpose it shall have all the powers which by law may be exercised by the council of an area in or in connection with the exercise of the delegated powers and the performance of the delegated duties and the provisions of any laws relating to areas, and their councils shall, mutatis mutandis, apply for the purposes of this Part to county districts and county councils : Provided that the power to levy rates or the power to borrow shall not be deemed to have been conferred upon a county council unless it is expressly mentioned in the delegation."

County council securities are trustee investments : s. 564A. Borrowing by a county council for the purposes of works of water supply or supply of electricity may be guaranteed by the Treasurer : s. 564D. A county council which has borrowed for works of water supply or for the supply of electricity may impose differential rates in cases where particular localities are specially benefited by the works : s. 564E. Where the parts of a county district are united, the council becomes the council of the united area and elaborate provisions are made for the succession : s. 565A. (at p550)

3. This short survey of the provisions of Pt XXIX satisfies me that, according to the law under which any county council is established, it is incorporated as a municipal corporation for "local government purposes" whatever its particular powers and functions may be at the time of its establishment or later. Furthermore, it appears to me that by virtue of s. 564 (4A) the precept stated in s. 419 governs the trading of a county council. Indeed both parties before us relied upon the provisions of s. 419 which is as follows :

"Subject to the provisions of this Act, and in particular to making proper provision for depreciation and obsolescence of assets, and for reserves and for the payment of principal, interest, and expenses in respect of moneys borrowed for the purposes of the undertaking, the council shall endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible." (at p550)

4. Upon the constitution of the Council there was delegated to it "the powers under sections 416 to 419, both inclusive, of the said Local Government Act, 1919, relating to the supply of electricity and the supply and installing of electrical fittings and appliances". By the same proclamation the Council was given power to borrow under the provisions of s. 181 a sum not exceeding 100,000, and it had delegated to it "the power to levy a loan rate, under and subject to the provisions of sections 181 and 124 . . . in connexion with the said loan of 100,000 pounds." (at p550)

5. Further delegations of power have, from time to time, been made to the Council but they all relate to the Council's electrical undertaking, the borrowing of moneys therefor, the levying of rates in connexion with such loans and the supply of electrical equipment to users of the power which the Council supplies. (at p551)

6. The submission of the Solicitor-General for the Commonwealth, who appeared for the respondents, was that the Council is and has always been a trading corporation. He relied exclusively upon the contention that this Council had been established for no purpose other than to trade and he refrained from submitting, in these proceedings, that a local government corporation which has local government purposes other than trading purposes is a "trading corporation" within the meaning of s. 5. (at p551)

7. The Solicitor's submission, to my mind, takes far too narrow a view of the character and purpose of the Council. The supply of water and electricity are commonly entrusted to municipal government bodies for obvious and strong reasons. Such undertakings require substantial capital outlay which is most conveniently provided by borrowers backed by Treasury guarantees and rating power. To carry on such undertakings requires the exercise of governmental powers such as those of entering upon and using or taking private land. Such undertakings require public supervision to ensure that the necessary monopoly powers are exercised in accordance with the public interest and for the purposes for which they were granted. Applying the foregoing general considerations to the case in point, the following features of the Council are to be observed. 1. First and foremost, the district of St. George was established and the Council was formed "for local government purposes" and the Local Government Act, in conformity with common sense and long usage, treats matters such as the supply of water and electricity for a municipal district as dominated by a local government purpose. It is because trading of a council is subordinate to its governmental purposes that the Act contains a section such as s. 419. It is this subordination of trading to community purposes that is, to my mind, the real importance of s. 419 in this case. It reveals the very nature of a council to which it applies. 2. The power delegated to the Council to rate land within the county district is a power entirely foreign to the character of a trading corporation ; that power signifies government. 3. The fact that the Council is formed as a county council and is the competent recipient of further governmental powers betokens both its original and existing character. It exists for local government purposes. A further delegation of powers, for instance to control building operations in the St. George District, would not change the character of the Council ; it would be but a further recognition of its character of a county council for local government purposes. 4. The power of the Treasurer to guarantee the Council's borrowing ; the fact that its loans are trustee investments are further indications, though by themselves slight, of the character of the Council. (at p552)

8. In short, the Council is unquestionably a corporation for local government purposes which has defined trading powers. (at p552)

9. Having so identified the Council, the question must then be faced whether it is properly to be described as a trading corporation. (at p552)

10. It seems to me that trading corporations were in 1900 a well-recognized classification of companies. This is readily apparent from the many cases which distinguish between the powers of trading and non-trading corporations - including municipal corporations - to make executory trading contracts not under seal. Trading corporations could make such contracts because as Dixon J. said in Johnsons Tyne Foundry Pty. Ltd. v. Maffra Corporation (1948) 77 CLR 544, at p 562 :

" . . . a trading corporation from its very nature must contract through its servants and agents in the ordinary course of its business as other traders do . . . "

A non-trading corporation could not make such a contract without the use of its seal. Its "very nature" differed from that of a trading corporation. In Halsbury's Laws of England, 3rd ed., vol. 9, pp. 5-6 the distinction between trading and non-trading corporations is conveniently drawn and corporations having statutory powers of local government are included in the classification there appearing of non-trading corporations. It may also be observed that in 1850 James Grant in his Treatise on the Law of Corporations classified "Municipal Corporations" separately from trading bodies and devoted 150 pages of his book to the consideration of municipal corporations. (at p552)

11. The difference between a trading corporation and a municipal corporation was noticed in this Court as early as 1908 in Huddart Parker &Co. Pty. Ltd. v. Moorehead when Isaacs J., in considering the language of s. 51 (xx.) of the Constitution, said (1908) 8 CLR 330, at p 393 :

" . . . it is always a preliminary question whether a given company is a trading or financial corporation or a foreign corporation. This leaves entirely outside the range of federal power, as being in themselves objects of the power, all those domestic corporations, for instance, which are constituted for municipal, mining, manufacturing, religious, scholastic, charitable, scientific, and literary purposes, and possibly others more nearly approximating a character of trading ; a strong circumstance to show how and to what extent the autonomy of the States was intended to be safe-guarded. The federal power was sufficiently limited by specific enumeration, and there is no need to place further limits on the words of the legislature." (at p553)

12. Moreover, municipal corporations, so called, were certainly known to the law as early as 1835 when the first Municipal Corporations Act was enacted in England. According to Halsbury's Laws of England, 3rd ed., vol. 24, p. 366, local administration of government has, since 1834, been based upon the following principles, namely :

". . . that local administration should be of duties prescribed by the central government ; that it should be by locally elected bodies ; that those bodies should exercise their functions over areas chosen primarily for administrative convenience ; that they should exercise them under the supervision of the central department or of a series of central departments appropriate to differing functions ; that new functions could be added by the central government, or old functions could be varied or re-shaped by the central rather than the local government ; and that the same area might be subject to the jurisdiction of more than one local authority, according to whether the function being exercised was more conveniently administered by a larger or a smaller local body or in a larger or a smaller area."

The Council is unquestionably based upon the foregoing principles. (at p553)

13. That a corporation trades is clearly insufficient by itself to bring it within the classification of a trading corporation. Not only authority but common usage establishes this. A university may trade - its bookshop is an example of this - but if incorporated it is not because of its trading within the classification of a trading corporation. A body such as a Board of Works, charged with the supply of water and the provision of sewage for a city, may sell water, but, should it do so, it would not, if it happens to be incorporated, thereby fall within the classification of a trading corporation. A church incorporated by Act of Parliament might, as part of its activities, run a co-operative shop, but were it to do so it would not be a trading corporation. The councils of many municipalities trade but they are not, if incorporated, trading corporations. A body such as the Snowy Mountains Authority sells electricity but I hardly think that it would be natural to call it a "trading corporation". That body and many other corporations which do trade are in essence public authorities. (at p553)

14. It is not my purpose to attempt to define all that falls within the limits of the classification of "trading corporation". Rather, I am concerned to indicate that the classification has limits and those limits are not to be ascertained simply by asking the question "Does the corporation trade?" As I have indicated, many corporations which do trade are clearly outside the limits of the classification and one group of corporations that is not comprehended is, in my view, corporations of an essentially different character, namely corporations for local government purposes. (at p554)

15. I have shown that the St. George Council is a corporation for local government purposes and, for the reasons which I have stated, it is my opinion that although it trades it is not a "trading corporation" for the purposes of s. 5 of the Restrictive Trade Practices Act. (at p554)

16. Accordingly I would make absolute the order nisi for prohibition. (at p554)

GIBBS J. By s. 37 (1) of the Restrictive Trade Practices Act 1971 (Cth) the engaging by a corporation in monopolization within the meaning of that section is an examinable practice for the purposes of that Act. Section 37 (2) defines what is meant by engaging in monopolization. Where the Commissioner of Trade Practices ("the Commissioner") has reason to believe, inter alia, that a corporation is engaging in an examinable practice, and he is of opinion that the practice is contrary to the public interest, he may institute proceedings in the Trade Practices Tribunal ("the Tribunal") under s. 47 in respect of that practice - s. 47 (2) . In such proceedings the Tribunal, if satisfied that an examinable practice is being engaged in, shall make a determination by which, inter alia, it determines whether the examinable practice is contrary to the public interest - s. 49 (1) (b). The Commissioner has commenced against the St. George County Council ("the County Council") proceedings in the Tribunal claiming that the grant by the County Council of a "subsidy" (or discount) on the price which it charges for electric storage water heaters sold by it for connexion to its electricity supply constitutes the examinable practice of monopolization as defined in s. 37. The County Council now seeks prohibition directed to the Tribunal, its President and the Commissioner prohibiting them from further proceeding with or upon those proceedings, upon the ground that the Tribunal has no jurisdiction to proceed to determine whether the practice of the County Council in granting the "subsidy" is contrary to the public interest under the provisions of s. 49 (1) (b), in that the County Council is neither a foreign corporation, a trading corporation formed within the limits of the Commonwealth nor a financial corporation so formed within the meaning of the Constitution, s. 51, pl. (xx.) and is in no way subject to the provisions of the Restrictive Trade Practices Act 1971. (at p555)

2. It was common ground that the question that now falls for determination is whether the County Council is a corporation within the meaning of the Restrictive Trade Practices Act 1971. By s. 5 of that Act, unless the contrary intention appears "corporation" means "a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed". It is not suggested that any contrary intention appears in any relevant section so as to exclude the definition of corporation contained in s. 5. The words of that definition echo those of pl. (xx.) of s. 51 of the Constitution - "Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth" - and were obviously intended to bear the same meaning as that constitutional provision. Clearly enough the Restrictive Trade Practices Act 1971 was enacted in reliance on the power conferred by pl. (xx.) and if it applied to corporations other than those referred to in pl. (xx.) its provisions would go beyond the limits of that power. (at p555)

3. It was not suggested that the County Council is a foreign corporation or financial corporation. The question is whether it is a trading corporation formed within the limits of the Commonwealth. (at p555)

4. County councils in New South Wales are constituted under Pt XXIX of the Local Government Act, 1919 (N.S.W.) (as amended) ("the Act"). So far as they are relevant the provisions of that part are as follows. The Governor has power by proclamation to "constitute as a county district for local government purposes any groups of wholes and parts of municipalities or shires, or of both municipalities and shires" : s. 561 (1). Upon the constitution of a county district, a county council for that district necessarily comes into existence. Section 562 (1) provides :

"For each county district there shall be a county council composed of the delegates elected as provided in this section."

The delegates are elected by the councils of the municipalities or shires which are in whole or in part included in the county district, and from among the members of the council concerned, that is, a delegate must be a mayor, deputy mayor, alderman, president, deputy president or councillor (s. 562 and s. 4, "Member of a council"). Section 563 (1) provides, inter alia, as follows :

"A county council shall be a corporate body with perpetual succession and a common seal, and may sue and be sued in its corporate name ; and shall, for the purposes and subject to the provisions of this Act, be capable of purchasing holding granting demising disposing of and alienating real and personal property, and of doing and suffering all such other acts and things as bodies corporate may by law do and suffer." (at p556)

5. The functions of a county council are those delegated to it in accordance with the Act for the joint benefit of the areas included within the county district (s. 564 (1) ). The delegation is made by the Governor, by proclamation (s. 564 (3) ). The councils of the municipalities and shires concerned in a district may request the Governor "to delegate to the county council the power to exercise or perform for the benefit of the county district any power or duty which by law those councils or any one of them may exercise or perform" (s. 564 (2) ). Where the request is made by a majority in number of the councils of the municipalities and shires concerned the Governor may proclaim the delegation (s. 564 (3) ). In some cases, not here relevant, a delegation may be made notwithstanding that no such request has been made (s. 564 (3) ). The effect of the proclamation of a delegation is dealt with by s. 564 (4) as follows :

"(a) Upon the proclamation of the delegation of powers or duties the county council shall for the benefit of the county district have full power to exercise the powers and shall perform the duties so delegated ; and for that purpose it shall have all the powers which by law may be exercised by the council of an area in or in connection with the exercise of the delegated powers and the performance of the delegated duties and the provisions of any laws relating to areas, and their councils shall, mutatis mutandis, apply for the purposes of this Part to county districts and county councils : Provided that the power to levy rates or the power to borrow shall not be deemed to have been conferred upon a county council unless it is expressly mentioned in the delegation.

(b) Except where otherwise expressly provided in this Act a council concerned shall not undertake any function delegated
to the county council."

(at p556)

6. The provisions of Pt XXIX generally make it clear that a county council is a municipal body, set up by the Governor under the authority of the Act for the purpose of exercising or performing powers or duties which would otherwise be exercised or performed by the municipal or shire councils within the county district. To indicate the public nature of a county council, and its close connexion with the municipal and shire councils within the county district, it is sufficient to refer to some only of the other provisions of the part. Where a county district is constituted for the purpose of the supply of water, gas or electricity in bulk only, and the Governor delegates to the county council the power to exercise or perform, for the benefit of the county district, so much of any power or duty which by law those councils or any one of them may exercise or perform, as relates to the supply of water, gas or electricity in bulk only, the following consequences follow - each constituent council shall have power to exercise or perform so much of any power or duty as has not been delegated to the county council ; a county council may with the consent of the council of an area supply water, gas or electricity, otherwise than in bulk, to persons within that area ; the county council shall sell and deliver the water, gas or electricity to the constituent councils and a constituent council shall not, except with the consent of the county council, supply water, gas or electricity which has not been bought and received from the county council (s. 564 (2A), (4A)). Where the powers and duties in relation to any works (other than works for the purpose of the supply of water, gas or electricity in bulk only) which are vested in, or controlled and managed by, the council of an area wholly or partly included in a county district are delegated to the council of that county district then, to state the matter broadly, all property, rights and liabilities in connexion with those works are transferred to the county council, and employees wholly or principally employed in connexion with such works are transferred to the service of the county council (s. 564B). Where the boundaries of a county district are altered by adding an area or part of an area, the council of that county district shall have all the functions, powers and duties which it was entitled to exercise immediately before the alteration and such functions, powers and duties shall be deemed to have been delegated to the county council in respect of the area or part added to the county district ; conversely when the boundaries are altered by excluding the whole or part of a constituent area without at the same time adding it to another county district the functions, powers and duties exercisable by the county council immediately before the date of the alteration of the boundaries shall be limited to the county district as constituted after that date and those functions, powers and duties shall be exercisable and performable within the excluded area by the council of the shire or municipality of which the excluded area forms part (s. 54 (3A), (3C)). The Treasurer may guarantee the due repayment of money borrowed by a county council for the purpose inter alia of works for the supply of electricity (s. 564D). A majority of the councils concerned may make an agreement respecting the whole or any part of the powers delegated to the county council, and in particular, prescribing the manner in which the expenses of the county council, other than expenses in respect of a matter for which the county council is authorized to rate, are to be met by the municipal and shire councils concerned ; in the absence of an agreement the county council may assess its expenditure upon the constituent councils in the manner prescribed by the Act (ss. 565, 572B). Where a power of rating is delegated to a county council it may levy the rate directly or (except in the case of a loan rate) may require the councils concerned to act as its agent in levying the rate (s. 572 (1) ). (at p558)

7. The St. George County District was constituted by a proclamation dated 26th October 1920 and published in the Government Gazette on 29th October 1920. It comprised the areas of the municipalities of Rockdale, Kogarah, Hurstville and Bexley. The municipality of Bexley has since been merged in Rockdale and part of Rockdale (Mascot Airport) has been excluded from the St. George County District. By the proclamation of 26th October 1920 the Governor delegated to the County Council all the powers under ss. 416-419, both inclusive, of the Act relating to the supply of electricity and the supply and installing of electrical fittings and appliances, the power to borrow, under and subject to the provisions of s. 181 of the Act, a sum not exceeding 100,000 and the power to levy a loan rate, under and subject to the provisions of ss.181 and 124 of the Act, in connexion with the loan of 100,000. By certain later proclamations made in 1922 and 1923 there have been delegated to the County Council the powers and duties contained in the following sections : s. 110 (as to the trading fund in respect of a trading undertaking) ; ss. 173-200 (as to borrowing money) ; s. 482 (power to provide buildings for public purposes) ; s. 506 (as to the extension of electricity works and the supply of electricity outside the area) ; ss. 516-517 (as to contracts) ; ss. 518-520 (as to the sale, exchange or lease of property) ; ss. 524-525 (power to enter land and do works) ; s. 528 (power to insure) ; s. 529 (power to do acts necessary for the proper exercise and performance of its powers and duties) ; and ss. 531-536 (the power to acquire land). Further, by a proclamation of 11th June 1947 the County Council's borrowing and rating power was increased ; the Governor then delegated to the County Council the power to borrow in accordance with ss. 173 and 176-200 of the Act such sums as might be required from time to time for the purposes of exercising the powers delegated to it ; and the power to levy loan rates under and subject to the provisions of Div. 4 of Pt VII and s. 124 of the Act in connexion with any loan so raised. The most important function exercised by the County Council is the supply of electricity in accordance with ss. 416-419 and the other delegated powers and duties are ancillary to this function. (at p558)

24. It was said that the judgment of Isaacs J. in Huddart Parker &Co. Pty. Ltd. v. Moorehead (1909) 8 CLR, at p 405 disclosed the purpose of the framers of the Constitution in conferring upon the Commonwealth legislative power in respect of "trading corporations" and that this purpose was such as to suggest that the County Council should not be regarded as such a corporation. His Honour did, in the passage referred to, speak of the need felt at the time of Federation to control the activities of trading and financial corporations ; he referred to the magnitude and wealth of such corporations and the great power thus conferred upon them and which might not be exercised for the public good. His Honour was no doubt there directing his mind to the agencies of private enterprise but the facts of this case suffice to show the magnitude of operations and the wealth of a corporation such as the County Council. If the allegations of the Commissioner of Trade Practices prove to be wellfounded there would seem to exist no less need for control over such a corporation than over ordinary commercial corporations. I doubt whether this consideration is properly of weight in the interpretation of s. 5 of the Restrictive Trade Practices Act, but to the extent that the prosecutor sought to rely upon what was said by Isaacs J. I would regard his Honour's observations as tending rather to the contrary. (at p574)

25. It is for these reasons that I would discharge the rule nisi. (at p574)

Orders

Rule nisi for prohibition made absolute.
Respondent Commissioner to pay
prosecutor's costs.