State of New South Wales & Ors v Commonwealth of Australia
[2006] HCATrans 233
[2006] HCATrans 233
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S592 of 2005
B e t w e e n -
STATE OF NEW SOUTH WALES
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Perth No P66 of 2005
B e t w e e n -
STATE OF WESTERN AUSTRALIA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Adelaide No A3 of 2006
B e t w e e n -
STATE OF SOUTH AUSTRALIA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Brisbane No B5 of 2006
B e t w e e n -
STATE OF QUEENSLAND
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Brisbane No B6 of 2006
B e t w e e n -
AUSTRALIAN WORKERS UNION
First Plaintiff
AUSTRALIAN WORKERS UNION OF EMPLOYEES QUEENSLAND
Second Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Sydney No S50 of 2006
B e t w e e n -
UNIONS NSW AND QUEENSLAND COUNCIL OF UNIONS
First Plaintiffs
PUBLIC SERVICE ASSOCIATION AND PROFESSIONAL OFFICERS’ ASSOCIATION AMALGAMATED UNION OF NEW SOUTH WALES AND NEW SOUTH WALES LOCAL GOVERNMENT, CLERICAL, ADMINISTRATIVE, ENERGY, AIRLINES & UTILITIES UNION AND ELECTRICAL TRADES UNION OF AUSTRALIA, NEW SOUTH WALES BRANCH AND NATIONAL UNION OF WORKERS, NEW SOUTH WALES BRANCH AND NEW SOUTH WALES TEACHERS FEDERATION AND QUEENSLAND TEACHERS UNION OF EMPLOYEES AND COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION – QUEENSLAND BRANCH (CEPU ELECTRICAL DIVISION)
Second Plaintiffs
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Melbourne No M21 of 2006
B e t w e e n -
STATE OF VICTORIA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
HEYDON J
CRENNAN J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON WEDNESDAY, 10 MAY 2006, AT 10.19 AM
(Continued from 9/5/06)
Copyright in the High Court of Australia
__________________
GLEESON CJ: Yes, Mr Solicitor.
MR BENNETT: May it please the Court. I was dealing yesterday with section 2.3 of my submissions and the distinctive character theory. There is one irony in the way the distinctive character theory is put against us and that is that, on at least one of the versions that is put of it, it is said that one looks for something distinctive about the trading or financial or foreign aspect of the corporation or something distinctive about the fact that it is a corporation, so the latter part of the test no doubt authorises most of what is in the companies legislation about general meetings and shareholders and duties of boards of directors and so on.
Of course, if one characterises it that way, one produces almost exactly the opposite result to that contended for by New South Wales in relation to the internal management theory which says that the Commonwealth may not interfere with anything internal to corporations, only the external things they do. One gets exactly the opposite result. Nothing turns on that that. One can put arguments in the alternative. But it is interesting that they do produce precisely the opposite result in that area.
One interesting consequence of that is that my learned friend, Mr Walker, submits that relationships with employees are in the internal category but those who support the distinctive character approach say that it is not part of the distinctive character of corporateness, or whatever word one wishes to use.
May I return to what I was dealing with yesterday which is the width of the submission because it has been said that virtually everything a trading corporation does will relate either to its trading activities in some way or to its character as a corporation, leaving only the rather trivial extreme examples put by South Australia about soup kitchens and so on, which I will come to when I deal with that in a later section.
It is of interest that in Tasmanian Dam 158 CLR 1 both Justice Deane and Justice Dawson, who took different views of course on the result in the case, were of the view that a test which involved looking to the trading character would cover virtually everything. If one starts with Justice Deane at page 270, after discussing the fact that a law can possess more than one character, the familiar theory flowing from a large number of cases, his Honour at point 6 of the page at the beginning of a long paragraph says this:
A law which applied only to cobblers (identified by reference to their trade) and prohibited them from engaging in certain activities away from their lasts could not properly be characterized as a law with respect to the boot‑making activities of cobblers; it could, however, properly be characterized both as a law with respect to cobblers and as a law with respect to the prohibited activities. Likewise, a law which applies only to trading corporations (identified by reference to their character as such) and prohibits them from engaging in certain non‑trading activities cannot properly be characterized as a law with respect to the trading activities of trading corporations; it can, however, properly be characterized both as a law with respect to trading corporations and as a law with respect to the prohibited activities. Indeed, the position is plainer in the case of the trading corporation than in the case of the cobbler for the reason that one can readily isolate the non‑trading activities of the cobbler from his boot‑making work in a manner in which it is quite impossible to isolate the non‑trading activities of a trading corporation from its trading activities.
Justice Dawson, who of course took the other approach, held the legislation invalid and even that the reference to “trading” in the definition was insufficient, said at the bottom of page 316:
In the present case it is apparent, in my view, that there is no significance in the way in which s. 10 of the Act relates to corporations in the fact that they are trading or foreign corporations or, indeed, in the fact that they are corporations at all.
So he is putting both parts of this test –
They are selected merely as pegs upon which Parliament has sought to hang legislation on an entirely different topic –
and while that is a pejorative expression, it is merely a pejorative expression for what this Court has authorised in many cases, including CLM –
If the question is asked whether s. 10 is in fact a law dealing with trading or foreign corporations or dealing with some other subject and applying it to trading or foreign corporations, it admits of only one answer. The section is bereft of any attribute which connects it with corporations other than the fact that the command which it contains is directed to trading and foreign corporations. That is not sufficient to make it a law with respect to corporations –
He goes on to refer to section 10(4) which tried to confine it to trading matters, and his Honour at point 8 of the page, at the second sentence in the last paragraph, says this:
That subsection is an attempt, if all else fails, to confine the operation of s. 10 to the trading activities of a trading corporation, evidently in the hope that to do so would transform the operation of the section into that of a law with respect to trading corporations. The attempt is a transparent one, for even if the activities which s. 10 proscribes are confined to activities for the purposes of a trading corporation, it is nevertheless not a law in which the character of a trading corporation has any significance.
His Honour’s reason for saying that appears in the next sentence:
Activities so confined are not necessarily trading activities. Ultimately anything a trading corporation does is for trading purposes, so that the attempt to narrow the operation of s. 10 by the application of sub‑s. (4) achieves little if anything.
So even although, as I say, his Honour had a view which was a dissenting view on which we do not propound, he too accepted that ultimately everything, or virtually everything, a trading corporation does is going to relate to its trading activities, and we add the gloss “or to its character as a corporation”. The only exceptions to that are what I will characterise as the South Australian exceptions which I will deal with later. They are a very narrow class which can justify a major rekindling of the whole subject in order to deal with them.
So for those reasons we submit that the argument based on the necessity for legislation to deal with corporations and their distinct character as traders or their distinct characters as corporations or, for that matter, putting it together, their distinct character as trading corporations simply does not operate. If it does, it does not narrow the field anyhow because, subject to the South Australian exceptions, it covers the same field as the other matters.
Now, 2.4 is very brief. That is the proposition put in detail in the Tasmanian submissions and referred to and partially adopted in some of the other arguments and, as I said in opening, the short answer to it is the three letters CLM. We note that no one has sought leave to overrule CLM and we submit it is clear authority of this Court rejecting the proposition that one cannot have clauses which select powers and limit the Act to those powers and thus brings it within them.
GUMMOW J: What is the citation of CLM?
MR BENNETT: It is (1976‑1977) 136 CLR 235. I do need, however, in dealing with it to deal with one case before it and one case after it to explain how we put the proposition.
The case before it is Strickland v Rocla Concrete Pipes (1971) 124 CLR 468. To illustrate the proposition which these cases establish, might I hand to your Honours a diagram. Let me assume for the purpose of this argument the objective command test. The argument applies equally to whatever the test is but I have taken that one because that is the simplest and easiest to use. This is not directed to the correctness or incorrectness of that test so it assumes the first proposition – that a section saying no trading corporation shall steal is valid. We also accept, as a number of cases have said, proposition B – that an Act which says “No person shall steal” is invalid. One cannot defend it in relation to corporations and say, well that has a valid application in relation to trading corporations and aliens and other particular groups.
KIRBY J: What about “No person shall steal from a corporation”?
MR BENNETT: Your Honour, I am going to come to that. I will be submitting that that is valid too, but that is in a different section of my argument. This argument is not concerned ‑ ‑ ‑
KIRBY J: As long as “corporation” in there, you say whether a subject or object or in any way reasonably connected with the subject of the legislation, that is enough.
MR BENNETT: Your Honour, it is a much more complicated series of tests than that.
KIRBY J: I think it is better that you deal with it in your time.
MR BENNETT: Yes, I will deal with that in section 4 of my argument. This part of the argument is not concerned with that. This merely assumes – and one may need to substitute – it should be “No trading corporation”, of course, not “No Company” – something which brings it within whatever the test is.
This part of the argument is concerned with multiple selection, not with what the test is. We accept, as I say, that a general law in the form of B is invalid and one does not say let us read it down within the various heads of constitutional power on its own. Now, example C is the one which I am concerned with. That is where section 1 says “No person shall steal”, section 2 says “This Act applies only to” and I have put a random list there of powers. Any powers could have been selected. Let us assume for the purpose of this argument that each of those would be sufficiently connected with the relevant power, but that is not what I am dealing with. What I am dealing with is the technique. Then section 3 says “s.2 does not limit s.1” in my hypothesis.
Now, what you say about that is this, that if one did not have section 3 there, that would be valid and that is CLM and CSL but section 3 if invalid. If it were valid it would bring down sections 1 and 2 because, in effect, it negates section 2 and that is what Strickland decided. In Strickland there was an Act in the form of my example C with the section saying that the limiting section did not limit the operative section and our submission about Strickland is that it is that ultimately which brought the Act down.
GLEESON CJ: In order to understand Strickland it is necessary to understand that the legislation took the form it did, as appears from the judgments, because it was assumed at the time the legislation was drafted that there would be a referral of State powers or complementary legislation of some kind.
MR BENNETT: Yes.
GLEESON CJ: The legislation was drafted upon an assumption that turned out to be incorrect.
MR BENNETT: Yes.
GLEESON CJ: That is why it took the form it did.
MR BENNETT: Yes. Your Honour, I will not spend a lot of time on Strickland (1971) 124 CLR 468. The section is set out at page 483 and your Honours see section 7(1), in the restrictive practices legislation, said:
The restrictions . . . include restrictions and practices that –
and then there was a connection put forward and then a series of constitutional powers:
(a)in the course of trade or commerce with other countries or among the States –
I do not worry about (b), (c) concerned authorities of the Commonwealth, (d) concerned Territories and (e) concerned Territories. So there is an attempt to limit it to three powers and then ‑ ‑ ‑
GUMMOW J: The point the Chief Justice was raising appears at page 472 in Mr Hughes’ argument at about point 4:
It was assumed that the States would pass complementary legislation. Section 35 was cast in general terms –
et cetera.
MR BENNETT: Yes. Subsections (2) and (3) were an attempt to introduce the corporations power and I will not worry about those for the moment. They did it in a somewhat complex way. The provision which brought down the Act was subsection (4) which said:
The preceding provisions of this section shall not be construed as –
(a) limiting the operation of this Act –
and your Honours recall that at the top of the page section 7(1) had the word “include”. Once one does that, clearly, invalidity must follow and that is what the Court said. Subsection (4) might as well have said, “The preceding subsections shall not be given any operation. Let us ignore them”. It might as well have said that.
GLEESON CJ: You might be overstating it when you say “clearly”. That is what Chief Justice Barwick said he thought was the hardest part of the case. There was a problem about section 15A.
MR BENNETT: Yes, there is, your Honour. There is a problem about applying section 15A to provisions in this sort of form and the very difficulty of doing that raises the Pidoto problem that there are so many ways one can do it that the Court is being asked to legislate. But the important point is that when one goes to the judgments, particularly of Justices Menzies and Walsh, what one sees is that they relied heavily on section 7(4).
The Chief Justice took a slightly different view. He regarded the way these provisions were drafted as creating almost a grammatical impossibility of construing what they applied to. In any event, the particular formula, bearing in mind section 7(4) and bearing in mind that it was not a definition clause, resulted in it failing. At page 495, point 9 the Chief Justice stressed that:
[Section 7] is not a definition section. Its terms cannot simply be applied to some word or expression in the substantial provisions of the Act in order to give that word or expression a particular meaning.
Or put differently, at point 3 of the page, if your Honours see the words “of the section” in the left‑hand margin, adjacent to that his Honour says:
Nor is there anything in the section in my opinion which forbids its application in a distributive fashion over the classes of trade which are constitutionally significant . . . Whilst, as I have said, nothing in the section precludes a disintegration or a distribution of its elements, without the presence of s. 7 (1) (a), the Court in my opinion would not be warranted in treating the restrictions as subdivisible into restrictions in relation to the various forms . . . nor the persons into foreign corporations –
et cetera. What his Honour appears to be saying is one can do it in that way but the drafting has not achieved it.
GLEESON CJ: If the Commonwealth wants to forbid a certain kind of activity, putting corporations to one side altogether, presumably the Commonwealth can pass a law and say, “This law applies to that activity in lighthouses, to that activity in Commonwealth places, to that activity in Territories” and so forth.
MR BENNETT: That is my submission, your Honour. CLM establishes that, if one needs a case establishing it. CLM is R v The Judges of the Australian Industrial Court and Another; Ex parte CLM Holdings Pty Ltd (1977) 136 CLR 235. This case involved a section which appears at page 241 where definition sections refer to:
“a body corporate that –
(a) is a foreign corporation;
(b)is a trading corporation formed within the limits of Australia or is a financial corporation so formed;
(c)is incorporated in a Territory –
et cetera.
HEYDON J: Is not the key section section 6(2)?
MR BENNETT: I am just trying to find that, your Honour.
HEYDON J: That appears in part on page 245.
MR BENNETT: Yes:
When s. 6(2) and (3) give the Act an extended operation by providing that the Act (or Div. 1 of Pt V) shall have the effect it would have if the reference to “corporation” included a person not being a corporation, the result is that the relevant sections are to be read as if they were expressed in the form “corporation and a person not being a corporation”.
Section 53(a) is then read.
HEYDON J: Justice Mason summarises section 6 in the middle of page 244.
MR BENNETT: Yes. That is a convenient summary of it, your Honour. It is read:
if references to “trade or commerce” were confined to trade or commerce –
of the types described -
if certain sections . . . were confined in their operation to –
particular aspects –
if the word “corporation” included –
various things and so on. Justice Mason, as he then was, at page 245, point 7, after setting out the composite section, the hypothetical composite section says:
It is apparent then that, quite independently of the application which s. 79 (a) has to s. 55, s. 79 (a) has an application to s. 53 and to other sections in Pt V once the Act is given the additional operation . . . So understood s. 79 (a) is supported by the heads of constitutional power on which s. 6 (2) and (3) are based.
GLEESON CJ: It is a bit like doing what conveyancers used to do when they would say “pursuant to all powers thereunto him enabling”.
MR BENNETT: Yes, it is, your Honour. Well, if I can digress for a moment, my late father, as a solicitor in drafting memorandum and articles of association, had a standard clause he would put in articles which said at the end of the other list “to carry on the business of” and then followed the current index to the pink pages of the telephone book. Now, that was a technique which was used by others I think at that time too, and it is very much the same sort of thing. It is to give one the widest power one can have without using general words to achieve the objective which might be thought in those days of ultra vires to have had other problems.
GUMMOW J: Mr Solicitor, this is a ferocious attack on Tasmania’s submissions, is it?
MR BENNETT: Yes, your Honour, I hope so.
GUMMOW J: But does Tasmania refer to CLM?
MR BENNETT: No, your Honour
GUMMOW J: That is all you have to say, is it not?
MR BENNETT: That is what I said in opening, your Honour, and that really is the – Tasmania has not referred to it. There is no application to overrule it, and the whole of their submission is CLM is wrong; that is all they are saying.
GUMMOW J: But they do not say that, do they?
MR BENNETT: They do not say that, but that is the effect of what they say.
GUMMOW J: They stop at Strickland. That is their problem.
MR BENNETT: Yes, it is, your Honour. Justice Mason distinguishes Strickland at the top of page 245 where he says:
Although the section is somewhat complicated it has its genesis in the unhappy fate which befell s. 7 of the Trade Practices Act 1965‑1969 in Strickland v. Rocla Concrete Pipes Ltd. The meaning of the section is, however, reasonably clear. It gives to the Act or parts of the Act three different applications: first, an application in accordance with its terms; secondly, an application in accordance with s. 6 (2) and thirdly, an application in accordance with s. 6 (3).
Then he goes through the extended operations and it is the passage to which I have referred. His Honour’s judgment is in effect the judgment of the Court. Every other Justice, I think I am correct in saying, agrees with it in full. The Chief Justice at page 238, Justices Jacobs and Murphy at page 247, and Justices Stephen and Gibbs at page 239. So every Justice agrees with the judgment of Justice Mason.
So returning to my diagram, the technique of drafting used there – and as I say, it is not intended to relate to the particular substantive applications which may or may not be sufficient to bring them within the particular powers – but the technique of drafting is one which, in my respectful submission, is valid and it totally answers the argument that one has to look at the Act as a whole and say, “Is this an Act about corporations?” One does not do that. One looks at the particular application and the applications selected by the sections which limit it to particular powers and, to the extent of those applications, it is an Act relating to trading or financial corporations, an Act relating to Territories, or whatever the particular power is. It is no answer to ‑ ‑ ‑
KIRBY J: You still have to fit within the constitutional words “with respect to”.
MR BENNETT: Yes, your Honour, I do. As I say, I am coming to that argument. All I am dealing with at the moment is the technique of relying on multiple constitutional powers. What Tasmania says is that if one took out the references to “corporation”, the Act would clearly be an Act on a totally different subject and so on, therefore it is not an Act in relation to corporations. It is a novel argument to say if one takes out the reference to X, it is not an Act in relation to X. That really only has to be stated in that form to be rejected. The point is there is nothing wrong with an Act having a distributive construction to bring it within different constitutional heads of power. That is all I need to say about 2.4.
Now, I can also be brief in relation to 2.5, the South Australian argument. I need to explain, because of the way they dealt with it, the partial concession in paragraph 225 of the Commonwealth’s submissions because the concession was misconstrued in the submissions of my learned friend, the Solicitor for South Australia. South Australia had advanced a narrow test about the meaning of the word “trading” in relation to trading corporations which was a test which did not extend to things done for the purposes of trade. It was confined, in effect, to things done in trade, rather like the reliance on the word “in” trade and commerce in Nelson’s Case, although here of course we do not have that word.
Now, what we said in paragraph 225 was the Commonwealth accepts that on the narrower test advanced by South Australia it would not be possible to read the Act down. What that is intended to mean is simply this, that if one said the Act is valid in its application to trading activities but not in relation to things done for the purpose of trade so as, rather, to pick up the view of Chief Justice Gibbs in Tasmanian Dam that digging a dam is not for the purpose of trade even if it is for the purpose of generating electricity which you are going to sell, if one takes that sort of narrow approach and divides it clearly, the division is totally unmanageable and severance is not possible. That is all we were conceding. We were not to be taken as conceding that if “trade” is given its broader meaning that necessarily applied.
GLEESON CJ: If you compared this legislation with section 52 of the Trade Practices Act, you would see the point that South Australia are making. Section 52 of the Trade Practices Act says:
A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive –
Another interesting question is to relate that to section 51(i) of the Constitution. That plainly is not limited to interstate trade or commerce, but that is a prohibition directed towards the activities of corporations provided there in trade or commerce.
MR BENNETT: Yes, and the word “in” was given a specific meaning by this Court in Nelson. I think the example referred to in one of the judgments was the truck driver engaged in interstate trade who gives a misleading or deceptive hand signal and causes an accident. Now, that is not misleading or deceptive conduct in trade and commerce because, although the truck driver may be engaged in interstate trade and commerce, the particular conduct is not misleading or deceptive conduct in that trade and commerce.
In the case itself, of course, a statement by a foreman to a labourer saying, “That platform is safe”, when it was not, was held not to be a misleading or deceptive statement in trade and commerce. But that arises because of the peculiarities of the word “in” in section 52 and, of course, it also came from the heading to the division which concerned consumer protection. But that just does not have any relevance here.
What South Australia does is take the distinctive character test of trading activities of trading corporations and then narrows that down to the things done in the trade itself, picking up the word “in” by some sort of analogy, although it is not there from Nelson’s Case and cases like that, and saying if something is done outside that, if it is merely done for the purpose of that, it is not part of the trading activity. That would create, in our respectful submission, an unmanageable breaking down of what the Act covers and does not cover, and that was the point of our concession about severance in relation to that. But once it is put in the broader sense, the concession simply does not operate.
The other thing I want to say about the South Australian submissions is equally brief. It is this, that South Australia gives examples of things which it rather assumes would be trading corporations – and there may be a question about it – things such as charities, hospitals, schools and so on. In some cases those bodies may be trading corporations and in some they may not, but he then says, what about the non‑trading activities of those bodies? If the Salvation Army trades by having a shop, does it mean it is trading when it operates its soup kitchen? He give examples of hospitals which have hypothetical doctors who only treat public patients – I do not know that any such hospitals exist – and says one cannot control under the corporations power the doctors who are dealing only with public patients but one can with doctors who are only dealing with private patients. He also talks about municipal councils and their local governmental roles.
We say those extreme examples can be dealt with in a number of ways. One way they can be dealt with is to say, when one looks at what is a trading corporation, one has to have some substantial proportion of activities, or at least a proportion that is not insubstantial. So when one says the Salvation Army or the Red Cross is a trading corporation, that may well be a doubtful proposition. It may depend on the particular facts. Might I remind your Honours of what was said in R v Federal Court of Australia; Ex parte Western Australian National Football League (1978‑1979) 143 CLR 190.
GUMMOW J: What are we are reading this well‑known case again for, Mr Solicitor?
MR BENNETT: Your Honour, to show that the test in relation to activities has a qualification. It is a very short passage. At page 234 Justice Mason, as he then was, says this:
Not every corporation which is engaged in trading activity is a trading corporation. The trading activity of a corporation may be so slight and so incidental to some other principal activity, viz. religion or education in the case of a church or school, that it could not be described as a trading corporation.
That deals with most of my learned friend’s examples. May I add to that this proposition, which we submit is a slight extension to what his Honour says there, that is that if the principal activity is concerned with the exercise of governmental authority, as in the case of a municipal council, in making this judgment one would give even more weight to that activity. So one would not say because it collects the garbage and charges for it a municipal corporation becomes a trading corporation.
GLEESON CJ: If the St Vincent De Paul Society were incorporated, it would not necessarily be a trading corporation just because it had shops at which it sold second‑hand clothes.
MR BENNETT: Precisely, your Honour. If on the other hand ‑ ‑ ‑
HAYNE J: Which shows the difficulty of the evolution that has occurred, and is noticeable in the WAFL Case at 233, because you see evolving from what Sir Garfield Barwick said in St George a test which just goes another step forward and then another step and so on.
GUMMOW J: Thereby digging the pit for the Incorporation Case actually.
MR BENNETT: Yes, and I am going to have some submissions about the history.
GUMMOW J: Because you have corporations wandering in and out of power.
MR BENNETT: Yes. Your Honour, people can wander in and out of power. A person can marry and divorce and marry and divorce. A person may cease to be an alien. A person may cease to be an immigrant or may leave Australia and remigrate. There are many powers that one can go in and out of in the course of one’s existence. There is nothing surprising about that.
GUMMOW J: Well, it is because it is linked to the decline of the doctrine of ultra vires ‑ ‑ ‑
MR BENNETT: Yes, it is, your Honour.
GUMMOW J: ‑ ‑ ‑ which was extremely strong in 1900.
MR BENNETT: Yes, it was, your Honour, and that has been said to be part of the ‑ ‑ ‑
GUMMOW J: Suggesting that the corporation was stamped at birth.
MR BENNETT: That is part of the changing denotation – that is discussed by the Chief Justice Sir Garfield Barwick at page 208 and following where the decline of ultra vires was very much a factor in relating trading corporation to activities rather than to purposes and ‑ ‑ ‑
HAYNE J: On one point of view, if there has been any change in the application of the term “corporations” over the last century, it has been brought about by the emergence of the true one person corporation as distinct from the Salomon arrangement, which was seven, and the decline of ultra vires.
MR BENNETT: Yes.
HAYNE J: You have gone from companies to individuals. You have gone from companies formed with an object to companies formed with as much capacity as the natural person. Now, that is a question of evolution of application of the term.
MR BENNETT: Yes, and it is that change which was the changing denotation which led to the decision ‑ ‑ ‑
HAYNE J: But non constat that trading or financial has seen any evolution. It may, it may not, and at some point you are going to have to confront that and confront it directly, Mr Solicitor.
MR BENNETT: I am going to, your Honour. I will go to the leading 19th century cases to show that – to look at what is trading, to define the activity, one may need to go to some of that but one looks at it, as was said in Western Australian Football League, from the point of view of activity.
HAYNE J: You are not understanding me. The point that I suggest you need to look at directly is not what activities are or are not trading, but whether trading or financial corporations are defined by their activities or are to be identified otherwise.
MR BENNETT: No, your Honour, we submit, subject to the qualification which Justice Mason put at page 234 of the West Australian Case, where the purpose is so dominant that the fact that a small part of the activities may constitute trading activities does not change it. A religious institution might be a good example of that. The fact that there is a church shop outside the church is unlikely to make the religious institution a trading corporation and one can say the same thing about charities and, for that matter, municipal councils.
GUMMOW J: What happens when it stops trading and is wound up? Is it outside power then, is it? It is in the process of winding up.
MR BENNETT: No, your Honour. Once the power attaches to it, the power extends to dealing with the consequences of it being within power, and at least under the incidental power one would get that far.
HAYNE J: The pre‑trading organisation, the shelf company incorporated for a single purpose of trade, in or outside power?
MR BENNETT: In, your Honour. Well, if it never trades or if it trades – I am sorry your Honour, one has to ask what it does.
HAYNE J: Do you hang your hat entirely on the proposition that activities are essential?
MR BENNETT: They are what define the nature of a trading corporation, yes, your Honour, but that is not to say that the power may not extend in some cases to a corporation which is going to trade, which is prospectively a trader. The incidental power may extend to the object before and after it actually has the characteristic if only because that is necessarily incidental to it for all sorts of purposes. Fencott v Muller is an example of that, where the Court said purpose is relevant where there are no activities, and in a sense that is the answer to your Honour Justice Hayne’s question.
HAYNE J: So the test is mixed: purpose sometimes, trading sometimes, sometimes both. What is the test that you are advancing, Mr Solicitor?
MR BENNETT: Trading normally, your Honour, with a broad definition of trading, but in certain narrow classes of case one may need to look to purpose. The shelf company that has just been incorporated is perhaps an example of that. That is what Fencott v Muller said, in effect.
GLEESON CJ: What about the defunct company?
MR BENNETT: The defunct company would certainly be covered under the implied incidental…..because if one is dealing with a trading corporation one would have to be able to deal with the consequences of the body as a trading corporation once it ceases that and is wound up. One might, to take a rather macabre analogy, compare a cemetery for deceased aliens. There may be a question whether they are aliens or not after they die but clearly that would be something incidental under the power. The mere fact that the activity has ceased may not alter the character for the relevant purpose, and if the relevant purpose is winding up and distribution of assets clearly the fact that it is no longer trading is irrelevant to what brought it within the category.
So that the South Australia argument insofar as it suggests that there are people who are concerned with the non‑trading activities of trading corporations, we say first that many of those bodies may not in fact be trading corporations. If they are, then those activities are within the power. If we are wrong in that, some reading down may be possible or some cases may be covered by the incidental power. But what South Australia tries to do is to combine these extreme and minor examples of charitable and the like corporations where people may have non‑trading activities, combine that with our concession given for a different purpose in relation to severance, and say that that brings down the Act.
GLEESON CJ: I am not sure that does entirely justice to South Australia’s argument. A possible point of view is to fasten upon this concept which was found sufficient to justify the trade practices legislation of saying the corporations power extends to the trading activities of trading corporations, reflected in section 52 of the Trade Practices Act which says you cannot engage in misleading or deceptive conduct in trade and then you say, “But there are some trading corporations that have extensive activities that are not trading activities”. If you confine the power to the trading activities of trading corporations, it may be that the Commonwealth has lost the argument on an earlier ground.
MR BENNETT: Yes, and that is why we do not, your Honour. We say that if there is any confining, it has to include things done for the purpose of those trading activities. But we say one does not read it down that way. We say it is, to use the cliché, a person power, and once the corporation is in, it is in, and that is as far as one needs to go. I should mention that since CLM there has been a body of legislation which uses the technique referred to in that case. I do not need to refer to that because there is no application to overrule it, but most of that has not come to this Court. Leask’s Case involved the Financial Transactions Act which – but I do not ‑ ‑ ‑
GLEESON CJ: I think we have seen many cases of Commonwealth legislation that is drafted using that technique, Mr Solicitor, just listing a series of heads of Commonwealth power and saying, “This Act applies in those cases”.
MR BENNETT: Yes. Your Honour, that concludes section 2 of my submissions. In relation to section 3, I do not need to address further in relation 3.1. That was something Justice Kirby and I had an extensive exchange about yesterday and I have really dealt with it to the extent that I need to.
HAYNE J: In looking at that question of importance of powers, are we entitled to go back and look, for example, at the official yearbook of the Commonwealth, the first volume of which was published 1901 to 1907?
MR BENNETT: Well, your Honour, that depends on the extent of the qualification in Eastman and the extent of judicial notice. If one accepts two propositions, the answer to your Honour’s question is yes.
GUMMOW J: This is original jurisdiction but on a demurrer.
MR BENNETT: Yes, that is true. The Commonwealth has always submitted and continues to submit that the Eastman principle, although as your Honour says, this is not a strictly appeal case, would have a qualification in relation to constitutional facts and to some extent that has to apply on demurrer cases, too. The principle about demurrers may create an exception. One then looks at the extent of judicial notice and the extent to which one can say, “Well, in relation to historical matter which is of relevance in looking at questions of this nature, to what extent can one go to it?” We do not raise any objection to your Honour going to that material.
CALLINAN J: Justice Dixon said in one case it had to be – he was fairly specific about the material. It is discussed by Justice McHugh and myself in Woods v Multi‑Sport. His Honour made the qualification in relation to, example, history that it had to be by, I think, history of reputable historians, but I think the underlying question is whether there is a natural justice issue, too, whether there is material with which the other party has not had an opportunity to consider and dispute, perhaps.
MR BENNETT: That is a different aspect of it, your Honour, obviously.
CALLINAN J: But it is an important aspect, Mr Solicitor.
MR BENNETT: It is, your Honour.
CALLINAN J: When it is referred to for the first time in argument and there have been voluminous materials filed it means that people have not had an opportunity to deal with the matter.
MR BENNETT: Yes. The way it can be dealt with, your Honour, is in writing after the argument where in most cases ‑ ‑ ‑
CALLINAN J: So long as the material in question can be taken to be accurate.
MR BENNETT: Yes. My learned predecessor used to say that the only rule of evidence in this Court was that you need 10 copies.
GLEESON CJ: How did Mabo come before the Court?
MR BENNETT: On appeal, I think.
CALLINAN J: On the basis Justice Moynihan had made extensive factual findings on reference from the High Court. He conducted a very lengthy trial in Queensland.
MR BENNETT: Yes.
CALLINAN J: Mind you, if you look at the decision, there is practically no reference to what his Honour said anyway.
MR BENNETT: No, and many of the facts referred to in that case were historical facts.
CALLINAN J: There were a lot of facts referred to that were not proved, for example, what happened or did not happen on the mainland and the contrast between the way of life of the islanders and the indigenous people on the mainland.
MR BENNETT: Yes.
KIRBY J: In native title matters the Supreme Court of Canada and the Supreme Court of the United States invariably look at historical matter. It is hard to see how one could deal with native title without doing so.
CALLINAN J: But it has not been uncontroversial, the references in Mabo, to all indigenous people on both the mainland and the islands. There have been a lot of complaints, for example, by mining companies that they were not given a hearing on these issues. It was exactly the sort of natural justice issue that I referred to before which arose there.
MR BENNETT: Yes.
CALLINAN J: Graziers were not party to Mabo. Graziers, miners, all people who had very strong interests in the matter and that is the problem generally about so‑called constitutional facts, defining them and deciding what use you can make of them and whether justice is done or whether people are given a hearing who should be given a hearing.
MR BENNETT: Well, I accept those qualifications, your Honour.
GLEESON CJ: It really comes down to a question of whether the material is contestable and Justice Hayne’s question was in relation to Commonwealth year books.
GUMMOW J: Do you remember there was a great fuss after Clark King 140 CLR 120?
CALLINAN J: Yes, I was in that case - a great deal of material was ‑ ‑ ‑
GUMMOW J: Justice Callinan still remembers that.
CALLINAN J: Exactly, a great deal of material was handed to the Court ‑ ‑ ‑
GUMMOW J: So does the Chief Justice.
CALLINAN J: ‑ ‑ ‑ after the argument was concluded and the Court acted on it. It was highly contestable, some of it.
MR BENNETT: Yes. Well, your Honour, there is also a question of the level of generality at which one refers to material. Propositions, for example, such as the corporation has a larger place in society today than it did in 1901 is the sort of statement which is, I suppose, in the judicial notice category.
CALLINAN J: But do you not say in your submissions somewhere that you do not do these things quantitatively? I will find it somewhere I am sure. I am sure you said that somewhere in your submission.
MR BENNETT: Well, your Honour, one of the things we say is that the mere fact that alterations in society or historical developments, matters of that sort, and external events, may change the relative importance in practice of particular powers from time to time.
CALLINAN J: I am not altogether sure that this place, this Bench, is the best position from which to make those sorts of sociological observations. I do not know whether we are the best equipped. In fact, I am pretty sure we are not.
MR BENNETT: But that does not mean that one turns a blind eye to broad historical statements that can be prefaced with the words “everyone knows that”.
CALLINAN J: I have not seen the material to which Justice Hayne referred and so I cannot say whether it is contestable or not, but what the Chief Justice, who with respect, seems - I would agree with you. That is what you have to decide.
MR BENNETT: Well, your Honour, clearly if the material is to be looked at, the parties should have the right to make written submissions in relation to it and the material needs to be defined in some way for that purpose.
GUMMOW J: There was a big debate about all this during the Road Transport Cases, you remember, back in the late 50s and early 60s about what material could be looked at as to the effects of the State regimes.
MR BENNETT: Yes.
GLEESON CJ: The Court at one stage – and this was the problem in Clark King – had running a test of validity of certain kinds of legislation about whether it was the only reasonably practical method of controlling a particular industry. Now, what the Court would know about that might be open to question.
MR BENNETT: But there is no doubt there is a danger in drawing inferences about specific matters and the sort of matter I was ‑ ‑ ‑
KIRBY J: There is also a bit of a danger in living in a world that is only occupied by the Commonwealth Law Reports. I mean, somewhere between those two dangers lies a practical and commonsense world in which judges live.
MR BENNETT: Precisely, your Honour. At first instance, the doctrine of judicial notice has dealt with that and dealt with it very adequately. The problem in this Court is that judicial notice is technically a form of evidence and therefore question arises as to the extent to which one can apply it. The answer may be that one needs to have a doctrine in this Court of analogous to judicial notice which says in relation to notorious historical matters of a broad nature the Court may, in effect, take judicial notice without being in breach of the Eastman rule or the demurrer rule.
GLEESON CJ: What is the particular matter relevant to section 3.1 of your argument that you want us to take account of?
MR BENNETT: That companies play a bigger role now than they did in 1901, your Honour. That is really all.
CALLINAN J: What follows from that?
MR BENNETT: What follows from that is that one does not criticise, from a constitutional point of view, the present legislation by saying the power – because of the role of the corporation in modern society, because that is so great – it would be wrong to construe the power in such a way as to make it larger than it might otherwise have been.
CALLINAN J: We have a bigger peacetime army now than we had in 1901. What does that say about the defence power?
MR BENNETT: Your Honour, I am rebutting the argument not advocating it. I gave the examples of bankruptcy in the Depression, quarantine during a pandemic, defence during a war. In a more general sense, looking at changes in society, the external affairs power today where treaties deal with subjects that would not have occurred to the founders ‑ ‑ ‑
KIRBY J: But it is a tricky argument because, at least on one view, it runs so far that the corporation and the corporations power on your theory has expanded so greatly that its very expansion causes one to think what effect do we give to this power within the context of a federal Constitution and within the context of a power that is directed to persons and in a constitutional document that requires us, both by its character and form and by its words, to have regard to what is elsewhere provided in the Constitution.
MR BENNETT: Your Honour, that is the necessary consequence. If Australia came to be populated 99 per cent by people who were aliens who chose not to become citizens, the same thing would apply.
KIRBY J: Yes, but if our Constitution said “the Federal Parliament shall have the power for the peace, good government of the Commonwealth with respect to (1) persons, (2) corporations”. You see, the problem with a person power as you construe it is that it is just completely open‑ended and has the risk of affecting 70, 80 per cent of the affairs of the nation. That is what makes you pull back and say that cannot have been what was meant because it is subject to this Constitution.
MR BENNETT: Your Honour, the trade and commerce power and the corporations power between them have always given a very large proportion of the commercial affairs of the nation to the Commonwealth. That is necessarily so. The trade and commerce power has expanded because the distances have become less significant in relation to trade and commerce. The corporations power has expanded because people have chosen to form corporations. It is the States that control who can form them.
GLEESON CJ: I do not understand why it is necessary to make this point to go beyond what Justice Windeyer said in the Payroll Tax Case 122 CLR 353 at 395 and 396.
MR BENNETT: I do not have that, your Honour, I am sorry – I do have it.
GLEESON CJ: At 395 and 396; particularly 396, three‑tenths of the way down the page:
With these developments it appears the position of the Commonwealth, the federal government has waxed; and that of the States has waned.
MR BENNETT: Yes:
That the Commonwealth would, as time went on, enter progressively, directly or indirectly, into fields that had formerly been occupied by the States, was from an early date seen as likely to occur.
KIRBY J: Yes, but at least a responsible constitutional court, when the waning comes to the point of almost extinction, has to then ask, is this the sort of waning that the Constitution had in mind in its text?
MR BENNETT: Your Honour, in my submission, it does not have anything like that effect.
KIRBY J: If you could affect every trading corporation by name and everything it does and everything everybody associated, or certainly its employees and those who trade with it, who deal with it, who contract it with it, who have come within its physical boundaries, who have any association with it in your list of constitutional powers, then the waning has gone to a point that at least if you adhere to a federal notion of our polity you have to pause. At least that is the role of this Court, as I can see.
MR BENNETT: Your Honour, the effect of the Constitution was that certain powers were given to the Federal Government. They were powers which even at the time had a very significant effect on the economic life of the community. If one takes a world in which only economics are looked at, the Federal Compact was one which was very largely one‑sided in that respect. It is not as if section 51 said (a) economic matters. It did not go as far as that, but in many ways it did, and the quantitative analysis your Honour puts to me limits the world to the world of economics. In the world outside the world of economics the dramatic effect is not as great ‑ ‑ ‑
KIRBY J: I am not so sure about that. Music is performed and art is performed by corporations. Increasingly the business of government is privatised and sent out so it is done by corporations.
MR BENNETT: Yes.
KIRBY J: I am just saying that that is the importance of this case, that what began in a sense in the Engineers’ Case and led to the waxing of the Commonwealth in its high day and was very important for the building of the nation has come to the point that the waxing has overwhelmed the States and we have to, as it were, pause and say, is that what the structure and purpose of the Constitution and the text subject to this Constitution mean? That is the importance of this case.
MR BENNETT: Well, your Honour, it does. Another example of how it has occurred is in the area of income tax where the changes in the way tax has been levied over the years has resulted in a growth in the economic significance of the Commonwealth at the expense of the States. Now, that has happened, that has been upheld, and it was always inherent in the Constitution that it could occur as, we say, is this development. The issues that are being debated are issues. But we submit the mere fact that the effect of changes that have occurred in society is to make a power more significant is not a reason for reading down that power.
GLEESON CJ: If you want to look at the way the relationship between the Commonwealth and the States was envisaged 100 years ago, you do not need to go past section 94 of the Constitution.
MR BENNETT: No, precisely, your Honour. The original idea was that a sum of money was levied by the Commonwealth, was spent on certain things, and the surplus was returned to the States. That provision is still in the Constitution but changes ‑ ‑ ‑
GUMMOW J: Unhappily it says “may”.
GLEESON CJ: Yes. It was originally envisaged that the surplus that we saw being dealt with yesterday would be given back to the States to spend.
MR BENNETT: Yes, it was, your Honour. Modern accounting methods have rather dealt with that fairly effectively.
KIRBY J: I know these jocular examples. All I am saying is that we have reached a point where the joke is beginning to become a bit of a worry. There are great arguments for Federation, as the federations of the world demonstrate. They divide power and that is a very important protection for liberty.
MR BENNETT: Yes, and one fairly standard consequence of Federation, which one sees in the United States, one sees in Australia and no doubt sees in other federations, is that where one starts with a division of powers, in many ways the federal powers are going to become more important and what is either left to or granted in some Constitutions to the States is going to become less important. That is part of, if one likes, a local aspect of globalisation. It is a natural trend. It is what Justice Windeyer was referring to, and referring to, we would respectfully submit, with great accuracy, in Victoria v The Commonwealth.
KIRBY J: It is a natural trend, but when it comes to the point of threatening viability and relevance of the States then you have what we see before us: every one of them here objecting to what is being done. We have to resolve it. Anyway, I think these are generalities and though it is proper that they be exposed because they, as it were, lie at the bedrock of the reasoning that one uses to approach specific constitutional problems, they do not solve the problem. They merely expose the concern that lies behind the search.
MR BENNETT: Your Honour, at the end of the day we submit this case does not really go any further than a wealth of existing authority in this Court, including Tasmanian Dam, Dingjan, CLM ‑ ‑ ‑
KIRBY J: My point is they were written in earlier times and, ultimately, lawyers who follow logic have to ask where it has led them and where it is leading them and, more importantly, where it is leading the Commonwealth.
MR BENNETT: Most of those cases, your Honour, are not very much earlier times. Most of the cases on which we rely, unlike Huddart, Parker, which some people attempt to resuscitate, were decided in the last 30 or 40 years and some in the very recent past. We submit there is no giant step here from the legal point of view.
KIRBY J: A giant step is not now needed. It is little steps that are taken that accumulate that amount to the giant step. When you are in the midst of it, you often do not notice it.
MR BENNETT: Your Honour, that is the process of the development of the law and particularly the development of constitutional law.
KIRBY J: Subject to this Constitution.
MR BENNETT: Yes, and, your Honour, the Court has said many times one does not say every time an argument is put up what would happen if this were taken to the most extreme extent to which it could be taken.
GUMMOW J: The first Uniform Tax Case is a classic example of that. The argument was the States were going to cease; this would be the practical result. Well, it has not happened.
MR BENNETT: No, it has not, your Honour, and it will not if the Commonwealth is successful in this case.
GLEESON CJ: Does that cover what you wanted to say about 3.1?
MR BENNETT: Yes, your Honour. In relation to 3.2 and referenda, before I go to the few references in authority to the use of referenda, can I just give this example which, in my submission, demonstrates why one cannot use failed referenda for the purpose of constitutional argument.
Let us assume that there is in Australia at some future date a great constitutional debate as to whether a particular power extends to a particular area, and that is a debate on which constitutional lawyers are differing, Professor Zines and Professor Williams have written articles on opposite sides, the public is divided over it, the politicians are divided over it and no case has come to this Court on it. Let us assume in that world where that controversy arises the Commonwealth decides that it will have a referendum seeking the controversial power and put the matter to rest that way and the Commonwealth has a referendum and let us assume that 60 per cent of the people of Australia vote in favour of it, but it does not get the statutory majority of majority in a majority of States, so it fails.
Now, if one then says when the issue comes to this Court the Court should give weight to the failed referendum, what the Court is doing is letting the 40 per cent of the people decide, on one of the two constitutional interpretations, where 60 per cent preferred the other. That would be the consequence of taking that course.
CALLINAN J: But is that not what section 128 requires? It does not require an absolute majority. It requires the States, the majority of the States.
MR BENNETT: Yes, it does, your Honour.
CALLINAN J: That is what was intended. If you do not like section 128, have a referendum about it.
MR BENNETT: I am not suggesting that for a moment, your Honour.
CALLINAN J: Well, governments do not like it because there have been occasions upon which they have had an absolute majority. It seems to me what you are saying is a complaint about section 128.
MR BENNETT: No, it is not, your Honour, it is not a complaint at all about section 128. What it is saying is that the mere fact that a particular constitutional change was not carried does not mean that one then says that the converse is deemed to have been passed as if it was a positive constitutional amendment. The constitutional amendment merely leaves exactly as it was when it fails the Constitution and it leaves its correct interpretation exactly where it was, and the Constitution’s correct interpretation is not changed merely because there was a suggestion that one view be preferred by the people and that was not carried by a constitutional majority.
CALLINAN J: Mr Solicitor, that does not make me feel any less uncomfortable about the fact that you are asking us to do what the people refused to do on four occasions. That is really what you are asking us to do, are you not?
MR BENNETT: What I am saying ‑ ‑ ‑
CALLINAN J: Your argument might well be right, but that is the consequence of it that ‑ ‑ ‑
MR BENNETT: Another way of putting it is that it was unnecessary to ask the people because the power was there.
CALLINAN J: Mr Hughes, I think, in the first of the referenda – it was probably in response to Huddart, Parker – said, “The High Court has shorn us of our powers and we thought we had these powers”, but on the three subsequent occasions the same sort of result was sought and rejected. He was accepting, as did Dr Evatt, I think, in 1946, that no matter how much they railed against it, they did not have the power and they had to get it if they wanted to exercise it.
MR BENNETT: Your Honour, that was in a milieu where Huddart, Parker prevailed and the doctrine of reserved powers and the doctrine of single characterisation and so on.
CALLINAN J: That is one of the reasons why I feel uncomfortable about Rocla Pipes too. Is it not in that that case that the earlier courts were accused of heresy? Mr Liddell Hart, the famous historian says be wary of anybody who accuses anybody else of heresy.
KIRBY J: I will have to get a note of that.
MR BENNETT: Yes. Your Honour, I have not used the words in my submissions, although it is a word that might not be inappropriate in relation to some parts of Huddart, Parker today.
GUMMOW J: The reference to Huddart, Parker and Mr Hughes being upset about it makes the point. When we are talking in this context about the Constitution, we mean the Constitution as it is operating, as it is construed from time to time by the Court. That is what the Constitution explicitly recognises in Chapter III. When you talk about the Constitution requires this, that or the other, you cannot just look at the text at any point of time; you have to know what the court doctrine is in construing it from time to time.
MR BENNETT: Yes. What one has done in my example is to say that a referendum which fails is to be taken as a passed referendum which affirms the negative constitutional doctrine which may be right or may be wrong. For example, if one takes the case of a constitutional power which clearly does extend to it, if one had a constitutional amendment proposed suggesting that there be added to the external affairs power the words “including legislation bringing Australia into conformity with international conventions in the human rights area”. That clearly is included in the external affairs power. If a referendum to add that were defeated, that would not mean that we would then have to say we have to have regard to the results of that referendum and regard that as excluded from the external affairs power. It cannot mean that.
CALLINAN J: It is not a very practical example when you have the explicit language of the external affairs power. It is highly unlikely that there would ever be an attempt to tack that on to a different power.
MR BENNETT: I will give your Honours a totally neutral one, one that has no political significance. Suppose there is a controversy about whether buildings on the coastline which transmit radio waves to ships and warn them of rocks in that way are lighthouses within constitutional power. One group of constitutional lawyers says yes and one says no and there is active controversy over it. A referendum is proposed and defeated. Does that mean that one then has to say that the group who say these are not lighthouses prevails even if the Court might otherwise have said that they were within the lighthouses power by virtue of the denotation of the word?
The argument treats a failed referendum as an affirmative selection of a particular constitutional doctrine and it not only allows the Constitution to be changed without the constitutional majority, it actually allows it to be changed by a constitutional minority and, as a matter of logic, it just cannot be right. The true constitutional meaning, as it develops or otherwise, cannot be altered because a referendum has failed. When one adds to that the comments by the Chief Justice in Mulholland (2004) 220 CLR 181 – I will not take your Honours to it. It is paragraph 29 of your Honour the Chief Justice’s judgment where the point is made that referenda have notoriously been difficult to pass, by and large ‑ ‑ ‑
CALLINAN J: Designedly so.
MR BENNETT: Yes, I accept that, your Honour. I am not disputing that.
CALLINAN J: I do not understand, with all due respect, the complaint. What you are really saying is it is very hard to get a change, therefore, ask the Court to do it.
MR BENNETT: No, I am not, your Honour.
CALLINAN J: That is what the States say, in effect.
MR BENNETT: That is not what I am saying, your Honour.
CALLINAN J: They say you do not have the power, you tried to get it through referendums repeatedly, you did not succeed, get the Court to do it.
MR BENNETT: Well, your Honour, we look at it a bit differently. The way we argue it is, we say assume that otherwise the Court would decide that we have the power, the Court then looks at the failed referenda. Is it to say because there was not a constitutional majority for an amendment adding this power it should be taken away, which is ‑ ‑ ‑
CALLINAN J: No, another way, it was never there and it could not ‑ ‑ ‑
MR BENNETT: Your Honour, if it was never there, I fail anyhow.
CALLINAN J: ‑ ‑ ‑ be achieved and the attempts to achieve it are just a further indication that the failed attempts to achieve it are a further indication that it was never there.
MR BENNETT: No, your Honour, they are not an indication it was never there. They may be an indication that a particular Minister or public servant or Cabinet perhaps took the view it was not there, but that is the most that they indicate.
GUMMOW J: The only body that can say whether it was or was not there is this Court at any particular time. That is what Mr Deakin was on about in 1903 as to why it was necessary to persuade the rather reluctant politicians of the day to establish the Court.
MR BENNETT: Yes, but, your Honour, my point is this ‑ ‑ ‑
GUMMOW J: The Americans had tried a civil war.
MR BENNETT: If a particular view is the view the Court would come to, then the fact that the electorate did not at a particular time have a constitutional majority for that result on the assumption that it was not there, this does not say anything to this Court about what it should do. This Court applies the Constitution, it applies the developing constitutional jurisprudence, but it is not relevant to that jurisprudence that at some stage a particular person in government or people in government thought that a power was not there and there was not a constitutional majority for adding it. That simply, in my lighthouse example, says that the Constitution is to be changed by the failed minority. In my respectful submission, for that reason, it is simply an impermissible use of the referenda results. Those are my submissions on 3.2.
On 3.3 and 3.4 – I will start with 3.3 with the historical materials. It is of interest that there is an analogy between the focus of early company law and one of the issues in this case and one of the arguments concerning aboriginal corporations under the Native Title Act. That is that one of the primary motivations behind early company law was that it was thought to be unwieldy to require people to deal with partnerships consisting of large fluctuating bodies of persons. There were obvious difficulties in suing them and in holding them accountable. That was to a large extent the mischief which led to the primary section in early company law being that if you existed for certain purposes and had a certain number of people, you were an illegal organisation unless you incorporated. Many of the English cases, in fact most of the early cases, are cases on that provision.
It is interesting that much the same reasoning is applied in relation to the argument on Schedule 1, which I will come to later, about the need to have cohesive industrial organisations and, indeed, the corporations under the Native Title Act which are largely required because of the difficulty of dealing with a large number of people where one needs to get a consent or do some act in relation to land.
Now, what occurred in the late 19th century was that where people did things for the purpose of the acquisition of gain and there was more than a certain number of people, there was a requirement for registration. What is interesting for present purposes from those cases is that the reference to “gain” was treated very broadly. In Re Arthur Average Association (1875) LR 10 Ch App 542 – I will not take your Honours to it; I am giving it as an example – it was held that a group of shipowners who got together and had an association under which they mutually insured themselves – so if one of their ships sank the others contributed between them the value of that ship – that was held to be an unlawful organisation under the relevant provisions of the Companies Acts. The same was applied in a number of cases to small co‑operative loan organisations where people lent money to each other.
The point is the acquisition of gain did not necessarily mean profit – it was a narrower concept. It was wide enough to include the potential gain of one’s fellow members reimbursing one if one’s ship sank, the organisation itself, of course, making no profit. Many of the cases stress that there was no requirement that the body be a profit‑making body.
One gets that from the Incorporated Council of Law Reporting Case (1888) 22 QBD 279 and from various of the cases at that time. Mutual loan cases have been referred to. There was Shaw v Benson and Re Thomas - I will not give your Honours the references unless your Honours wish me to do so. The Law Reporting Case involved the same sort of question. But what does emerge from those cases is that there was no particular doctrine which involved the words “trading company” or “trading corporation”. That was not a part of that jurisprudence.
It is interesting that volume I of Halsbury, the 1910 edition - in volume V dealing with companies at page 13, paragraph 3 has this – your Honours need not go to it, it is a very short statement. It says:
Companies may be formed for every conceivable kind of object, including that of trading at a profit, and the promotion of “art, science, religion, charity or any other useful object” –
that phrase coming from section 20 of the 1867 English Act –
and hence they cannot be usefully classified according to the object for which they are formed.
HAYNE J: “Companies” in that context being used in contradistinction to “corporation”, is it not? There was a separate title, corporations.
MR BENNETT: Yes. Corporations included corporations sole and corporations aggregate.
HAYNE J: Companies there was used to refer to a group of individuals who were associated, whether or not they sought incorporation.
GUMMOW J: I think Halsbury had a separate title about corporation, which rather assists your point, I suppose.
MR BENNETT: I have not checked that, your Honour, in relation to the first edition. I should not answer the question, but I would suspect that it did have. I will have that checked. As your Honours will see when I get to the Convention Debates there was a discussion about the choice of term, “company” or “corporation”, as well as discussion about the choice of the term “trading corporation”.
What is important for present purposes is that charitable and scientific and other such bodies could be formed under the Companies Act. They were given a privilege. They could apply to dispense with the word “limited” and so on, and one could of course have a company incorporated with unlimited liability so the limitation of liability, while an attraction to many – no doubt Mr Salomon in Salomon’s Case – was not the sole purpose of forming a company. The other was that one had a body which was a juristic person and that was easier to deal with, both for those inside it and for those outside it.
It is clear, both from the early cases and from more recent cases, that making profits is not a requirement of the word “trade”. One gets that from the Law Reporting Case. One gets it from the decision of the Full Federal Court comprising Chief Justice Bowen and Justices Deane and Brennan in In re Ku-ring-gaiCo‑operative Building Society (No 12) Ltd (1978) 36 FLR 134 – I am not taking your Honours to this – where it was again made very clear that the pursuit of profit was not a necessary ingredient in that case in being a financial corporation so that a co‑operative building society was a financial corporation.
HAYNE J: You are just throwing together about four ideas there, Mr Solicitor, which you draw from history and you simply amalgamate without recognising the radically distinct sources of each of them. The old Companies Act was at pains to draw distinction between pursuit of gain, pursuit of gain for the company, pursuit of gain for the individual. It prohibited the formation of companies of more than 10 people, or 20 was it, for the pursuit of gain. Yes, it permitted the incorporation of other companies but there is a considerable difficulty in simply taking the several threads, which you confined in the old Act, and treating them without distinction. Ku-ring-gai may have to be understood against a background of whether the gain is a gain for the company, the corporation. Is it a gain for the members? It is necessary to look rather more closely at the history than that.
MR BENNETT: Yes. Your Honour, we submit that the ultimate position is that taken by this Court in the Western Australian Football League Case with the qualification recognised in that case and that that sufficiently defines the concept for the present purposes. We do not need, of course, in this case, to ask the Court to define precisely what is meant by a trading corporation or a financial corporation. That is no part of the issue in this case. It is only peripherally relevant for the purpose of looking at the scope of the power and it arises, to some extent, because of the argument which I have already referred to, put by some of my learned friends, that we have to look for the distinctive characteristic and can only deal with that. We submit, of course, that that is not the appropriate way of dealing with it.
If I can turn to the Convention Debates, there are various aspects of them which are of significance in showing what was being discussed in relation to this area. I am not, by going to them, suggesting a totally originalist approach, I hasten to add. They have to be qualified heavily by the remarks in Western Australian Football League about the changes in the importance of ultra vires and other matters which make the purpose of the incorporation something which is not normally of significance, except in the very narrow type of case where one has a company that has not yet started its operations.
HAYNE J: Just apropos of ultra vires, which form of corporations legislation was it that finally did away with notions of ultra vires? It is relatively recent, I think.
MR BENNETT: I thought it was around 1980, your Honour, but I may be mistaken in that.
HAYNE J: I thought it later than the 1980s, I thought it was the corporations law, or subsequent, that the old section 20 of the Companies Act - so‑called Uniform Act of 1961 persisted through the Code into the early days of the law.
MR BENNETT: It is suggested to me that it was 1989.
GLEESON CJ: I have a reason to believe it was later than 1988.
MR BENNETT: Yes. Well, in that case it probably was the 1989 Act. But, of course, even by then articles of the type I referred to earlier had made ultra vires considerably less significant. If one had an article that said “to carry on the business of” followed by the index to the pink pages, that covered an awful lot of matters, particularly when combined with the standard things which talked about guarantees and owning every kind of property and borrowing and so on. So by the 1980s it is hard to imagine an ultra vires case arising, and I do not know when the last ultra vires case was in relation to general ‑ ‑ ‑
GLEESON CJ: Problems of ultra vires used to arise, I can tell you, well into the 1980s in relation, for example, to gifts by corporations. Donations to charities by corporations used to have to be justified theoretically on the basis that they were for the good of its business in some way.
MR BENNETT: Yes. The West Cork Railway Company in the late 19th century had laid down the principle where it was said that, whether or not a railway company could spend money on a picnic for its porters depended on whether one could regard that as improving their esprit de corps to such an extent that ‑ ‑ ‑
GLEESON CJ: Yes, but it was a more practical question to ask whether a large bank, for example, in 1980, could make a donation to the Royal Blind Society.
MR BENNETT: Yes, well, that was one narrow area where it remained of some significance. But the old idea of ultra vires, the company incorporated to be a haberdasher engaging instead in the business of cobbling, was something which had in a practical sense disappeared well before the 1980s. It arose in relation to specific activities of the type your Honour the Chief Justice refers to.
That has been a trend for some time and, as I said, it was regarded by the Chief Justice in the Western Australian Football Case and by a decision of the Court in that case as being a significant reason why one did not characterise a trading corporation by reference to its objects. One looked at what it did, and we accept that as a gloss which has to be placed on any view of what a trading corporation is that one gets from the Convention Debates. The Convention Debates in a sense are more concerned with what was excluded than with what was included. Do your Honours have the New South Wales document on the Convention Debates?
GLEESON CJ: Yes, thank you.
MR BENNETT: It is a convenient thing to use. The first one I wanted to refer to is one which is not in that volume – I am sorry, yes, it is, tab 5 at page 439 in the right‑hand column. There is a reference to the change from the original form which, as your Honours recall, was limited to dealing with what I will call the Westlake problem, the problem of dealing in one place with corporations incorporated in another place. Mr Barton at the top of the second column on page 439 commences the discussion in relation to the corporations power ‑ ‑ ‑
GLEESON CJ: That has all been read to us.
MR BENNETT: Yes. What we rely on there is – what is important is that there is a reference to the change – was that the Commonwealth could legislate not merely with regard to the legal status of corporations acting for the Commonwealth but it should have power as far as it can legislate upon the general subject of these corporations, over the general subject of foreign corporations formulating part of a state for the purpose of uniform legislation.
GUMMOW J: That became Justice O’Connor’s view, too, in argument in Huddart, Parker that we have looked at.
MR BENNETT: There is a passage which follows which reflects some dated legal thinking that trading might not exclude a law excluding someone from trading but we do not need to worry about that argument. If one moves then to page 793 there is a reference to why the ‑ ‑ ‑
GLEESON CJ: Where is that? What tab?
MR BENNETT: Tab 6, your Honour, I am sorry.
KIRBY J: But if you can make a law with respect to corporations by that name then you could exclude them from operating in a particular part of Australia, subject to section 92.
MR BENNETT: Yes. I suspect that the ‑ ‑ ‑
KIRBY J: The question was not quite so foolish.
MR BENNETT: I suspect that Mr Barton, as he then was, might not have held as valid a law under the trade and commerce power prohibiting the importation of heroin. He might well have said, “That is not dealing with trade and commerce, it is prohibiting.” That is why I say it is a little bit of dated legal thinking that we do not need to worry about. Obviously, a power to deal with X includes a power to prohibit X. It may have been thought, initially, that by some tortured grammatical argument it did not but that would not be the law today.
The point of referring to page 793 is twofold. First, it explains when the change occurred. Your Honours see at the bottom of the first column Sir George Turner says, looking at the clause in its new form:
we have already given power to deal with the question of banking, and we are now giving power to deal with foreign corporations and trading corporations. I fail to see why we should limit the sub‑section to trading corporations. There are financial institutions which are not banking institutions, and if we are going to give the Federal Parliament power to legislate with regard to banking, and with regard to trading corporations, we should go a step further and give it power also to legislate with regard to financial institutions.
Mr. BARTON: I do not know.
Sir George Turner explains what he means and makes it a bit more specific and says:
Building societies.
Mr. BARTON: I think the present wording of the sub‑section covers as nearly as may be the intentions of the Constitutional Committee, and really for the amendment, which is a desirable amendment, in the sub‑clause as it stood in the Bill of 1891, we are indebted to my hon. friend, Mr. Isaacs, who put it in its present form.
Mr. ISAACS: I suggested the word –
and that is probably the word “trading” –
for temporary consideration.
Then there is a discussion and Mr Deakin says:
We distinguish them –
being the financial corporations –
from banks on the one hand and trading corporations on the other. We want to include all limited companies because the class of companies I am speaking of deal with lands and with deposits, and they require to be carefully regulated.
There is an interesting question from Mr McMillan, who was not a lawyer. He was a businessman and politician, and he says –
You want to include everything outside private companies.
His question is not really answered. His reference to private companies was not picked up by anyone else. It seems to have been an assumption Mr McMillan made that Salomon’s Case‑type companies were in a different box somehow, but no one else seems to have made that assumption. Mr Deakin says:
Especially land and finance companies which caused so much litigation in the past -.
and so on. Then on the next page, the words “or financial” are added.
HAYNE J: An example of the non-bank that would fall within financial corporations would be the large pastoral companies of the time like Dalgety’s, Goldsborough Mort and the like, which engaged in transactions, not radically different from banking transactions, with their clients.
MR BENNETT: Yes. Your Honours, it is significant that that width is emphasised by what is said on the next page. At the top of 794, still in tab 6, Mr Symon asks:
Why not simply use the term “company”? If you use that word it will be well enough understood.
Mr. BARTON: Why not adhere to “corporation”? That governs everything under the Companies Act.
As I have shown, that included charities and learned societies and so on.
Mr. SYMON: Why not leave out the word “trading”?
Mr. BARTON: Or add the word “financial”.
Then the word “financial” is added.
KIRBY J: That shows that they did at least address their attention to the proposition that they should grant a power in the broadest generic sense, a corporation, and rejected it.
MR BENNETT: Yes, it does, your Honour.
KIRBY J: That rather suggests that they attached importance to the adjectives and that they were seen as words of limitation.
MR BENNETT: It seems to suggest the contrary, your Honour, because Mr Barton was not suggesting, at the top of page 794, that the word “corporation” appear on its own. He was simply dealing with the word “corporation” as opposed to “company”.
GLEESON CJ: Mr Solicitor, we know as a fact, do we not, as an historical fact, that different people at this Convention had different understandings of what this power meant?
MR BENNETT: We do.
GLEESON CJ: If we read Huddart, Parker v Moorehead, we know that Justice O’Connor on 15 October 1908, as reported at paragraph 334, had a different idea of what the power meant than that which he had when judgment was delivered in June 1909, as appears from pages 374 and 375. Not only did Justice O’Connor express an argument, an idea that was the opposite of the idea expressed by Justice Isaacs, Justice O’Connor expressed an argument, an idea that was very different from the idea that he formed in his written judgment.
MR BENNETT: Yes, and, in addition, your Honour, one cannot assume, human memory being what it is, that people who had gone through these conventions and argued for years over every section of the draft Constitution retained in their minds, 10 years later when they are sitting on a bench, every aspect of whatever particular understanding about a particular provision that they may have had 10 years earlier. One simply cannot make that sort of assumption with ‑ ‑ ‑
KIRBY J: Except perhaps in the case of Mr Isaacs, whose centenary of appointment to the Court is this year.
MR BENNETT: Even there, one wonders, your Honour. I will not speculate on human memory, it is a dangerous area. There is one passage in the Debates I wanted to mention before I – yes, in tab 6 at page 793 there is one statement I did not remind your Honours of, at the very bottom of the second column on 793:
Mr. SYMON: In the original Act corporations simply are mentioned. Why this difference?
That is the reference to trading corporations.
Mr. BARTON: The reason of making the difference was this: It having been seen that the word “corporations,” as it existed, covered municipal corporations, the term was changed to “trade corporations.”
Yes, that was the passage, just between the two passages I read. That rather indicates that one of the purposes of including the reference to trading corporations was not to get in some broad context of what trading corporations were, it was not a term of art anyhow, but just to make it clear that they were not talking about municipal corporations which, of course, is what the word “corporation” would have suggested to many lawyers at that time.
KIRBY J: Even much later. The Melbourne Corporation Case is an example.
MR BENNETT: Yes.
CALLINAN J: When was it that companies ceased to be able to be formed only by an Act of Parliament, do you know? You may not be able to answer it now.
MR BENNETT: Well, your Honour, I do not know if the Companies’ Act 1862 – I do not think it was the first, but it was certainly the major Act at that time. There may have been precursors for a short time prior to that.
CALLINAN J: Probably some still needed it though. There were still Acts of Parliament, I think, after 1862 in relation to some companies.
MR BENNETT: Yes. Well, there still are today, your Honour. There are the occasional corporations incorporated under State Acts.
CALLINAN J: I was thinking more of ones divorced from government.
MR BENNETT: Yes. Well, divorce at one stage required an Act of Parliament too.
CALLINAN J: I was thinking of companies divorced from government.
MR BENNETT: I am sorry, yes. Well, the ‑ ‑ ‑
CALLINAN J: Anyway, do not worry about it know, Mr Solicitor.
MR BENNETT: Well, it is suggested to me, your Honour, and I do not vouch for the proposition, that it may have been the Gladstone reforms in the mid‑1840s which led to that change, but I do not know if that is correct. Certainly it was around that period of the mid‑19th century.
CALLINAN J: There are still some companies in New South Wales which still exist and are carrying on some activities ‑ ‑ ‑
MR BENNETT: Yes, I think the Australian Gaslight Company was incorporated by Act of Parliament in ‑ ‑ ‑
CALLINAN J: Nearly all private enterprise utility companies were because they needed authority to commit the nuisance like the old railway companies in England and to come onto property and the like.
MR BENNETT: Yes, and to have easements and so on. The example I have referred to is I think 1838, but I may be wrong in that. Limited liability of course came later but, as I said, the ability to incorporate private companies appears to have begun around the middle of the 19th century.
GLEESON CJ: Well, after they dealt in that very brief way with trading and financial, they got onto a subject that aroused their passions.
MR BENNETT: Yes, and your Honours will see that discussion commences with one of the founders suggesting that he thought it was a joke when he first read it. That was in relation to rivers I think. So we stress the Football League passage which I took your Honours to, from Justice Mason in the Football League Case, that:
it is a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation.
The passage I took your Honours to at page 234 suggests that where you have a company such as, no doubt, the Salvation Army or the Red Cross or St Vincent de Paul where there are trading activities but the primary purpose is something different, that purpose may become so significant as to overwhelm the trading character caused by the activities, and that is a qualification expressed by Justice Mason which we accept. The phrase is “sufficiently significant proportion”, and we emphasise the gloss that we place on it or the addition we place on it that where those other activities are the exercise of governmental authority one should give particularly great weight to them in looking at whether the body is a trading corporation or not.
Moving to 3.5, this has been largely dealt with by my learned friends from New South Wales in the note they have handed your Honours about the use of the corporations power in industrial relations legislation prior to Work Choices. As they point out, in 1977 the secondary boycotts provisions were introduced into the Trade Practices Act and while those provisions may have been capable of applying to a secondary boycott for the purpose of damaging a competitor or achieving a social or environmental objective, the primary target of that legislation, fairly obviously, was industrial secondary boycotts. Section 45D of course was held to be valid by this Court in Fontana Films.
There are, as New South Wales has pointed out, references in very early versions of the Conciliation and Arbitration Act to corporations in the context of transmission provisions, and those are set out in the note. Of course, if my learned friends were correct that section 51(xxxv) limits section 51(xx), that might be a problem for the validity and scope of the secondary boycott provisions in the Trade Practices Act which this Court has upheld. In 1993 the Industrial Relations Reform Act inserted a new definition of “constitutional corporations” and had ‑ ‑ ‑
KIRBY J: It was suggested the other day that that came in 1988 following the Hancock reforms. Is that so or was it first used in 1993?
MR BENNETT: I think parts of it did, your Honour, but I think the 1988 amendments, the only part that specifically dealt with corporations were the transmission provisions.
KIRBY J: That was the traditional one going back to 1924.
MR BENNETT: Yes.
GLEESON CJ: Did anyone ever challenge the validity of the Prices Justification Act 1963?
MR BENNETT: No, your Honour, not so far as I am aware. That depended on the corporations power in the same sort of way as the Tasmanian Dam Case did, although, of course, its subject matter was something closer to the concept of trading.
GLEESON CJ: But it did produce an Australia‑wide system of price control.
MR BENNETT: Yes, it did, by reference to the corporations power.
GLEESON CJ: When was it repealed?
MR BENNETT: I will have that checked, your Honour, but so far as I am aware that Act was never challenged – certainly not in this Court. The major amendments were in 1993 and certainly since then the corporations power has been used in this field. As your Honours know, it was expressly conceded in the Industrial Relations Act Case of Victoria v Commonwealth. As a result, that case was primarily decided by reference to the external affairs power. What that indicates is that the use of the corporations power in this area is not something which is novel and thought of for the first time.
GLEESON CJ: I said Prices Justification Act 1963, I think on reflection it would have been 1973.
MR BENNETT: Yes, I think it was. No 37 of 1973. That brings me to the fourth section of my submissions which is the major section dealing with the extent to which the Commonwealth can legislate under the corporations power once it finds the relevant body. I will not go back and rehearse all the cases about plenary and not construing a power narrowly or pedantically. Those statements are summarised in our submissions.
HEYDON J: What part of your written submissions corresponds with 4.1 of your oral argument?
MR BENNETT: It starts at paragraph 21, your Honour, and it goes quite a long way. The significance of it being a person power for present purposes is very simply that one does not look at purpose.
GLEESON CJ: What exactly do you mean by the expression “object of command”? Take the Fontana Films example. The corporation is not an object of any command.
MR BENNETT: No, it is not.
GLEESON CJ: It is the subject of a command. The object of the command is the person who is trying to introduce the secondary boycott.
MR BENNETT: Yes. The object of command would cover “a corporation shall not steal”. It would not cover “a person shall not steal from a corporation”. Object of command is not a test in its own right; it is an application of a broader test which I will come to, but I deal with it because there has been debate about it in the submissions and a number of Judges of this Court have said it is not necessary to decide whether every section which said a “corporation shall” or “shall not” would be within power.
GLEESON CJ: Yes, but that is my point. Those statements have nothing to do with the Fontana Films law.
MR BENNETT: No, they do not, your Honour. Fontana Films is a different category. We do submit that the object of commands test, if I can so describe it, would be sufficient but certainly not necessary. In other words, we submit that if any law saying “a trading corporation shall” or “a trading corporation shall not” would be within power but it is not a requirement that the law say that and that is not the broad principle on which one tests validity. It simply is a consequence of that principle which we come to.
GLEESON CJ: Well, it is not enough, is it, that the law mentions corporations?
MR BENNETT: Not it mentions, no. We know that from Dingjan, that a law which says a person who is a contractor to a trading corporation shall not deal unfairly with an outside party has too remote a connection. We know that.
GLEESON CJ: Why is not a law that says no person shall smoke in a restaurant owned by a trading corporation a law that has a connection with corporations that is too tenuous to justify its characterisation as a law with respect to corporations?
MR BENNETT: The first question is whether the law reads “no person shall smoke in a restaurant owned by a trading corporation” or “no trading corporation that owns a restaurant shall permit smoking in it”. There might be a difference in the categorisation of those two laws. The second one is one which directly affects the corporation in its business affairs. It has a connection with corporations that we say is not tenuous, insubstantial or distant. The ultimate way of putting it, which we do when we get to 4.2, is that where the law relates to the business functions, activities or relationships of a constitutional corporation that is within power, but the ‑ ‑ ‑
GLEESON CJ: Yes, but 4.2 is a different test from 4.1, is it not?
MR BENNETT: Well, 4.1 is only an application of the broader 4.2 approach, but we do say that if one says “a corporation shall not” or “a corporation shall”, that is directly controlling a person subject to the power and that, we submit, is within power, as a law saying “no alien shall” or “an alien shall not” is within the aliens power. The fact that that connection has been chosen in part or in whole in relation to the application of the Act brings it within the constitutional power because of the direct command given to persons in the category. It is a law with respect to corporations if one says “a corporation shall not”. It may have other characterisations, but it has at least that one.
There are numerous cases where Judges of this Court have said words to the effect it is not necessary to decide whether a law in the form I have put is, by virtue of that feature alone, within power. That is simply an application of the general approach that this Court has always shown to constitutional development, that one does not deal with matters beyond what is necessary for the particular case, and it has never been necessary for this Court to answer the question which has been posed by so many Justices.
What we do say is that where Justices have said that, that it is not necessary to deal with that question, that does not entitle my learned friends to put those Justices in their camp and say, “Well, here are Judges who have refused to say that such a law would be valid”. It is simply a matter of not deciding what is before the Court. We have accepted in our submissions that there is no case which has directly decided as a matter of ratio the object of command question.
This case raises it somewhat more directly, although one can decide much of this case, and maybe all of it, without reference to it, but we submit that where there is a direct command addressed to a constitutional corporation that is sufficient.
HEYDON J: Do you submit that the so‑called narrower basis summarised in 9.3 of your written submissions will support the whole Act except for what I might call the specific challenges of the type that Mr Tracey, for example, will be dealing with?
MR BENNETT: Yes, your Honour. That is, in a sense, our central submission.
HEYDON J: If so, do we have to bother with the ambitious submission?
MR BENNETT: Your Honours do not, probably. It is a convenient way of dealing with much of the Act but it is not ‑ ‑ ‑
GLEESON CJ: It is a convenient way of arguing the next case.
KIRBY J: It is what we always have to keep our eye on.
MR BENNETT: Yes.
GLEESON CJ: And what we have always said we will never decide.
MR BENNETT: Yes, of course. Now, this is a law which squarely, we submit, in all of its parts, falls within the bases set out in 9.3. We start with the proposition that so long as the connection between the power and the law is not tenuous, insubstantial or distant, then the connection is sufficient. That supports at least ‑ ‑ ‑
GLEESON CJ: Chief Justice Barwick was undoubtedly right, was he not, when he said that there is a question of characterisation that always has to be answered?
MR BENNETT: So long as one accepts, as he did not always accept, that one can have multiple characterisations.
GLEESON CJ: Yes.
MR BENNETT: The old idea of saying, “This is a law about heroin, not a law about trade and commerce” or in the taxation example given by Justice Menzies, “This is a law about taxation” – “This is a law about heroin, not a law about taxation”, as long as one eliminates that form of reasoning, then characterisation certainly becomes a factor, but that really asks the question rather than answers it.
GLEESON CJ: Yes, it just insists that there is a question that has to be answered.
MR BENNETT: Yes.
GLEESON CJ: It may be that in most cases where a corporation is the object of a command, it may be a short step to attribute that character to the law, but many Justices of this Court have guarded against saying that you can avoid taking that step altogether.
MR BENNETT: Your Honour, that is so.
GUMMOW J: It is just another way of asking is it with respect to, it seems to me.
MR BENNETT: Yes, it is. It is another way of asking the same question. There has to be a connection and ultimately one has to find what the connection is. The clearest example of the reference to not tenuous, insubstantial, et cetera, occurs in Re Maritime Union; Ex parte CSL 214 CLR 397. It cites with approval the statement by Justice Mason in CLM Holdings at the bottom of that page.
KIRBY J: Which page and which paragraph?
MR BENNETT: This is paragraph 39 on page 414, where it is said that some matters relied on by the prosecutor in that case:
deny the settled authority that, where a connection exists between the law in question and the head of power which is not insubstantial, tenuous or distant, that connection is not displaced by the lack of some further or additional connection
That is a judgment of seven members of the Court, six of whom are here today, and we submit that is where one starts in relation to looking at the connection.
What we have sought to do, in our submissions, in paragraph 9.2 and 9.3, is spell out where that gets one, and 9.2 refers to the law in its terms providing that it applies to such corporations, that is, “no corporations shall” or “a corporation shall”, and then 9.3 spells out what is meant, we would submit, by a connection that is not tenuous, insubstantial or distant.
These are applications of the test rather than the tests in their own right. The first of these is if it relates to the conduct of those who control, work for, hold shares or office in constitutional corporations; relate to the business functions, activities or relationships of such corporations; protects one from conduct carried out with intent to, and the likely effect of which would be to, cause loss or damage to its business activities; or otherwise in its practical operation materially affects or has some beneficial or detrimental effect on a constitutional corporation.
We refer them particularly to intention to damage. If one can say a person may not injure a constitutional corporation, clearly one could also say a person shall not to do an act with the intention of injuring it. If there is power to protect, the power to protect must extend both to the acts and to acts done with the intention of causing that harm. That is clearly within the scope of the power to protect. The example given by Justice Deane of the cobbler and the clergyman example in the Bank Nationalisation Case – a taxation law which excludes clergyman, being a law relating to clergyman – are, we submit, good examples.
The plaintiffs rely against us on cases which we do not dispute for a moment which say that a law of general application not referring to corporations at all is not a law with respect to corporations. A law saying no person shall steal is not something which is valid in relation to corporations or valid in relation to aliens or thefts in lighthouses. One must specify a bit more than that if the law is a law purely of general application. We have pointed out that many of the cases on which the plaintiffs rely are directed to that point and we have dealt with that at 151 to 164 of our submissions.
Given the definition in 6(1)(a), we submit that parts of the Act which alter the industrial rights, duties or privileges of employers in relation to employees, or the reverse, can properly be categorised as laws with respect to constitutional corporations. I have dealt with the cases that leave the point open. That is referred to at paragraphs 151 and following of our submissions. I will not go through them. If I did, I would simply be reproducing large numbers of statement to the effect that it is unnecessary for me to decide in this case whether a law saying “no corporation shall” would thereby be valid. The cases do not, we submit, say the contrary.
Now, in Re Pacific Coal; Ex parte CFMEU (2000) 203 CLR 346 – this concerned section 51(xxxv). Your Honours see at paragraph 82, page 374 in the judgment of Justice Gaudron a question arose whether a particular severance provision was valid or not, but then there is a dictum in paragraph 83 of her judgment which was, we submit, prophetic. Her Honour says:
Even if s 7A(1) did apply in this case, item 50 in Pt 2 of Sch 5 could not, in my view, be characterised as a law with respect to constitutional corporations. I have no doubt that the power conferred by s 51(xx) of the Constitution extends to the regulation of the activities, functions, relationships and the business of a corporation described in that sub‑section, the creation of rights, and privileges belonging to such a corporation, the imposition of obligations on it and, in respect of those matters, to the regulation of the conduct of those through whom it acts, its employees and shareholders and, also, the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business. More relevantly for present purposes –
and for today’s purposes I add –
I have no doubt that it extends to laws prescribing the industrial rights and obligations of corporations and their employees and the means by which they are to conduct their industrial relations.
Perhaps that would be a convenient point at which to adjourn.
GLEESON CJ: We will adjourn until 2.15.
AT 12.47 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
GLEESON CJ: Yes, Mr Solicitor.
MR BENNETT: Your Honours, I will continue dealing with the various parts of section 4 of my submissions together, if that is a convenient way to do it. Certainly, 4.1 is a subset of what follows. We have taken your Honours in our submissions, and done so at some length, to the cases which provide that the power supports any law that has a connection with constitutional power that is not tenuous and substantial or distinct or distant. Perhaps the clearest statement of that is in CSL 214 CLR 397 at 414, which I have taken your Honours to before. The familiar passage is paragraph 39 that:
where a connection exists between the law in question and the head of power which is not insubstantial, tenuous or distant, that connection is not displaced by the lack of some further or additional connection.
That is the key proposition. Now, in order to find what sort of connections are sufficient, we have listed a number in paragraph 379 of our submissions. I stress that those are not tests. The test is sufficient connection. They are simply examples of types of sufficient connection. But it is important to look at the way in which those connections are invoked. In the Grain Pool Case (2000) 202 CLR 479 at page 492 [16] in the judgment of six members of the Court, this statement appears which we submit is now a classic statement of the general proposition:
The general principles which are to be applied to determine whether a law is with respect to a head of legislative power, such as –
the patents power –
are well settled. They include the following. First, the constitutional text is to be construed “with all the generality which the words used admit” . . . Secondly, the character of the law in question must be determined by reference to the rights, powers, liabilities, duties and privileges which it creates. Thirdly, the practical as well as the legal operation of the law –
has to be considered. So one has to look at the rights, powers, liabilities, duties and privileges which the law creates. That is one of the reasons we say that where you have a law which says “a corporation shall not”, that is creating a duty and it is directly creating a duty in a constitutional corporation.
That test, by the way, was applied in Singh (2004) 209 ALR 355 in relation to the aliens power. I do not think it is yet in the Commonwealth Law Reports. It may be in a loose part but in paragraph [155], in a judgment by your Honours Justices Gummow, Hayne and Heydon, the passage from Grain Pool is cited as being the general principle to be applied. That was done, of course, in relation to a person power, namely the aliens power. There are passages in the earlier case of Dingjan which support that sort of approach.
Now, the way the law relates to the business, functions, activities or relationships of constitutional corporations, we would submit that is directly within it. If I could just show your Honours a couple of passages in Dingjan 183 CLR which say that ‑ ‑ ‑
GLEESON CJ: Is there a comma after “business” in that sentence? Is there a comma between ‑ ‑ ‑
MR BENNETT: Yes. I think there probably is, your Honour, but I will check that as I go along. At page 364, Justice Gaudron, with whom Justices Mason and Deane agreed, said at point 9 of the page:
When s 51(xx) is approached on the basis that it is to be construed according to its terms and not by reference to unnecessary implications and limitations, it is clear that, at the very least –
and we stress those words, “at the very least” –
a law which is expressed to operate on or by reference to the business functions, activities ‑ ‑ ‑
GLEESON CJ: No, there is no comma after “business” – that is significant. It means the word “business” qualifies all the other words.
MR BENNETT: Yes:
or relationships of constitutional corporations is a law with respect to those corporations.
Of course, there are few things that could more accurately be described as a business relationship than the relationship between the company and its employees. Her Honour goes on -
In this regard, it is sufficient to note that, although the business activities of trading and financial corporations may be more extensive than their trading or financial activities, those corporations, nonetheless, take their character from their business activities.
Various cases are cited on that. Justice McHugh at page 369, point 5 says, in the first full paragraph on that page at point 3:
Where a law purports to be “with respect to” a s 51(xx) corporation, it is difficult to see how it can have any connection with such a corporation unless, in its legal or practical operation, it has significance for the corporation. That means that it must have some significance for the activities, functions, relationships or business of the corporation. If a law regulates the activities, functions, relationships or business of a s 51(xx) corporation, no more is needed to bring the law within s 51(xx). That is because the law, by regulating the activities, etc, is regulating the conduct of the corporation or those who deal with it. Further, if, by reference to the activities or functions of s 51(xx) corporations, a law regulates the conduct of those who control, work for, or hold shares or office in those corporations, it is unlikely that any further fact will be needed to bring the law within the reach of s 51(xx).
Then the extension appearing in Justice McHugh’s judgment which was particularly relevant on the facts of Dingjan is at the following page. He starts by dealing with the category he has been dealing with before. He says at line 6 on page 370:
A law operating on the conduct of outsiders will not be within the power conferred by s 51(xx) unless that conduct has significance for trading, financial or foreign corporations. In most cases, that will mean that the conduct must have some beneficial or detrimental effect on trading, financial or foreign corporations or their officers, employees or shareholders. Thus, laws that regulate conduct that promotes or protects the functions, activities, relationships or business of such corporations or laws that regulate conduct conferring benefits on those corporations are laws with respect to s 51(xx) corporations even though they are also laws with respect to that conduct.
GLEESON CJ: That is slightly different from the way Justice Gaudron put it because he has business in there as a sort of another thing as well as relationships.
MR BENNETT: Yes.
GLEESON CJ: A possible point of view is that what is distinctive about a trading or financial corporation as a legal person is that it is brought into existence for business purposes.
MR BENNETT: That would be contrary, your Honour, to Western Australian Football League.
GLEESON CJ: Why is that? The thing that brought what used to be regarded as sporting associations under the umbrella of this power was that they are now big businesses. Professionalism in sport – probably a response to television in large part – has stamped the character of business upon a lot of activities that used to be regarded in some other way.
MR BENNETT: Yes. We accept that the effect of ‑ ‑ ‑
HAYNE J: See what Chief Justice Barwick said in the WAFL Case 143 CLR 190 in the first paragraph commencing on 210:
the players may be, and I gather mostly are, professionals employed and paid for their participation in those matches which are played on grounds –
et cetera.
MR BENNETT: Yes, and:
These activities are clearly within the objects or purposes of the prosecutors.
The argument put there, of course, was the argument that has a slightly old‑fashioned ring to it that sport is not business, and they were at pains to reject that.
GLEESON CJ: Yes, that argument was given its quietus in New South Wales in the case of Hawick v Flegg.
MR BENNETT: Yes. There were a number of cases in New South Wales dealing with football players and restraints of trade, as I recall, and some of them were quite early, I think, as early as the 1960s and 1970s. I think Tutty v Buckley was one at an early stage.
GLEESON CJ: Hawick v Flegg was the first and people tried to argue that you could not interfere in sporting contracts because of Cameron v Hogan. Successful counsel in Hawick v Flegg, which was the first of those sporting cases, was Mr Deane.
MR BENNETT: Yes. Of course one of the things which made it business was the payment of the players. They were employees of the clubs. That is seen as an aspect of the business, as of course it is. Now, your Honour the Chief Justice asked one of my learned friends about the point of departure in Dingjan between Justice McHugh and Justices Gaudron, Mason and Deane, and that is really in relation to the difference between what one might call first and second tier outsiders, the first tier being the people who actually deal with the company and the second tier being people whose conduct or dealings affect the company in some way.
Fontana Films makes that very clear when it talks about first, second, third and fourth persons in the way it controlled it. The difference between them is that, in relation to the second tier, Justice McHugh says the effect on the corporation must be substantial. That is really the difference between them and there is a difference also in relation to the way reading down could operate under section 15A.
Now, your Honour, the reading which we give to Dingjan was applied by the Full Federal Court in relation to this legislation in Quickenden v O’Connor (2001) 109 FCR 243 – or, yes, the previous legislation but the same general effect. It is a decision of Chief Justice Black and Justices French and Carr and it involved, among other things, a question very similar to the question involved in this case. I will not take your Honours right through it but the conclusions were primarily based on Dingjan. For example, in paragraph 39, after referring to a number of authorities, Chief Justice Black and Justice French say:
It is neither possible nor necessary for the purposes of this case to extract from these authorities an exhaustive statement of the limits of the corporations power. It is sufficient to say that the state of the law after Dingjan supports, as a valid exercise of the corporations power, a law that applies expressly and specifically to constitutional corporations in their capacity as such corporations or to other persons or bodies in their dealings with such corporation or their conduct in relation to them. A fortiori a law is a valid exercise of the power under s 51(xx) if it confers rights or powers or imposes duties or liabilities peculiarly on such corporations or those who deal with them –
read unions –
or engage in conduct affecting them in connection with those dealings or that conduct.
GLEESON CJ: What is the meaning of that expression “in their capacity as such corporations”? If you have a law that applies expressly and specifically to constitutional corporations, what do you add to that by saying “in their capacity as such corporations”?
MR BENNETT: Nothing, your Honour. What their Honours are referring to there, we would submit, is the last sentence of the paragraph that:
a law of general application which happens to apply to constitutional corporations among others is not a law with respect to such corporations for the purposes of s 51(xx).
They go on to talk about Part VIB, about workplace agreements. At the next page, at the top of page 258, they describe those agreements as being agreements:
“ . . . about matters pertaining to the relationship between . . . an employer who is a constitutional corporation and . . . all persons who, at any time when the agreement is in operation, are employed in a single business or a part of a single business of the employer and whose employment is subject to the agreement.”
These elements, made essential by s 170LI, are sufficient to indicate that the impugned laws apply directly to constitutional corporations in that character and to their employees.
They then refer to the simple discrimination test and say:
If satisfaction of a discrimination test as enunciated by Brennan J can be regarded as at least sufficient to determine validity then these laws are valid on that basis. They are also valid if the test applied is that of “sufficient connection”. The rights and duties which define the relationship between a corporation and its employees are central to its functioning. It is true that employee relations are not peculiar to constitutional corporations, but neither are trading or financial activities. The fact that the subject of the law is not itself unique does not deprive it of the character of a law with respect to constitutional corporations if it is specifically and uniquely directed to them. That direction is no mere peg or reference point. The constitutional corporation in Pt VIB is a necessary party to the agreement –
et cetera. Justice Carr, who delivered a concurring judgment, said at the bottom of page 273 in paragraph 113:
In my view, the authorities show that it is no longer necessary, in order to establish the constitutional validity of a law based on the corporations power, that such a law relate in some way to the trading activities of (relevantly in this case) a trading corporation. The question is to be answered by ascertaining whether there is a sufficient connection or some discriminatory application to corporations: Re Dingjan and the authorities there discussed.
Then he cites a number of passages from Re Dingjan and says at paragraph 115 at the bottom of that page:
The challenged provisions can be seen to operate directly on a constitutional corporation in relation to its day‑to‑day employment relationships. In my opinion, the challenged provisions are quite clearly a law with respect to constitutional corporations. In this case, the fact that the University is a trading corporation has significance in the way in which the law relates to it . . . The challenged provisions only apply to trading corporations and they apply directly to confer a benefit. That, so it seems to me on the state of the authorities to date, provides a sufficient connection for the challenged provisions to be characterised as laws with respect to constitutional corporations.
He then said it is internal to talk about internal matters. There was an attempt in that case to run the Justice Isaacs view about internal ‑ ‑ ‑
GUMMOW J: Yes, where does Justice Carr deal with that?
MR BENNETT: Deal with the internal/external?
GUMMOW J: Yes.
MR BENNETT: Well, he deals with it in the rest of the paragraph where I just stopped reading at the top of 275. He says:
Once such a sufficient connection is shown, it would be irrelevant, in my opinion, whether or not the conduct sought to be regulated involved relationships internal to corporations. However, it is not necessary to decide that point, because in my opinion the relationship between a corporation and its employees should not be characterised as being “internal”.
That is why the picking up on what Gower says about a corporation being ultimately its corporators and what was said in the – Gower in the introduction in 1954 says:
But the fact that the workers form an integral part of the company is ignored by the law. In legal theory the relationship between a company and its employees is merely the contractual relationship of master and servant and the servants no more form part of the company than do its creditors.
and so on. What I was looking for, your Honours, was the quotation from Justice Windeyer. Your Honours need not go to this. It is in Mendes v Commissioner of Probate Duties (1967) 122 CLR 152 at 169, which is very much in the Duomatic line in relation to ‑ ‑ ‑
GLEESON CJ: Is that not the case in which he said the company is the corporators assembled in general meeting?
MR BENNETT: Yes, that is the passage I referred to. Justice Carr then decided not only that the test was inappropriate, but also that, even if it was applied, it would not assist in that ‑ ‑ ‑
GUMMOW J: Did the joint judgment deal with the Isaacs theory, the joint judgment in Quickenden?
MR BENNETT: Yes, I think it does, your Honour. I will just find the passage. It seems to be impliedly excluded by the passage which I took your Honours to in paragraph 39.
GUMMOW J: Yes.
MR BENNETT: It is referred to at pages 253 and 254 where your Honours refer to Huddart, Parker and then say the doctrine of reserved powers passed away in Engineers and that Huddart, Parker has been overruled and ‑ ‑ ‑
GUMMOW J: I think not.
MR BENNETT: Yes, I think they treat it as not being worthy of being referred to.
HEYDON J: It is referred to at the end of paragraph 30 but it is not praised or criticised.
MR BENNETT: Yes. It just says that “Isaacs J, in dissent, would have”, but they do not even trouble to deal with it because they clearly regard it as so much on left field. Now, in paragraph 379 we give examples of cases where there is a sufficient connection. The first one is that they relate to the conduct of those who control, work for, or hold shares or office in constitutional corporations in that capacity. That we have referred to Re Dingjan for and we have picked up a few other ways one could establish a connection.
Now, the related persons link is the clearest one where the law by reference to the activities or functions of a corporation relates to the conduct of those who control, work for, or hold shares or office in it in that capacity. That can be gleaned from a number of passages in Dingjan. Justice Gaudron, with whom Justices Mason and Deane agreed, at page 365 at point 7 of the text part of the page says:
Once it is accepted that s 51(xx) extends to the business functions, activities and relationships of constitutional corporations, it follows that it also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships.
There is a similar passage at page 369 in the judgment of Justice McHugh. Now, that would support all the provisions in the Act that are directed to employees. So far as second tier outsiders are concerned, Dingjan, your Honours recall, was a case where the connection was too remote but the protection from damage connection certainly is sufficient, we would submit, where the purpose of the legislation or the effect of the legislation is to protect a constitutional corporation from loss or damage.
There are a number of passages we have referred to from Fontana Films. I will just give your Honours the references; I will not take time by going to them. Fontana Films 153 CLR 169 and passages supporting that proposition appear at 183 per Justice Gibbs, 195 Justice Stephen, 208 Justices Mason and Aickin, 212 Justice Murphy and 219 Justice Brennan. Now, that connection is relevant to very few provisions in the Act, one of them is section 496(2), but, by and large, it is a fairly small part of the Act which is supported by that proposition. We have referred also to the practical effect connection which Justices Brennan and McHugh refer to in Dingjan. That is mainly concerned with right of entry and freedom of association. Those are my submissions on section 4.
Section 5 I am going to deal with extremely briefly because basically the miscellaneous matters in section 5 are dealt with sufficiently in our general submissions. In relation to Schedule 1 ‑ ‑ ‑
GLEESON CJ: Just before you go any further, before you depart from section 4. In a decision in 1904, Re David Payne & Co Limited [1904] 2 Ch 608 at 612 Justice Buckley said this:
Every trading company has power to borrow for the purposes of its business, and the introduction of this clause –
that is in the memorandum about borrowing –
is only to express in words what would otherwise be the law. A limitation of the borrowing to borrowing for the purposes of the company’s business is necessary, of course. A corporation cannot do anything except for the purposes of its business, borrowing or anything else; everything else is beyond its power, and is ultra vires.
MR BENNETT: Yes. Your Honour, that accords with the submissions I was making earlier in relation to the width of whether one uses the word “trade” or one uses the word “business” because much the same would apply to the trading activities of a trading company except the very minor South Australian exceptions which I referred to. So we, with respect, would call that passage in aid.
Now, your Honour the Chief Justice asked about the Prices Justification Act. So far as we can find, the validity was never challenged. It was repealed by Act 74 of 1981 and similar provisions were included in the Prices Surveillance Act 1983 which was repealed in 2003, although that had a CLM clause in it dealing with a number of heads of power, whereas I think the first Act was purely under the corporations power.
Schedule 1 is an amendment of Schedule 1B of the pre‑reform Act which dealt with the registration of organisations. Registration of organisations was therefore seen as incidental to the conciliation and arbitration power. What is put against us is that where you have a conciliation and arbitration power, one of the parties to the conciliation and arbitration is in general terms organised labour and, therefore, the registration of these bodies as parties to those proceedings has a direct relationship with the power. Yes, we accept that. Then it is said, but that is not present in relation to the corporations power.
We submit on the tests that have been put there are a number of relationships to the corporations power. It is obviously, we would submit, of benefit, and at least affects a corporation, that in relation to the contracts which necessarily will form a major part of its expenditure and in relation to its activities which depend almost entirely on the activities of its labour force, that the persons representing that labour force be members of responsible and democratically‑elected institutions.
HAYNE J: That, if it has content, is a proposition about the substantive provisions of the Act, not a proposition about Schedule 1, because there are assumptions made in that proposition about the way in which the substantive provisions operate which are critical to the validity of what you assert.
MR BENNETT: Yes, but I can only deal with one topic at a time, your Honour, but, yes, and the ‑ ‑ ‑
HAYNE J: Exactly, Mr Solicitor, not two wrapped up as one.
MR BENNETT: Yes, but, your Honour, there is a separate challenge made to Schedule 1 of course, separate from the substantive provisions, and it is that challenge with which I am dealing. In my respectful submission, all the substantive provisions, without going through them, can very easily and necessarily be characterised as falling within one or more of the descriptors we have given in paragraph 279. I am not undertaking the task of going through them one by one and allocating a descriptor to each section, but the general subject matter is one which clearly falls within it and so long as no provision is remote from that subject matter, the general submission in relation to validity would apply.
Your Honour, the functions of organisations are functions which clearly impinge, through a large number of the substantive provisions, directly on employers, as defined. That happens through such things as right of entry; it happens through things such as the freedom of association and the various procedures for dispute resolution. All those matters are facilitated by having on the other side bodies that truly represent persons in negotiation with the company, or some of them, and hence the need for the democratic procedures, and bodies where there is a high standard in relation to their conduct and the conduct of their officers. One does not need to spell out the obvious reasons for that.
HAYNE J: You say truly representative bodies; representative of whom?
MR BENNETT: As has been pointed out, they are not necessarily totally representative of any particular workforce but that is because of the need, in order to address the problem, the old corporations problem of dealing with hundreds of people at once, of having one person to talk to. They are democratically representative of their members, at least some of whom will fall into the relevant category.
HAYNE J: What is the relevant category?
MR BENNETT: The category of employees ‑ ‑ ‑
HAYNE J: There has to be a degree of rigour about these propositions that are being advanced, Mr Solicitor. They are not, I think, useful cast at a level of generality. They have to be tied back into the Act which is impugned.
MR BENNETT: Your Honour, the case put against me on Schedule 1 is to say, first of all, there is a specific case based on the requirements of membership and so on and then there is a case based on the unions as, in some cases, constitutional corporations in their own right and the provisions about incorporation, but that is the extent of the attack, as such, on Schedule 1. In general, the attack which has been made on the Act has not been an attack of going through it section by section; it has been an attack which says, “Here is what the power is. Here are what we say the limitations are on the power. It does not justify a generalised industrial relations law.” Your Honours, it is necessary to respond to that attack at the level at which it is made.
GLEESON CJ: But Mr Hutley made a more specific argument which was to the effect that when you look at the provisions of Schedule 1 relating to the constitution of industrial associations, they are provisions that, according to his submission, seem to have no connection with a head of power under which the Commonwealth has legislated with respect to relations between corporations and their employees.
MR BENNETT: His concern rather seemed to be a difference – and he detected a few minor differences – in the constitutional definitions appearing in the schedule and appearing in the Act. The schedule itself has constitutional definitions which make reference to federal system employers and federal system employees who are defined in sections 18A and 18B. Now, those definitions we defend by their own force. The fact that there may be minor differences and that one may need different degrees of constitutional connection in relation to one type of provision or another type of provision, really says nothing about constitutional validity.
GLEESON CJ: One of the arguments he put was that the drafter of Schedule 1 appears to have proceeded on the basis that it had to be sustained in its own terms by various heads of legislative power, but the result was a series of provisions that had no intersection with the substantive provisions of the Act.
MR BENNETT: Well, your Honour, it is not that it has no intersection. It has what one might call a 99 per cent intersection and there may be the odd case which one could divine by elaborate reading of the two definitions where someone comes within one definition and not within another, but other than that, they are very similar. What is important to the validity of the schedule is that it has definitions in subsections (2) of each of 18A, 18B and 18C which clearly tie it to constitutional power. That appears most clearly in relation to the situations where the only characteristic of an association of employees under section 18B is that it is a constitutional corporation.
If that is the only connection, then the reach of constitutional power in relation to it comes from a completely different direction than the source of constitutional power where it falls within the other part of the definition because it falls then within the rather more direct ability to control the actions and the rights, liabilities and so on of a constitutional corporation.
Now, my learned friend used the word “irrational”, but there is nothing irrational in Parliament saying, as a responsible Parliament must, “We wish our legislation to be constitutionally valid, we need to direct our minds to what should be done to ensure that it falls entirely within power”, and then passing provisions which have that effect, and this is one. This brings within the constitutional power some organisations which otherwise might not be there but to which we say, so what? Why is that irrational? Why is it irrational to say that one wishes to apply some principles which the Act is laying down and some controls the Act is laying down to an area within power not otherwise controlled?
GLEESON CJ: I am just not clear in my own mind at the moment as to whether the Commonwealth says, “The provisions of Schedule 1 are there and are valid because they help us more effectively regulate relations between corporate employers and their employees” or whether the Commonwealth says, “Schedule 1 is there because we have these various heads of power pursuant to which we may regulate the affairs and activities of industrial associations”.
MR BENNETT: It is both, your Honour. It is clearly both. The primary matter is the first but to ensure the width of it and to protect against constitutional invalidity the Schedule is extended and applies beyond the indirect application to provisions of the Act to a direct application to, for example, unions which are constitutional corporations, if they choose to be.
GLEESON CJ: Do you mean that those provisions that Mr Hutley said were irrational – actually, the word he used was “weird” ‑ ‑ ‑
KIRBY J: He used both, I think.
MR BENNETT: He used both, yes.
GLEESON CJ: ‑ ‑ ‑ are belt and braces provisions.
MR BENNETT: Yes, your Honour.
GUMMOW J: What do you say about Mr Jackson’s submissions to us yesterday at page 318 of the transcript, beginning at line 13555 and going over the page? You have this industrial organisation, none of the members of which are employees of the particular constitutional corporation with which there is the dispute. That might have been okay for industrial organisations but his point is you cannot transfer those notions readily across to this context.
MR BENNETT: I am sorry, your Honour, which paragraph on the page is it?
GUMMOW J: Page 318, line 13555, the transcript for yesterday and going over the page.
MR BENNETT: Your Honour, we had trouble understanding what that meant. Obviously in relation to particular dispute X union Y may have no relation to it, but we just did not see what that had to do with anything. The fact is that if a particular union has employees of somebody’s then it is relevant to the potential disputes or actual disputes in relation to those bodies. Some other union might be relevant in relation to that body. It seemed to us a complete irrelevancy and we did not understand it, your Honour. We tried.
There are provisions which connect particular organisations to particular employers. There is a provision, for example, in section 405(3) of the Act which limits an application for a penalty to an organisation that has a particular relationship with the particular corporation. Your Honour, it is very hard to deal with a submission which seems to us to be incomprehensible, but obviously, in any particular dispute, there may be unions that are not involved in that dispute. So what? The point is that the organisations which are dealt with are identified by a constitutional connection.
GUMMOW J: With what?
MR BENNETT: Either with themselves being ‑ ‑ ‑
GUMMOW J: I know that. That is not going to be very often, I think.
MR BENNETT: Well, by having a majority of members and a majority are selected as a conservative, as a safe harbour, if one likes, constitutional relationship, to people who fall into the various categories of employees of bodies within power, including the Commonwealth and the bodies in Territories, constitutional corporations, and so on. Once one has that relationship, one then has a connection to power.
GUMMOW J: Power to do what?
MR BENNETT: I am sorry, your Honour, power to legislate.
GLEESON CJ: The key to this is registration, is it not?
MR BENNETT: Yes, your Honour.
GLEESON CJ: It all hangs on the concept of registration, which is voluntary, but these provisions deal with eligibility to become registered.
MR BENNETT: Yes, that is so, your Honour.
GLEESON CJ: And the price of becoming registered is subjection to regulation.
MR BENNETT: Yes.
GLEESON CJ: You do not have to be registered if you do not want to.
MR BENNETT: No, that is so.
GLEESON CJ: But if you are registered, then you have to have democratic elections, and so forth.
MR BENNETT: And you can participate in various ways in the procedures the Act lays down in relation to things such as right of entry and the provisions for industrial action and the provisions in relation to a large number of areas within the Act, and one could get the constitutional connection, as I said, either through the provisions of the schedule or through the relationships in the Act.
GLEESON CJ: Well, take a simple example. Suppose you erected a system of registration with all the consequences that have just been mentioned and then the Commonwealth said, “To be registered as an association, the association must have as a majority of its members people who are employed in a Territory. That’s the head of power that we’re going to select”. What has that to do with enabling constitutional corporations more efficiently to deal with their employees, to deal with their labour relations?
MR BENNETT: That particular union may not, but that particular union would have an effect in relation to the territories power in relation to things done in ‑ ‑ ‑
GLEESON CJ: Suppose that was the only criterion for eligibility. Suppose the Act fastened onto that undoubted head of power and said, “To be eligible to be registered as an industrial association, the majority of your members have to be employed in a Territory”. How would that fit into the scheme of this kind of legislation?
MR BENNETT: Your Honour, it would dramatically limit the effectiveness of Schedule 1 because it would only apply it to a small part of the area sought to be dealt with. There is nothing irrational in the draftsperson divorcing the object sought to be achieved from the heads of constitutional power used to achieve that objective. That is CLM. The assumption of the submission against us seems to be that because the heads of power selected for the eligibility provisions in Schedule 1 may be different to those which appear in the Act and may involve different unions in different situations, in some way that makes it irrational. It simply means, we submit, that the Parliament is being responsible in having in mind its constitutional limitations; nothing more.
GUMMOW J: Do you get any assistance by way of analogy from Cunliffe 182 CLR 272, the registration provisions in Cunliffe, the migration agents?
MR BENNETT: Yes, your Honour. The purpose of the legislation was the protection of a group of people who were, if one likes, the clients of the relevant profession and the Act set up a system of registration so as to enable it to be assured to the members of the client group, who were a subject of constitutional power, that they dealt with responsible and educated people. That clearly is a law, at least in one of its characterisations, with respect to aliens and it was so held in Cunliffe. There was no compulsion, of course, to be a migration agent. One could embark on any other profession one liked but if one chose to be a person who was giving particular forms of advice to the protected group then a system of registration and control was set up.
In that situation there was no need for any constitutional eligibility provision because the belt and braces technique was not employed but if the Commonwealth chooses to employ it, it is entitled to do so. It would have been open to the Commonwealth to have said that migration agents had to be aliens or could not be aliens or that they had to be constitutional corporations or could only operate in territories. It could have done those things. They would have limited the application of the legislation considerably and it was not necessary to do them. In this case the view has been taken for more abundant caution that it is desirable to have a set of constitutional criteria in Schedule 1.
The only other matter I want to mention about Schedule 1 is this, that there was a peripheral attack made on the provision about organisations which are themselves constitutional corporations and it was said that we incorporate them and therefore there was a problem. That does not arise because the provisions of section 27 which say an organisation “is a body corporate” and “must have a common seal” and so on, that may cause incorporation where one starts with a new body and that is under‑justified in one way.
Also, if one has a body which is already a constitutional corporation then it is not reincorporated. It merely continues as an incorporated body with some different characteristics. So it was formed, if one likes, when it initially became a constitutional corporation. So there is no question of it being formed if it is under the heading of “constitutional corporation”. There are deregistration provisions where bodies cease to have characteristics but I will not trouble your Honours with those. There is no problem of incorporation in the case where the association is a constitutional corporation.
Where its eligibility arises out of the majority of its members being federal system employees or employers, where that is the basis for its eligibility, then the prohibition on its incorporation does not exist because it is not being treated as the relevant constitutional corporation for the purpose of constitutional validity.
As I submitted earlier, we can clearly incorporate bodies under other heads of power and bodies can be incorporated under placitum (xx) so long as it is not the body being incorporated which is relied on as the connection under placitum (xx). To take the most obvious example of all, if the Commonwealth incorporates ASIC and it does so under placitum (xx), one would not say “No, you can’t form corporations under placitum (xx), and ASIC is a corporation, therefore you couldn’t do it”. That would be a nonsense argument because the aspect of 51(xx), which justified the incorporation of ASIC, was the regulation of thousands of other constitutional corporations, not that one.
Another example might be a law which dealt with the incorporation of subsidiaries of trading or financial corporations. Such a law would be valid, notwithstanding the Incorporation Case, because it would depend on the corporation of which it was a subsidiary, as the trading or financial corporation bringing it within power rather than the newly formed corporation. All the participle stops us doing is relying on the newly formed corporation as the link to constitutional power and that is all the participle stops us doing, so the arguments based on incorporation in relation to Schedule 1 simply fail.
There are some other provisions which are relevant to the purposes of registration of associations. I simply, without taking your Honours through them, would direct your Honours’ attention to Schedule 1, clause 19(1)(e) and (i) which contain links to the relevant powers. Your Honours, I am not going to deal with the transitional aspects of Schedule 1 because Mr Tracey is going to deal with those.
GLEESON CJ: Just before you go, where does Mr Walker’s argument leave ASIC?
GUMMOW J: It goes around, on one view of it, meddling in internal affairs of trading corporations.
MR BENNETT: Yes, although, of course, it is not because the link with power for the creation of ASIC is not the fact that it is a trading corporation, assuming that it is – I do not know whether it is or it is not.
GLEESON CJ: Of course not.
MR BENNETT: If it were, that would not be the link to the head of power. The link to the head of power is what it controls.
GLEESON CJ: But what it controls, its whole raison d’être, is internal management.
MR BENNETT: In that sense, I am sorry, I misunderstood your Honour’s question. Yes, in that sense it would result in almost the whole of modern companies law being unable to be enacted by the Commonwealth. In fact, of course, there has been a reference. The reference was there because of two small perceived gaps, incorporation and corporations that were not trading or financial corporations.
Virtually the whole of the reference would have been necessary, if my friend’s argument was correct, and prior to the reference virtually the whole of the corporations law would have been invalid. We do not have to deal with that, I simply mention it in answering your Honour’s question and there is a further consequence of that argument. As I say, it is an argument that only two people ever have put. One is the dissenting judgment of Justice Isaacs and the other is my learned friend’s submissions. It is an argument which can be shown to have no logical basis at all except assertion.
In relation to rights of entry, I only want to refer to one or two minor matters. They are dealt with fully in our submissions. The relationship to power is fairly obvious because they are rights to enter on premises controlled by constitutional corporations or the Commonwealth and so on. Your Honour Justice Kirby asked about delays in obtaining a right of entry permit in an occupational, health and safety situation. The answer to that is really that the people concerned are union officers, permits are issued to the person for a period and it is likely that, in the same way as most people have passports even if they are not planning a particular trip, most relevant union officers would ensure that they were the holders of right of entry permits. The situation where someone needed one urgently in a particular case is going to be comparatively rare.
Secondly, there is no reason to assume that where there was a situation of urgency one could not be obtained rapidly. In any area where the government provides licences, passports or courts provide remedies or the government does anything at the request of a citizen or the courts do anything at the request of a citizen, there are going to be situations where it is particularly urgent to act quickly. The courts deal with that by ex parte injunctions and leave to serve short notice and urgent hearings. Government officials deal with it in a variety of ways.
I have no doubt, without any particular knowledge, that if someone goes to the passport office and says, “My father is dying on the other side of the world. I want a plane to take me over there tomorrow and I do not have a passport, I need one quickly”, that that person is not going to have to wait three weeks. It is a fairly safe assumption without knowing anything about it, and if not, the ombudsman would no doubt ensure that it was.
The government sometimes has to act quickly and there is no reason why in a case where there was a matter of urgency - some recently appointed union safety expert wishes to go to Beaconsfield or whatever - why one could not obtain a right of entry permit as a matter of great urgency where it was necessary to do so. That, of course, does not go to validity but your Honour asked the question and it should be dealt with.
The other matters concerning rights of entry, I think, are all dealt with – there was one minor matter of construction in relation to rights of entry. If your Honours go to section 755 of the Act, your Honours see that in subsection (1)(d)(iii), (e)(iii) and (f)(iii) there is a reference to the right relating:
to conduct engaged in, or activity undertaken or controlled, by . . .
(iii)a contractor providing services for a constitutional corporation or the Commonwealth.
We would accept that that has to be read and we would read it as a contractor in the course of providing services or to the extent that it provides services or some such phrase which limits it to the relationship with the head of power. There would be a constitutional problem otherwise because of Dingjan, but we submit it clearly has to be read in that way for the purpose of ‑ ‑ ‑
GUMMOW J: “Providing” is a present participle ‑ ‑ ‑
MR BENNETT: Yes, your Honour. We note in section 756 that it is the official not the organisation who has the right to enter premises. So it is a personal right which the person has and it is that right which requires the permit and the rules about time of day. Now, I do not think I need to say more. The rest is covered in our submissions. The same applies to freedom of association. I will not deal with that separately and the same applies to the provisions about industrial action, which again I will not deal with separately except to say that one could hardly have a clearer example of the protection of the rights, privileges, et cetera or the avoidance of substantial detriment to a constitutional corporation.
GUMMOW J: Are you going to say anything about the explanatory memorandum?
MR BENNETT: No, your Honour, I was not, but if your Honour wishes me to deal with some particular aspect I will do so, but I had not proposed to.
KIRBY J: You did say you were saving up the objectives – the objects of the Act, that there was an explanation and you were saving it up till last.
MR BENNETT: Well, your Honour, yes. The explanation lies in what I said before, that it lies in the Murphyores analysis. If one had a law, as in the Murphyores Case, saying that one could not export material mined on Fraser Island and the head of power relied on was trade and commerce, the objective was a purely environmental objective, one would not expect the long title of the Act to say the objective is to further trade and commerce or reduce trade and commerce or control trade and commerce. The objective would be to save the environment.
KIRBY J: Doing that would test credibility, you see, and the proposition is that we ultimately have to exercise our credulity in testing the proposition under the aegis of “with respect to”.
MR BENNETT: Yes, but, your Honour, that is my point.
KIRBY J: Even when one adds all the heads of power that are invoked.
MR BENNETT: It would not test credulity. Your Honour, what I am suggesting is that the title would expose the truth, but the truth does not lead to invalidity.
CALLINAN J: Mr Solicitor, be careful about Murphyores. Justice Stephen who wrote the leading judgment refers to the regulation of mining as being an essential function of the State. That case was decided before Austin’s Case which preserves essential functions for the State. You cannot really reconcile it with Austin.
MR BENNETT: Well, your Honour, I was not dealing with the Melbourne Corporation aspect.
CALLINAN J: I know you were not, but I am just saying, you are relying upon Murphyores.
MR BENNETT: Let me take the example given by Justice Menzies in Fairfax which was rejected by the later Court, the example of the tax law which imposes a tax at a high punitive rate on dealing in heroin - for the purpose of suppressing dealing in heroin. The constitutional head of power is taxation not drugs but there is no reason why an honest statement at the beginning of the Act would not say, “An Act to suppress heroin” but one would not say that led to any invalidity. One would not be surprised not to see the title being “An Act to impose taxation” in a particular type of case. There is nothing wrong with honesty in long titles and the fact that the long title exposes a motive has nothing to do with constitutional validity.
CALLINAN J: Nothing to do with frankness.
MR BENNETT: No, the opposite, your Honour. What I am suggesting is the very opposite to that, that by having a frank title which admits the motive one does not take oneself out of constitutional validity. Describing the taxation of heroin Act as an Act to suppress heroin is being honest. Describing it as a taxation Act is referring to – if I can use the derogatory term – the peg rather than the substance, but that does not detract from the constitutional validity of the peg in that case.
KIRBY J: I am not so concerned for myself that this Act was not named “A Corporations (Fair and Just Employment Conditions) Act”. That does not trouble me so much. What is at least a source of puzzlement and anxiety is that in the list of objectives of the Act, or the objects, though it is a long list, nowhere is there any suggestion that one of the objects of the Parliament was to make a new law for employment in corporations and that makes you then start to wonder is that really the object of the Act or is it, as one looks at it, simply a refurbished industrial employment Act with a new label thrown in?
MR BENNETT: No, your Honour, because the objects ‑ ‑ ‑
KIRBY J: You would have expected one object, indeed, you would have expected the first object but even if you had put it somewhere down the end you would have expected it. I know this is not determinative but it makes you just a little suspicious.
MR BENNETT: No, your Honour, because one would have needed to list all the heads of constitutional power logically then, including territories ‑ ‑ ‑
GUMMOW J: Before you go much further, Mr Solicitor, have look at page 1 of the explanatory memorandum under the heading “OUTLINE” and the first bullet point as to major reforms.
MR BENNETT: I am just obtaining a copy, your Honour.
GUMMOW J: You may get some good news.
CALLINAN J: I would prefer the good news to be in the Act, myself.
MR BENNETT: May I come back to what your Honour Justice Gummow puts to me when I get a copy of it?
GUMMOW J: I will read it:
The major reforms to be implemented by the Bill will:
· simplify the complexity inherent in the existence of six workplace relation jurisdictions in Australia by creating a national workplace relations system based on the corporations power that will apply to a majority of Australia’s employers and employees ‑ ‑ ‑
MR BENNETT: Your Honour, precisely. That puts it precisely and fairly.
KIRBY J: This is the Executive Government at work. I was asking about the Parliament of the nation.
GLEESON CJ: This is the explanatory memorandum in the House of Representatives.
KIRBY J: Written by the Executive Government.
HAYNE J: The passage to which ‑ ‑ ‑
MR BENNETT: Yes. But there is no need, your Honour, for Parliament in its objects to refer to the constitutional heads of power which it is proceeding under. One good example of that is the Trade Practices Act which says in its objects clause:
The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.
No mention of corporations or Territories or all the various other heads of power which are invoked by the extended operation of the Act.
GLEESON CJ: Well, you get the clearest example of it in the Prices Justification Act 1973 which, in its long title, described itself as an Act to regulate the prices of goods and services throughout Australia, full stop.
MR BENNETT: Yes, precisely, your Honour. One would be surprised to find the heading of constitutional power relied on included there. That is the means, not the end.
HAYNE J: These points are amplified a little at pages 9 and 29 of the explanatory memorandum, which I note the Commonwealth does not seem to have brought to Court.
MR BENNETT: Yes. We have, your Honour; it simply had not been placed in front of me.
HAYNE J: You have got the slim line obviously, Mr Solicitor.
MR BENNETT: Yes. I have the second reading speech; the explanatory memorandum as well, which is very short, yes.
GLEESON CJ: That shows you have not read it.
HAYNE J: Snap.
MR BENNETT: Well, the one I have been given is two pages, your Honour. There is a lot of paper in this case. The point is that very short one, that where an Act is passed of the Osborne, Fairfax, Murphyores, whatever, type, where an Act is done – or a Tasmanian Dam’s type legislation – where an Act is passed to achieve a result and powers are used to achieve it, there is simply no need to refer to those powers in the objectives. It clutters them up. The powers are the means rather than the objectives. In my respectful submission, there is nothing surprising in the short title.
Now, on severance I only want to say very little. We submit of course it will not be necessary to get to any questions of severance. It is almost impossible to deal with severance in a case such as this where such wide‑ranging and diverse attacks are made on a piece of legislation because in a sense each submission needs to carry with it an analysis of whether, if it succeeds, severance can occur and, if so, how, and that is a task which would take me well beyond the week, let alone my allotted time today. What we do say is that while we have accepted that if application of the Act based on section 6(1)(a) is found to be beyond power in a total sense, then no severance is possible.
I have dealt with the question of severance in relation to the South Australian submission, that being a case where one fairly easily could sever in relation to the few trivial examples of cases where one actually can find something done by a trading corporation that has no relation at all to its trading or its corporate existence. It is very hard to find such examples. It requires a lot of imagination and one can fairly easily sever if they occur.
GLEESON CJ: But if you treat contracts of employment as being essentially of a business nature, then anything that is by hypothesis a trading corporation – and the question does not arise if it is not a trading corporation – is engaged in a business activity in relation to all its contracts of employment, even if the employees are health inspectors.
MR BENNETT: Yes, precisely, your Honour, and we so submit. We have in our submissions referred to severance generally and to section 15A, and section 14 of the Act can assist in reading down. Section 14 applies where a provision of the Act would be supported by a head of power but for its application to some situations not within it and where it cannot otherwise be read down and it expresses a presumptive intention to exclude those from the reach of the law. Now, that, we submit, does not commit the Pidoto offence and it leaves to the Court the function of ascertaining if there is a contrary intention.
A reading down can be valid even though there is no criterion given by which the Court can read it down. R v Hughes (2000) 202 CLR 535 is the most obvious example where this Court upheld the application of a law under a power other than that under which it was primarily supported because the facts of the case clearly brought it within power. Your Honours
recall that involved the powers of the DPP to prosecute in relation to a State Companies Act offence and the fact that it was alleged to have been committed in New York in the course of international trade was held to be sufficient to save it in its application to the particular case. I will not take your Honours to it, but the passages are 555 to 557 and your Honour Justice Kirby took the same view at pages 582 to 583 in paragraphs 116 to 118.
There are some provisions of the Act which are supported by reference to international instruments. I do not think I need to take your Honours to those. There is no specific challenge in relation to them. As I understand it, the other specific challenges are all sufficiently dealt with in our submissions or withdrawn. Those, your Honour, are the Commonwealth’s submissions in relation to validity.
GLEESON CJ: Thank you, Mr Solicitor. Yes, Mr Tracey.
MR TRACEY: If the Court pleases. As foreshadowed by the learned Solicitor, I propose to deal with two of the other bases of challenge, namely South Australia’s challenge to the validity of the transitional provisions contained in Schedule 6, and in doing that I will say something shortly also about the transitional provisions touching on Schedule 1, and secondly, the AWU’s attack on the conferral of some regulation‑making power on the Executive. Could I start with the matter of Schedule 6.
GLEESON CJ: Is that connected with prohibited content?
MR TRACEY: Yes, it is, your Honour. The regulation making‑power is, yes, but there are also some Henry VIII clauses as well, but the same complaint is made about all of them.
GUMMOW J: And section 16(4).
MR TRACEY: Yes, that is being dealt with separately by my friend, Mr Burmester.
GUMMOW J: He is doing it, yes.
KIRBY J: Who is dealing with the injunction power, that is to say the power to get the injunction ‑ ‑ ‑
MR TRACEY: Again, my learned friend, Mr Burmester, will do that following. Your Honours, as to Schedule 6, our submissions appear between paragraphs 574 and 589 of our written submissions responding to South Australia’s submissions which appear between paragraphs 73 and 93 of its submissions. As your Honours have seen, I think, to some extent at least, Schedule 6 deals with one of the consequences of the creation of a system based on section 51(xx) rather than 51(xxxv). Some employers who were bound by awards under the old regime will not be covered by the new system because they are not section 6 employers and Schedule 6 continues awards to which such persons are party in force for a limited period to ensure a smooth transition. That transition may be into a State system or, if the employer during the transitional period changes status, for example, by incorporating ‑ ‑ ‑
GLEESON CJ: Is Schedule 6 based on paragraph (xxxv)?
MR TRACEY: Yes, it is, your Honour. It is analogous to some extent with the process considered by the Court not so long ago in Pacific Coal where there was a transition from an award to an agreement based system with awards being retained but only to provide a safety net. The difference is that at the end of this transition period awards will cease to have force and effect if they have not earlier done so.
GUMMOW J: What is that critical section?
MR TRACEY: Your Honour will find it in the second volume, Schedule 6, and it starts at page 1006. I will be taking your Honours through some of the provisions shortly. The employers and employees to whom the schedule applies, as I say, can agree to move to a State system during the transitional period or it may be that if the employer’s status changes during that period such that the employer becomes a constitutional corporation that it will be possible for the transmission of the arrangements to be into the new system rather than to a State system. But given the length of the transitional period – it is up to five years – there is also provision in Schedule 6 for there to be variation of the preserved awards during the transitional period should that be necessary.
Schedule 6 provides the regime pursuant to which industrial disputes between the parties in that period can be prevented or settled by conciliation or arbitration and, as I have already indicated in answer to your Honour the Chief Justice, the provisions are founded on the conciliation and arbitration power because what is involved is a staged dismantling of a structure erected under that power. I would ask your Honours please to look at some of the provisions of Schedule 6. Some of them have already been drawn to your attention by the learned Solicitor-General for South Australia and I will not do more than mention the ones that he has already gone to.
Could I ask your Honours to start with clause 1 and note the objects clause, clause 1(2), which sets out the intention that it is desired that Schedule 6 will serve. If your Honours then go to page 1009, you will see in clause 2, towards the bottom of the page, the definition of “transitional period”, which is where the five‑year period comes from, and then to clause 4(1) which continues awards in force in accordance with the schedule. Clause 6 provides in subclause (1) that:
A transitional award that has not ceased to be in force during the transitional period ceases to be in force at the end of that period.
Clause 7, which your Honours have seen, provides the functions of the Commission in dealing with awards during the transitional period. Clause 8, on which particular attention is focused, because it is one of the provisions that it is said is invalid, provides that the Commission is required to have regard to certain identified matters in performing its functions under the schedule. In particular, criticism is made of subclause (3)(a) which refers to the wage‑setting decisions of the Fair Pay Commission.
If your Honours would then go over to clause 16, you will see there limits on the scope of industrial disputes during the transitional period. Those limits are limits which are based on the type of matters that might be dealt with by conciliation or by arbitration, arbitration matters being narrower in scope than those that can be the subject of conciliation. Clause 17 provides for the allowable matters. Clause 18 identifies non‑allowable matters.
If your Honours would then go over to clause 28(2), your Honours will find there a provision which is not attacked in South Australia’s written submissions but was the subject of challenge during the learned Solicitor’s oral submissions, a provision that prevents the Commission varying certain types of award terms. That type of term is what is known as a preserved transitional award term and I think your Honours were taken to clause 22(3). Your Honours will see there that the matters that fall into that category are very narrow. There is only four of them. They deal with long service leave, notice of termination, jury service and superannuation.
Clause 29 is the other provision that is attacked in the written submissions of South Australia and, in particular, what is said is that the provisions of clause 29(1) which limits the Commission’s power to vary transitional awards to matters – and, in particular, paragraph (a):
to provide minimum safety net entitlements about the matters referred to in subclause (2) –
and then those matters are identified. If I can take your Honours next quickly to clause 31 which provides a limited power of the Commission to revoke awards during the transitional period and then complete the excursion by taking your Honours to clauses 57 to 59, which start at page 1052, which provide that during the transitional period awards will cease to have effect vis‑à‑vis employers in certain circumstances. Clause 57 deals with that in which the employer makes a State employment agreement with a transitional employee.
Clause 58 deals with the situation in which there is a dispute arises and reasonable efforts are made to resolve that dispute which was a dispute directed towards a move into the State system and they are unsuccessful. At that point the Industrial Relations Commission can declare that the transitional award ceases to bind the employer in respect of the relevant employees. Clause 59 deals with the situation where a dispute arises under the schedule during the transitional period and efforts are made to solve it, they are unsuccessful and in those circumstances the Commission can make a similar order releasing the employer from any obligations arising under that award.
Now, South Australia complains firstly that clauses 8 and 29 have the effect impermissibly of restricting the discretion of the Industrial Relations Commission and there is a related claim that the practical effect of these provisions is to require the Industrial Relations Commission when it is settling a dispute to apply the decisions of the Fair Pay Commission when varying awards. In our submission, there is no doubt that the conciliation and arbitration power extends to prolonging the existence of an award and providing for its variation during the extended period. In Pacific Coal the Court held that the extension could be limited to certain matters because Parliament could withdraw legislative support for some award matters.
If the legislature can withdraw support entirely from an award term, it can, in our submission, limit the scope for varying preserved provisions, particularly when the variation is to occur in a transitional period following which legislative support will be wholly withdrawn. In other words, the Parliament would, in our submission, have the power, should it have been so minded, to simply declare that awards of the kind dealt with in the schedule would cease to have effect on the commencement of this new Act. To continue provisions is to continue legislative support of those provisions and if the Parliament can do that then, in our submission, there is nothing wrong with the Parliament limiting the scope for variation of those provisions during the transitional period which will lead, ultimately, to total withdrawal of legislative support.
KIRBY J: It may have been changed by Pacific Coal but it used to be said that because of the limitation in section 51(xxxv) that limited the federal power to the determination, ultimately, of the arbitrator that for good or for bad you were basically stuck with the arbitrator’s award though you could continue it in operation and do various other things at the periphery, but there must surely be a point where what Parliament is seeking to continue is no longer the arbitrator’s award and then you have lost your contact with the federal source of power if you are using 51(xxxv).
MR TRACEY: If all the Parliament does is freeze what the arbitrator has determined under the old system for a specific period, then that is preserving the award. All that is being prevented is a variation during the transitional period.
KIRBY J: It is a matter of looking at these provisions, which I suppose one will have to do, though it is not a terribly thrilling prospect. I know you are trying to make it extremely interesting but transitional provisions can rarely, as one might say, grab you, but there would be a point where what Parliament has done by interfering with the content of the award no longer answers the description of the award of the arbitrator. At least that used to be the old theory of the cases of this Court. It may be that they have been undone by Pacific Coal.
MR TRACEY: We would have thought not, your Honour. There is a distinction, in our submission, between maintaining the settlement by saying the terms remain as they are for a particular period beyond what would otherwise have been the life of the award. It is another thing altogether to deal with whether, and in what circumstances, there may be variations during that extended period. That is a different issue. Your Honour, we do not seek to submit that Pacific Coal changes the requirement that if a variation provision is made that there has to be an exercise of discretion by the arbitrator – in this case the Industrial Relations Commission – when it is exercising that power of variation. We do not understand Pacific Coal to say anything to the contrary. That was a different question.
Justice Callinan, as your Honour may recall, in Pacific Coal specifically says that if the discretion becomes too narrowly confined, it may become tantamount to Parliament indirectly through the Commission doing what it cannot do directly.
KIRBY J: Exactly.
MR TRACEY: Namely, prescribe industrial conditions.
KIRBY J: Well, Justice Gaudron, Justice McHugh and I dissented in Pacific Coal and it may be that Justice Callinan’s reasons provide on - at least on charting the outer boundary of what you can do under section 51(xxxv), the vital fourth holding of the Court in that decision will just have to be examined.
MR TRACEY: It is a matter of degree, your Honour, but his Honour Justice Callinan was not persuaded that the line had been crossed.
KIRBY J: In that case.
MR TRACEY: And that informed his decision which otherwise adopted what had been said by the Chief Justice and Justices Gummow and Hayne.
HEYDON J: On clause 8, is the difference between you and South Australia this, that you say clause 8 requires the Commission to have regard to a range of matters, but not be completely bound by, whereas South Australia says fettered completely?
MR TRACEY: That is the point of departure, your Honour.
HEYDON J: So it is a question of construction.
MR TRACEY: That is right, and we say that having regard to is not the same thing as being dictated as to an outcome.
GUMMOW J: There must be plenty of administrative law cases that support you, I would have thought.
MR TRACEY: Yes, and ‑ ‑ ‑
GUMMOW J: Construing other Acts, I agree, but this is not an unusual form of statutory provision.
MR TRACEY: No, it is not. The administrative law cases though, your Honour, tend of course to deal with dictation by some outside body or person rather than some statutory mandate.
GUMMOW J: No, what I was saying is not unusual is a Commonwealth law that says “must have regard to this”.
MR TRACEY: No.
GUMMOW J: That is not read as meaning “is controlled by this”.
MR TRACEY: No, indeed, your Honour, and that is our submission, and we say that in any event the line has not been crossed here, that there is sufficient discretion that has been left to the Commission and it is one thing to say that it is required to have regard to the Fair Pay Commission’s decisions; it is another thing altogether to say that the Act comes pre‑ordained by that requirement. As to clause 29, what we submit is that all that it does is limit the scope for variation and that can hardly be unconstitutional given the constitutional power of the Parliament should it have so wished not to have provided any scope for variation; just maintained the settlement by leaving the award in place.
KIRBY J: Well, there would be a point though – I mean, it is one thing not to allow an arbitrator to operate; it is another thing to have a pretend arbitrator who is so limited in what he or she can do that in effect you have deprived the arbitrator of the power of arbitration to reach what inferentially the Constitution implied would be a just determination of the actual dispute between the parties. Now, if you withdraw the power of varying the award by taking out a whole series of matters, the question is posed. I am not saying what the answer is, but there was a lot of authority on this in the old days about what arbitration had to involve.
MR TRACEY: Your Honour will, of course, be conscious that it does not just have to be arbitration. Again, it would have been within the scope of legislative power here to say only variation following conciliation was permissible during the transitional period. We submit that those older authorities based on a century as your Honours have said of jurisprudence relating to section 51(xxxv) are of limited assistance in dealing with a situation such as the present. Can we stress this, your Honour? Those authorities dealing with variation and genuineness of arbitration and conciliation power were there at a time – as indeed it still was the case in Pacific Coal where awards that had been preserved were going to continue indefinitely. What this schedule deals with is a situation where that is not the case. Statutory authority behind those awards is going to be totally withdrawn in five years. The imperative to be able to vary ‑ ‑ ‑
KIRBY J: I suppose if Parliament has the power to extend indefinitely it has the power to extend for only five years.
MR TRACEY: Yes, your Honour, but it is a question of what happens at the end of five years. What happens according to clause 6 of Schedule 6 is that the legislative support is withdrawn. As to the content of the matters that can be dealt with by way of conciliation or arbitration that was a matter dealt with by the Court in Pacific Coal and the Court had no difficulty, well at least the majority, had no difficulty with the proposition that you could withdraw support from a range of terms and maintain the settlement in respect of others and we say ‑ ‑ ‑
KIRBY J: What is left is still the arbitrator’s award.
MR TRACEY: It is a sufficient part of it.
KIRBY J: We will not revisit old battles.
MR TRACEY: Your Honour, I do not want to do that. Can I move on to an alternative submission which is simply based on what Justices Gummow and Hayne said in Pacific Coal which is reflective of a long line of cases. The Court need not go to it, it is in paragraphs 184 and 185 of the judgment which say in substance what Parliament can erect under the conciliation and arbitration power it can dismantle under the power and we say that Schedule 6 is a dismantling provision – it is providing for the change of system from a placitum (xxxv) system to a placitum (xx) system.
I just want to add something briefly in relation to Schedule 1 and its transitional operation because it was submitted orally, by certain of the plaintiffs, that Schedule 1 as amended gains no support from the conciliation and arbitration power. In our submission, that is not correct. Schedule is, as the Court has been told, in substantially the same form as the old Schedule 1B and organisations that have been registered under that schedule ‑ ‑ ‑
KIRBY J: That is the one that came in and then was abolished in March of this year, 1B?
MR TRACEY: No, I think your Honour is thinking about Part VIIIAAA.
KIRBY J: You may know what schedule ‑ ‑ ‑
GLEESON CJ: That is redundancy payments, is it not?
MR TRACEY: Yes, that is redundancy payments. The current Schedule 1 is the old Schedule 1B.
KIRBY J: Remind me what the old Schedule 1B was. Its fame has slipped ‑ ‑ ‑
MR TRACEY: It is an amalgam of provisions that your Honour will recall used to be in the old Industrial Relations Act, before that the Conciliation and Arbitration Act. They are the provisions regulating the internal conduct of registered organisations, their rules requirements, the amalgamation requirements, the auditing requirements, the election requirements, all those sorts of things. They were taken out of the Act and put in a schedule, I think, about 2001 and I think the intention was that it was going to become a freestanding Act and that may explain the query that arose earlier in these hearings as to why in Schedule 1 there was reference to sections, whereas in the other schedules they are referred to as clauses because the old Schedule 1B was destined to have a life of its own.
GLEESON CJ: Does it also explain why a schedule is drafted as though it is in need of independent constitutional support?
MR TRACEY: Indeed.
GLEESON CJ: So the schedule was not drafted specially for this legislation?
MR TRACEY: No.
GLEESON CJ: It was drafted several years ago?
MR TRACEY: Yes, although I am not sure that the constitutional support provisions appeared in the old Schedule 1B. I will have to check that overnight.
KIRBY J: But the Chief Justice’s question raises the issue of whether or not the old 1B, which is now the new Schedule 1, is not a sort of hybrid that was drafted with a view to underpinning by section 51(xxxv) of the Constitution and now has to look to section 51(xx) but without perhaps, as it is suggested in the submissions, sufficient attention to providing those underpinnings.
MR TRACEY: Your Honour, as to the first part of your Honour’s question there is no doubt that the greater part of the present Schedule 1, as Schedule 1B was, is supported by the conciliation and arbitration power and as Schedule 1 it is supported principally, but not exclusively, and that is the point of my present submission, by section 51(xx) and my learned leader, the Solicitor‑General, has already addressed the Court on ‑ ‑ ‑
KIRBY J: This gave rise to the submissions which we just have to look at as to whether or not – whereas section 51(xxxv) of the Constitution implies and necessitates that there will be industrial organisations to do the arbitrating and the conciliating, whether that is truly necessary or apt in the case of a section 51(xx) power. The answer that is given to that is it is not necessary but if you want to play the game in the machinery that is provided you have to join it and join it on its conditions. That is, as I understand it, what you say.
MR TRACEY: Yes, your Honour, however – and my answer to your Honour is qualified in this way. I think your Honours were told by the learned Solicitor for New South Wales when he took you through the legislation on the first day that the provisions of the schedule continue to be applied to all organisations which were registered as at 27 March under the old legislation for three years. That appears from Schedule 4, item 24 of the Work Choices Act.
The statutory device has simply been to say that the deregistration provision which appears in section 30 of Schedule 1 cannot be activated – that is 30(1)(c)(v) cannot be activated for that three‑year period. So these organisations will continue. They will continue to service their members who are the subject of awards that are also preserved, as we have seen, under Schedule 6 and they will continue to service them in respect to providing support in the system of conciliation and arbitration. So we submit that to that extent Schedule 1 is supportable, at least for the next three years, by section 51(xxxv) in the same way that Schedule 6 derives support from the same provision for the next five years.
Your Honours, the second major area that I seek to address is the regulation‑making power. The submissions of the Commonwealth dealing with the issues raised appear between paragraphs 633 and 660 of the written submissions which are responsive to paragraphs 170 to 184 of the AWU’s submission. The AWU concentrated on the validity of section 356 in both its written and oral submissions. The submission was that the provision was invalid and it brought down the whole of Subdivision B of Division 7 of Part 8 which is constituted by sections 356 to 366 with it.
We have identified in paragraph 633 of our submissions the other provisions which are also the subject of challenge. They are what I referred to loosely a little while ago as Henry VIII type clauses, but the same submissions are simply picked up by reference in respect of those provisions as are made in respect of 356. Your Honours will see, and indeed have seen, that 356 is a very short provision which says that the regulations are to be the source of the content of the term “prohibited content” for the purposes of the Act.
GUMMOW J: “Prohibited content” does not appear from anywhere else, does it? It only comes in through a regulation.
MR TRACEY: It appears in the regulations ‑ ‑ ‑
GUMMOW J: No, but if you are trying to work out what Part 8, Division 7 does, you cannot do it without reading the regulations.
MR TRACEY: I think you can, your Honour, and I am going to take the Court briefly shortly to the provisions of Part 8 that bear on that point. Can I just tell the Court at the outset, because I think time is going to catch up with me before I can embark on that excursion, what our principal submission is and that is that in context it is clear that what is comprehended by “prohibited content” are matters which may not be included in workplace agreements entered into by constitutional corporations with their employees under this Act. To make good that proposition I will need to take the Court through a number of provisions.
KIRBY J: That will depend on what the Executive Government specifies in the regulations though.
MR TRACEY: No, your Honour – well, the content, yes, your Honour. It is left at the discretion of the Executive Government to determine what should not be in agreements between constitutional corporations and their employees.
KIRBY J: But what is suggested to be missing is the link between saying, “And in this Act or schedule – it is an Act – we mean by ‘prohibited content’ those matters which are otherwise dealt with which are forbidden to be included in awards or agreements”.
MR TRACEY: Well, your Honour, so much is implicit, because if your Honour goes to 358, your Honour will see that workplace agreements are declared to be “void to the extent that it contains prohibited content”. So that it is tolerably clear ‑ ‑ ‑
KIRBY J: Well, you say that, but the complaint is that that makes the workplace agreement vulnerable to extinction by anything that the Executive Government of the nation, without clear authority from the legislature, declares to be a prohibited content, and that is the complaint.
MR TRACEY: Your Honour, I will develop the argument in the morning, but the submission that we would make is that there is nothing remarkable in a provision that leaves that sort of discretionary decision to the Executive and it is simply a question of power. We say the link with the corporations power is forged by the context in which the provision appears. But I think if I embarked on the task of developing that submission now, I would be trespassing on the goodwill of the Court.
HAYNE J: Just before you finish then, Mr Tracey, can I hark back to the use of the official yearbook that I mentioned earlier in the proceedings. That yearbook, as far as I can tell, was published pursuant to section 20(1) of the Census and Statistics Act 1905 (Cth). Assumedly it was laid before both Houses in accordance with section 20(2). It would seem to me to be a work of a kind to which the Court can have reference and unless parties make submissions to the contrary, it is a work to which, if it seems appropriate, I would propose to have reference.
MR TRACEY: Your Honour, can I reiterate what my learned leader said in response to a similar query your Honour asked earlier and that is that the Commonwealth have no objection to the Court having regard to that material.
GLEESON CJ: Is that a convenient time, Mr Tracey?
MR TRACEY: If the Court pleases.
GLEESON CJ: We will adjourn until 10.15 tomorrow.
AT 4.18 PM THE MATTERS WERE ADJOURNED
UNTIL THURSDAY, 11 MAY 2006
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