State of New South Wales; State of Western Australia; State of Queensland; State of South Australia v The Commonwealth of Australia

[1989] HCATrans 172

•

'	"'
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IN THE HIGH COURT OF AUSTRALIA	•
Office of the Registry

Sydney No S92 of 1989

B e t w e e n -

STATE OF NEW SOUTH WALES

Plaintiff

and

THE CO'.MMONWEALTH OF AUSTRALIA

Defendant

Office of the Registry

Brisbane No B28 of 1989

B e t w e e n -

STATE OF QUEENSLAND

Plaintiff

and

THE CO'.MMONWEALTH OF AUSTRALIA

Defendant

SlTl/1/PLC 1 17/8/89

Office of the Registry

Adelaide No A32 of 1989

B e t w e e n -

STATE OF SOUTH AUSTRALIA

Plaintiff

and

THE CO'.MMONWEALTH OF AUSTRALIA

Defendant

Office of the Registry

Perth No P24 of 1989

B e t w e e n -

STATE OF WESTERN AUSTRALIA

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Summons for directions

MASON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON THURSDAY, 17 AUGUST 1989, AT 11.00 AM

Copyright in the High Court of Australia

MR K.R. HANDLEY, QC: In these matters, if the Court pleases,

I appear for the plaintiffs,New South Wales and

Western Australia,with my learned friend, MR A. SACKVILLE.

(instructed by the Crown Solicitor for New South Wales

and the Crown Solicitor for Western Australia) . -

MR G. DAVIES, QC: I appear, if Your Honour pleases, for the

States of Queensland and South Australia with my

learned friend MS R. ATKINSON. (instructed by the

Crown Solicitor for South Australia and the Crown

Solicitor for Queensland)

Sl.Tl/?./PLC 2 17/8/89

MR G. GRIFFITH, QC, Solicitor-General for the Commonwealth.

If the Court pleases, I appear with my

learned friends, MR A. ROBERTSON and MRS. GAGELER,

for the defendant in these matters. (instructed by

the Australian Government Solicitor)

HIS HONOUR:	Mr Handley.
MR HANDLEY:	Your Honour, the Solicitor for the Commonwealth

has a proposal that he wishes to put before the

Court for a question to be referred to the Full
Court of this Court and I think perhaps that may be

the convenient way to begin, looking at that question.

HIS HONOUR:	Very well. What is your attitude to his proposal?
MR HANDLEY:	Your Honour, we only heard about it about five

minutes ago. We certainly wish the case to go to

a Full Court and to go to the Full Court in the time

that has been pencilled in. Your Honour will notice

about the question prepared by the Solicitor-General

for the Commonwealth that some of the other powers

which are apparently.relied upon in the legislation,

banking, insurance, bills of exchange, foreign

currency, territories, external affairs are not to be

relied upon. There is just trade and commerce,

communications, post and telegraphs, corporations and insolvency and, of course, the incidental power, both the constitutional one and the implied one.

This has the effect of narrowing the issues for

the Full Court and he has indicated that - I think I

will leave him to say what would be the consequence

of an adverse ruling on that question against the

Commonwealth so far as the whole litigation is

concerned. There is a question about the section 250

of one of the Acts which relates to the acquisition

of the States' records -

HIS HONOUR:  That does not seem to be the subject of a

demurrer at the present stage.

MR HANDLEY:  No, it is not because questions of fact arise

with regard to the particular documents as to whether

they are necessary for the functioning of the States'

administration and executive functions. That is the

first point. Secondly, he has informed us this

morning for the first time as to what in fact the

Commonwealth proposes to do under the power which in

itself is fairly harmless and would not warrant

taking up the time of this Court. The matter could be

adjusted by accommodation between the parties if what

he told us this morning accurately reflects the

intentions of the Commonwealth with regard to the

exercise of that power. So we are quite happy for

section 250 to be sidelined and for the Full Court not

to be troubled by that section and the issues which it

raises.

SlTl/3/RB 3 17/8/89

I think the question of severance which we had

proposed in our summons should be deferred.	The
ultimate question of severance should be deferred.	I
gather my friend is agreeable to that being deferred
as well because of what he has said would be the
attitude of those instructing him if the question
that I have handed up to Your Honour is answered

adversely or substantially adversely to the Commonwealth.

I think that is all I can usefully say at this moment.

HIS HONOUR:	What would remain to be determined if the Court pronounced in favour of validity in relation to the
general question that has been proposed by the
Commonwealth?

MR HANDLEY:  Very little, if any, Your Honour. The point is

that the heads of power which the Commonwealth

proposes by that forrn of question to exclude from

the hearing before the Full Court would be heads of

power which they would not need to invoke if their

substantial proposition under placitum (xx) were to

find favour with the·court. Dr Griffith has indicated

that if the substantial propositions on placitum (xx)

on which the Commonwealth has drafted this legislation

do not find favour with the Full Court, then he may not

wish to pursue the residue of powers under section 51

which are not covered by the question.

HIS HONOUR:  Mr Handley, what is the current status of the

legislation that is, as it were, embodied in these

questions?

MR HANDLEY:  Your Honour, my understanding is that the formal

parts - the Governor-General's assent has been granted to all Acts. The AUSTRALIAN SECURITIES

COMMISSION ACT is in force and apart from that, only

particular sections of the other Acts are in force,

that is normally Part 1 of the Act, the formal parts

and so on.	The substantive provisions are not yet in
force.

HIS HONOUR:	Now does that present any difficulty in terms of the Court exercising jurisdiction to determine the
validity of those sections?

MR HANDLEY:  We would submit not, Your Honour. The legislation

has passed all stages of the legislative process and

there is a threat to -

HIS HONOUR: ..... promulgate it.

MR HANDLEY:  To promulgate it and what the Commonwealth has done

is to avoid confusing the business and financial
communities of this country, it has deferred seeking

to put their legislation actually into force while

this challenge is pending.

SlTl/4/RB 4 17/8/89

HIS HONOUR:  I follow the utility of seeking a determination of

validity at this stage without plunging the

Australian corporate and commercial world into chaos

but I was just interested to know do we have a

precedent for determining the validity of sections that have not yet become operative as part of the law of the land.

MR HANDLEY:  I would have thought, Your Honour, it is covered

in principle by cases such as BMA V THE COMMONWEALTH
but I am not sure that we actually have a precedent
which applies to this present situation at the moment.

Of course, we are not seeking to interfere before the

legislation is passed, it is not like - - -

HIS HONOUR:	No, I realize that.	I mean, it is beyond Parliament.
MR	HANDLEY:	Yes.

HIS HONOUR:  You are not confronted with any problem within the

wa11s of Parliament.

MR HANDLEY:  It may be that my friend - someone is suggesting

that the MARRIAGE ACT case, ATTORNEY-GENERAL FOR

VICTORIA V THE COMMONWEALTH is such a case.

HIS HONOUR: That could be right. I do not regard this as a

major difficulty, Mr Handley, but I would just like

to satisfy myself.

MR HANDLEY:  Yes. There is bound to be at least one of the

members of the Court who would ask some questions

about it, whatever we said here this morning.

HIS HONOUR: That is what I had in mind.

MR HANDLEY:  Perhaps Dr Griffith might be able to assist on

that last question.

HIS HONOUR:  Yes. Yes, Mr Solicitor.

MR GRIFFITH:	Your Honour, we wish to make it clear we are not the plaintiffs.
HIS HONOUR:	No; that message has come through, I think.
MR GRIFFITH:	Your Honour, we have filed a short defence and

demurrer and it seems now it is common ground that

the allegation in respect of section 250 can be held over. I could enlarge on why that should be so, but

if it is common ground I will not, Your Honour.

We have been served with a draft document headed

"Schedule to Statement of Claim"in the Queensland

action and perhaps if my learned friend does not mind

me just referring to it generally as a draft document

which, of course, we would accept be subject to

SlTl/5/RB 5 17/8/89

amendment. I do not think it has been filed.

HIS HONOUR:	I do not have such a document on the file.
MR GRIFFITH:	No, Your Honour, it is a draft but my learned

friend has no objection to Your Honour having it

for the purpose of submissions.

HIS HONOUR: Thank you.

MR GRIFFITH: This lists each section separately that is under

attack. I gather there is about a thousand of them.

Then under a heading referring to the plaintiff's

expectation there is listed various powers mainly

by reference to section 51 but also the territories
power occasioned with reference to section 109 and

I think one can pick up in those references

obviously, of course, reference throughout to

corporations power. But also, Your Honour, power

in respect of trade and commerce, borrowing, currency,

banking, insurance, insolvency, external affairs,

posts and telegraphs, bills of exchange as well.

Now, Your Honour, we do not find that heading

very helpful as to what the plaintiff expects us to

rely on for -

HIS HONOUR:  It is even less helpful to me. I would like to

know what the defendant intends to rely on.

MR GRIFFITH:  Yes, well Your Honour, we would like to know what

the plaintiff asserts as their case. That would be

a more positive conveying of information to us

rather than -

HIS HONOUR:  But is not the starting point an identification

of the heads of powers on which you rely to support

each section.? And then we can begin to understand

how the plaintiffs are going to attack.

MR GRIFFITH:  Your Honour, when we received this document we

immediately started to work to put our own column of

heads that we seek to rely on, and that exercise

resulted in such a plethora of powers being turned

up that it started to concern us that when one

multiplies this perhaps by a thousand, the situation

gets somewhat unmanageable in that on some

provisions one could have issues, Your Honour, which

in themselves could comprise what in other

circumstances could be several separate litigations.

Your Honour, could I take you to a representative section which throws up that problem and that is

section 780 of the CORPORATIONS ACT. It is on

page 22,403 of the CCH volume. Perhaps at this point

it might be convenient to mention that CCH have

published the legislation. I think it may be

SlTl/6/RB 6 17/8/89

subject to a few corrections. Its great convenience,

Your Honour, is that it is about one-third of the

volume in physical displacement of the government

print copy and I have not discussed it with my

learned friends, Your Honour, but it may well be

convenient during the course of the case if all parties

were prepared to use this print because it means that

it is manageable in a form that page numbers can be

given et cetera.

HIS HONOUR: What page do you say it is on this blue book?

MR GRIFFITH:  22,403 top right-hand. Chapter 7.3. Could I

hand to Your Honour photocopies of that and the other

relevant pages which have marginal notes we have made

to analyse what we see as being the position. I will

give copies to my learned friends.

This Part deals with participants in the

securities industry, in particular dealers and

investment advisers. We have highlighted in this

provision various expressions which are defined
expressions. Firstly, "corporation", "eligible securities"

in subsection (2), "corporation", "eligible circumstances".

Then Your Honour will see those same expressions

repeated in subsection (3); and then "eligible

communications service" in subsection (4).

When one goes to the compilation by the

plaintiffs in respect of section 780, one sees a

reference to powers under section Sl(i)(v)(xx)(xxxix);

that is on page 12 of that draft docum~nt. Now,

Your Honour, we do not see it as being quite as

simple as that because if I could go to the second photocopy which comes from the definition section,

section 9, the definition of "corporation", one sees

that that picks up in paragraph (a) placitum (xx)

corporations power; similarly paragraph (b);
paragraph (c) picks up the territories power; (d)

picks up banking; (e) insurance and (f) picks up

all of those and also placitum (xxix); (g) picks

up everything again.

When one goes to the definition of "eligible

communications service" which is on the next page,

then it is posts and telegraph, of course. When one

comes to "eligible securities", also the definition

in section 9 which is on the next photocopied page,

one has, we suggest, placitum (iv), (xxix) and also

the powers constituting a relevant authority of the

Commonwealth, section 122.

(b) refers back to that definition of "corporation"

including all those powers. (c) does both (a) and (b)

and (d) would seem to dealing with placitum (xii) and

(xxix). The "Eligible Circumstances", Your Honour,

within the next page would seem fairly clearly in the

SlTl/7/RB 7 17/8/89

definition of section 63 in Part 1.2 of the Act to

pick up the trade and commerce power, the territories

power, banking, insurance and again territories. Then

as is referred to in the first marginal note on the

first page, there is an extended application

provision perhaps analogous to section 6 of the TRADE

PRACTICES ACT which applies generally to provisions

to banking and insurance corporations, so again

generally picks that up.

There are other powers that may be touched upon

in passing, for example, division 4 of Part 7.10 of
the Act deals with the Levying of contributions to

the national guarantee fund and we would say that

relies on the taxing power, although that is not one

of the powers that is referred to in the plaintiffs'

draft document.

Your Honour, we could take you in similar way to

Chapter 8 dealing with the futures industry where

basically one has th~ similar reference to

corporations, eligible circumstances and eligible

communications service, for example in section 1142.

Once more there are other powers, Your Honour, for

example in section 1256(4)(a)(iv) there is reliance

upon external affairs power. But in Chapter 6,

dealing with acquisition of shares, it would seem to

be basically corporations; Chapter 5 dealing with

external administration, it seems basically

corporations but possibly also supported by bankruptcy
and insolvency, although probaby it is not necessary

to refer to those powers, if, it is included within

11 • II

corporation .

Chapter 4 dealing with various corporations

would seem to include corporations, companies,

foreign companies and also interstate trade,

section 340. Chapters 2 and 3 dealing with

constitution and internal management are basically to

do with corporations.

The CLOSE CORPORATIONS ACT, Your Honour, as far

as we can see, does not turn up any separate issue

from those that would be embraced by the CORPORATIONS

ACT. Basically it would seem to be a question

carried by corporation, in particular the power to
incorporate and control internal management, although
possibly the plaintiffs will have some separate

contention. We do not know of it.

The AUSTRALIAN SECURITIES COMMISSION ACT seems

to rely on all the powers used in the CORPORATIONS

ACT and the CLOSE CORPORATIONS ACT. Your Honour, we

proposed the question in the form that has been

handed to Your Honour because it seems to us that

some of the obvious difficulties which were involved

in considering for all purposes issue of alleged

SlTl/8/RB 8 17/8/89

invalidity, or validity if you like, which are thrown up by the example we give in reference to section 780 can be avoided so that the ambit of the issue before

the Court is reduced to the essence of the dispute

between the parties and is presented in a form which

is amenable to consideration by the Court.	We are
conscious of what was said by this Court in

THE COMMONWEALTH V QUEENSLAND, that was with reference

to an action by the Commonwealth claiming declarations

for inconsistency. If I could hand Your Honour the

short copy of the judgment of the Court.

HIS HONOUR: Thank you.

11R. GRIFFITH:  If issues of alleged invalidity are confined to

argument in respect to trade and commerce, posts and

telegraphs, corporations, insolvency and the incidental

power, substantially we would submit that that will

dispose of the issue between the parties. There

would be - - -

HIS HONOUR:  You have not mentioned the incidental power,

have you?

11R. GRIFFITH:	Your Honour, that is incidental to the reference to these powers. Of course, the incidental power
would be regarded in so far as that was separate, we would say, to the corporations power. We could add
it to this list -

HIS HONOUR: It is a matter for you.

11R. GRIFFITH: Yes. My learned friend, Mr Davies, said to

Your Honour that that was under - I think Mr Handley

said it, Your Honour, that that was understood as

being there but of course we could add that

specifically. But there would be some sections,

for example those relying on the taxing power or

the banking insurance power, section 110, section 940,

section 250 which has already been put on one side of

not be before the Court.	the AUSTRALIAN SECURITIES COMMISSION ACT which should
Your Honour, were a question of this sort to be formulated, in our submission Your Honour would be in
the position that the Court was confined to an issue which was amenable for consideration by the Court at
this time and in a position to dispose of the argument
as to whether or not this legislation which, in its
substantial terms relieaupon the corporations power,
validly may so rely. Now, in the event that it is
held that in substance the corporations power does support incorporation, internal management and the other various provisions of the Act, these incidental
other powers would not be relevant because there would
be no need to go to them to support the validity of
legislation already determined valid.

SlTl/9/RB 9 17/8/89

Now, in the converse case, Your Honour, in the

event that the basic structure of the Act dealing with
incorporation, internal management and the like were
held not to be supported by the corporations- - -

HIS HONOUR: Well, that would look like the end of the section.

MR GRIFFITH:  It would be a shambles, Your Honour. We are not

asking the Court to determine what would be left to

be argued, but it would be a matter, Your Honour, of

the parties re grouping, and with respect, Your Honour,

it would seem to us ..... obvious that one or other of

the protagonists would limp from the stage and that
in essence, Your Honour, if we were to exhaust all the

possible powers that, for example, could be argued

under section 780, we would be setting numerous essay

subjects for the Court to write but ones which would
have no immediate relevance to the basic issue before
the Court which is, is the general assumption that

legislative power in respect of corporations in the

form embodied in this legislative scheme in its basic

outline relying on the corporations power valid?

Your Honour, although we have included, for

example, insolvency power in this list, we do not

really see that as adding very much at all but it is

just convenient not to leave it out because it is so

obviously the converse of saying, well, insolvency

is supported by the corporations power; as an
incident to the power to incorporate and regulate
the internal management we probably only make passing

reference to insolvency.

So far as trade and conunerce is concerned, that

would seem not to be such a substantial issue either

but one that can conveniently be left there. Posts

and telegraph, Your Honour, basically stands out,

The particular sections have been identified in the

statement of claim and, for example, Your Honour will

see in the extract of section 780 we gave to you,

section 780(4) obviously refers to the posts and

telegraphs power. There may be an issue that if that

subsection were held invalid whether or not that

would carry with it any substantial invalidity of

the whole part of the Act on which it was intended
to provide support.

I should add, Your Honour - I am reminded - that this posts and telegraphs point has the plaintiffs'

section 92 point attached to it which we understand

is based on intercourse. So we would see that as being

embraced within the question of: may we rely on posts

and telegraphs for the purpose of a provision such

as this? One answer from the plaintiffs is, no,

you cannot because that would infringe section 92.

So that is there.

SlTl/10/RB 10 17/8/89

Assuming it was held we could not support

780(4) by the posts and telegraphs power, it would

be an issue there, Your Honour, as to whether

none the less the legislation is not substantially

valid in being supported by the other power. But we

would agree with the thrust of the plaintiffs'

summonses that questions of severance of that sort

could be held over. It would be fairly clear to the

parties, we would suppose, what the position would be.

So that we do suggest that a question in this

form which Your Honour could state would go to the

essence of what otherwise might be almost

overwhelming listing of issues which would be

multiplied up, Your Honour, by the number of extended

definitions and the number of times that they are

used.

HIS HONOUR:	I would agree with that, subject to the excision of the word "almost", but at the moment I am not
persuaded that the solution that you put forward is going to rescue the Gourt from the difficulty that
you foreshadow if all the questions go without any qualification at all. The difficulty, it seems to me,
is that there is a vast number of sections, and at
the moment I have no means of knowing how the
arguments in relation to particular sections are going
to vary.

Now, that raises in my mind the question: is it

possible to select a series of sections that provide

a representative sample so that one could say if

an answer, valid or invalid, was given in relation to
those representative sections, there would be a
consequential effect from which one could almost

automatically say other sections would be valid or

invalid, according to the answer given in relation to

'1 the representative sections.

MR GRIFFITH:  Yes. Your Honour, I must say at one stage we

had been expecting that we would receive from the

plaintiffs a collation of sections bundled under

a proposition - - -

HIS HONOUR:  Yes, precisely. That is what I had in mind as a

possibility.

MR GRIFFITH:  Your Honour, I must say when we received the summons,

before we received this draft document, we had been

ex~ecting to get something in that form and we, in

discussions, indicated we would respond in like form.

Now, Your Honour, I understand there is a draft of such

document but not in a form that the plaintiffs are

yet content to give to us.

SlT2/l/PLC 11 17/8/89

HIS HONOUR:  The difficulty, as I see it, Mr Solicitor, is

that the Court has informally indicated it would be

willing to set aside seven days for the hearing of

this case. Now, if, in fact, the validity of so

many of these sections is really going to turn

on, say, half a dozen arguments, then I can contemplate

that the case will finish within seven days but if

the Court is going to be asked to look at a series

of particular arguments directed to section after

section, then, it seems to me, the case is likely

to become unweildy~

MR GRIFFITHS:  Your Honour, with respect, we would agree.

Your Honour, for our part - and we respond as defendants -

we see the basic issue as to whether or not the
corporations power carries with it the ability to

incorporate, control incorporation and internal

management. Now, Your Honour, we would see internal

management, really, as covered by the incorporation

point and if there is an essence in this case, we

see that as the determinative issue. As to whether, once that was

asked of Your Honour; there ~uld not be all that much to
argue other than the posts and telegraphs, section 92,

point, perhaps · is a matter for the plaintiffs.

But if we adopt the course of narrowing out the obvious references, for example, that we picked up

in section 780, insurance power, banking and the like,

we would have thought, so far as a definition such

as "corporation" referring to a foreign corporation

or a trading corporation is concerned, there could not

be much argument about that because the definition

in section 9 picks up the words of the power itself.

HIS HONOUR:  But you have heard your opponents before,

Mr Solicitor.

MR GRIFFITH:  Yes. Your Honour, I think what we are trying to

say is for our part we think that that is possible

and we would expect that once those basic issues

of incorporation, post and telegraphs, section 92,	are dealt with, that basically, Your Honour, if one	then puts on one side what we see now is incidental
supporting powers that will not save the legislation
as a workable scheme on their own and which would be
overcome in any event by a favourable decision on
the corporations point, that it would be possible to confine it to several issues.

HIS HONOUR:  Yes. I must say that before I make any decision

about what ought to be done, I would like to see

better definition of the arguments that are to be

presented to the Court.

MR GRIFFITH:  Yes. Well, Your Honour, speaking of our expectation,

what we were hoping would be that the plaintiffs would

give us a proposition with attached sections for

invalidity. We would respond, Your Honour, by saying

why it is valid and then in considering our position

SlT2/2/PLC 12 17/8/89

there that is where we got to the position of suggesting

perhaps we should narrow it to the essential issues.

HIS HONOUR:  Would not the first step be for you to indicate

heads of validity in relation to each challenged

section then for the plaintiffs to respond with an

outline of argument indicating their propositions

for invalidity and for you to respond with an outline

of your argument based on validity.

MR GRIFFITH:  Yes. Your Honour, we do think it would be very

useful to narrow down to these particular powers

and not go into all of them because the problem is

something like section 780 then carries through the

entire Part all these various aspects of reliance.

HIS HONOUR:  Yes, I would be prepared to amend my suggestion,

provided that Mr Handley and Mr Davies have no

objection, to limiting it to the powers that you

have nominated so as to excise others in the beginning

unless they have some strong objection to that.

MR GRIFFITH:  So, really, the Court would be saying, in

answering the question, "Well, you're either

successful or unsuccessful in relying on validity

on these specific powers"?

HIS HONOUR:	Yes.
MR GRIFFITH:	Your Honour, we feel that is very useful because,

for example, we would say, as a general proposition,

of course, in so far as the Act attaches and is

supported by the territories power, the whole thing

is good. But that is not an exercise that we wish to

engage in to vindicate and we do not believe that the

plaintiffs do either.

HIS HONOUR:	No, it is not going to be of much help to anyone.
MR GRIFFITH:	No, so that we would prefer to leave that unagitated

before the Court. Your Honour, it certainly is possible

for us to say which sections we would support by these

powers. It would leave some sections hanging, as it

were -the taxing section - but that does not matter,

Your Honour, because that can be dealt with when one

considers the result of any judgment. As we say,

Your Honour, we do see a great advantage because an answer one way would seem to make consideration of

these extended powers unnecessary. An answer the other

way, Your Honour, would seem to make it fruitless, as

a matter of reality, Your Honour, that is

without forecasting what any argument on severence

might be but it is fairly clear, Your Honour, that

the structure of the Act is an attempt to cover the

field and if that is so reduced by a failure on the

corporations power point, well, obviously, one would

consider one's position then.

SlT2/3/PLC 13 17/8/89

Your Honour, it was a very useful suggestion, with respect, that it might be appropriate to

identify some sections.	We have referred to
section 780 as being quite a good example.	I wonder

whether it is not appropriate for the States to,
perhaps, select what they regard as a crucial
provision, Your Honour, and for us to address ourselves

to that. There are a thousand sections, Your Honour,

but as long as the States can say, "Well, we wish to,

attaching ourselves to this section, demonstrate

that you don't have the power to incorporate, you

don't have the power of internal management and,

as well, you can't hoist yourself up with post and

telegraphs and, anyway, section 92 is a problem."

We would have thought that the basic issues are in

there and there is only one short allegation of

fact on section 92, Your Honour, that we have admitted.

So, it seems the plaintiffs do not want any other

facts on section 92.

One can see, Your Honour, that once the

structure of the legislation is explained to the

Court there may be a limited amount of argument

that can be put on the basic issues. They have been

exposed to a significant extent already.

HIS HONOUR: That is what I suspect but I do not know it. I

have no confident assurance that that is the

position, Mr Solicitor.

MR GRIFFITH:  I think in our hearts we believe that, Your Honour,

but our additional step with which we have taken our

friends a bit by surprise this morning because it was

only, really, precipitated by our attempt to respond

to this draft list, is that it seems to us on reflection

just unnecessary to go down all the byways. There is

no plus in the event the corporations power does it

and there is nothing much there for us, Your Honour,
as a matter of legal reality, if we do not get up

on the basic structure. And we would suggest,

Your Honour, as the Court has been invited to take a

somewhat exceptional course, the sort of thing that

was done in the MARRIAGE ACT case so that we would not

submit that it is inappropriate for the Court to
consider doing it and there is obvious public interest
that the basic issue should be resolved as soon as may

be, it is appropriate, we suggest, for the Court to

insist that if it is in a position to respond that

the matter is presented in a way which concentrates upon the essential issue between the parties rather than, as we have already mentioned, giving essay

topics to the Court as abstract, more or less, advisory

opinions. Quite frankly, Your Honour, we would see

that that would be involved if one followed through

all these extended definitions that we exampled by

reference to this section. That is perhaps an extreme

case but the whole case would be permeated by this sort
of issue which does not seem to have any advantage to

either party to discover the ultimate truth.

SlT2/4/PLC 14 17/8/89

HIS HONOUR:  Yes.

MR GRIFFITH: If Your Honour pleases.

HIS HONOUR:  Yes, Mr Handley, are you going to address first on

behalf of the plaintiffs?

MR HANDLEY:  I think Mr Davies and I might break it up in

some way and I might be speaking and he might speak

and then I might speak.

Your Honour, we have been able to check. The

MARRIAGE ACT case was a case where the Court entertained

a constitutional challenge against sections which had

not yet been proclaimed to commence. Point one.

Point two:	if Your Honour would be good enough to
look at the index which I think	my copy is

paginated the same as Your Honour's, page 2,011 -

a table of contents, perhaps.

HIS HONOUR:  Yes.

MR HANDLEY: "Chapter 2 - Constitution of Companies" raises one

aspect of the corporations power. "Chapter 3 -

Internal Administration" raises another. Then

Chapter 6, in relation to acquisition of shares,

raises another. It is another aspect of internal

administration, of course, but a slightly different

one. "Chapter 7 - Securities", again, is similar

in some respects to dealings in shares but, of

course, extends to other securities, and "Chapter 8 -

The Futures Industry" likewise. Those particular

chapters do seem to raise most of the key questions
if the Commonwealth is to be allowed to sever

the case in the way they propose.

Speaking without instructions and without any

opportunity of a full reflection, I do not see any

difficulty other than of a theoretical kind with

what is proposed by the Solicitor-General for the

Commonwealth.

HIS HONOUR: When you say "of a theoretical kind", Mr Handley,

what do you have in mind by that qualification?

MR HANDLEY:	Your Honour, my friend is not giving up any of the sections he is not relying on so that one has
a theoretical problem of the Court taking part of an issue which may not finally dispose of the case,
something which it is not normally anxious to do,
but this may be the exception that proves the rule.

Without opportunity for instructions and

reflection -

HIS HONOUR:  No, there is no need for you to commit yourself

without qualification today. What I propose to do

SlT2/5/PLC 15 17/8/89

is after today's exchange is stand the matter over,

say, to a date in a fortnight or three weeks time

and we can give all mature consideration to the

proposals in the meantime.

MR HANDLEY: 

But it is true, Your Honour, that there are a

number of key propositions which underlie both
cases, the cases for the States and the case for
the Commonwealth which, once decided, it would be
a matter of not requiring Court time to apply those
propositions to the success or failure of particular
sections as a matter of mechanical working out of
the success or failure of the proposition.

HIS HONOUR: 

Yes. One of the difficulties as I see it at the

moment is if you look at Mr Davies' document it is

a particularly forbidding document. If you are

asking the Court to consider the validity of all the
sections mentioned there, one can imagine the
days taken up in merely reading to the Court or
getting the Court to.absorb what the actual provisions
are let alone apply the Judges' minds to the

questions that would arise in relation to each

section. And that was one of the reasons why I

was anxious if at all possible to see if we could

present in the first instance a series of sections

which might be regarded as the fulcrum validity or

invalidity generally.

MR HANDLEY:  Yes. It is possible, Your Honour, that key sections

could be isolated from Chapter 2 dealing with

constitution of companies to raise the incorporation

point and, likewise, the other chapters to which I

have drawn attention a moment ago.

HIS HONOUR:  Yes. What I would strongly suggest is,

in the meantime, the parties might confer with a view

to seeing whether some such array of sections could

be identified. You, no doubt, and Mr Davies, from

your perspective, seeking to identify sections that

would perhaps better display your arguments for

invalidity and the Solicitor adopting an opposite

course.

MR HANDLEY:	I am not sure there is much scope for finessing in that area, Your Honour. The Commonwealth asserts
through this legislation that placitum (xx) gives it power to incorporate"trading or financial corporations"
and it has squarely sought to exercise that power
if it exists and I do not think, frankly, that whether
one chooses one or other section - - -
HIS HONOUR:	- - - it would make any difference, yes.
MR HANDLEY:	- - - would make a great deal of difference. A

section like 780, however, of course, that Your Honour

was taken to, dealing with securities, is like a

hedgehog.

S1T2/6/PLC	16	17/8/89
HIS HONOUR:	Yes.	Mr Davies?

MR DAVIES: There are really only two points. One, just

taking up that last point: there will be no
difficulty, we would not think, in paragraph (xx),
in isolating the sections. Indeed, it is a very

general argument.

MR HANDLEY: Placitum (xx).

MR DAVIES:  Yes. So, that really is not difficult at all.

I do not know, with respect, to the others, whether in fact it is as easy as, with respect, to

paragraph (xx).

Now, the only other point, Your Honour, we want

to make is - and can we really take up that question

of Your Honour's suggestion that our learned friend

provide us with a list of the powers. We really did

ours somewhat in the dark, of course, in a sense

that we do not know what powers the Commonwealth is

relying on for suppot'ting the validity of the

provisions and it really would be extremely helpful

to the preparation of the sort of outlines Your Honour

has in mind ultimately - and we did two - to have

those given to us in the fortnight that Your Honour

has in mind before the next hearing.

HIS HONOUR:  I do have in mind too that ultimately I would

direct the parties to lodge written submissions

with the Court, shortening the argument.

MR DAVIES:	Yes.
HIS HONOUR:	And I think, certainly, as a first step in that,

I would contemplate directing the defendant to

identify the heads of power upon which it relies

in connection with each of the sections which is the

subject of attack. Now, all it has to do is to

identify the heads of power in relation to each

section.

MR DAVIES:  Yes. I simply just want to make a point: it

would be helpful to the expedition of the matter

if that were done within the next fortnight that

Your Honour has in mind between now - - -

HIS HONOUR:	I would have thought it could be done within the next seven days.
MR DAVIES:	I would have thought it could be done within a

couple of days.	The Commonwealth ought to know now,
I imagine.

HIS HONOUR: Experience should teach you otherwise, Mr Davies.

MR DAVIES: It should, Your Honour - eternally optimistic.

There is nothing else that I can usefully add,

Your Honour.

SlT2/7/PLC 17 17/8/89

HIS HONOUR:  Very well. Yes, Mr Solicitor?

MR GRIFFITH: Well, Your Honour, firstly we believe that it is

appropriate for there to be a bundling of sections

rather than just listing by numbers and our
reference, Your Honour, to section 780 in

Part 7.3 really establishes that because one has the

broad definition provision of "Dealers" and then

all that follows is, in effect,supported basically

by the various definitions which are, in turn,

supported by the powers we have identified in the

margin. So that, Your Honour, we would see not so

much a function in having a listing of this sort

but of a bundling and say, well, this Part is

supported by these powers.

HIS HONOUR:  I think in the first instance the plaintiffs are

entitled an identification by the defendant of the

particular heads of power on which it relies to

support the validity of each particular section.	Now,
that does not necessarily mean that later on,

Mr Solicitor, the argument is going to follow, as it

were, the particular heads of power. It may be

possible and, indeed I would hope,that in the format
of the argument presented to the Court, we would be
able to pursue an approach more along the lines you

have suggested in the form of a question that you

have put forwarrl,although I would like to see it done

in relation to an array of representative sections.

But I think in the first instance the plaintiff is entitled to a specification of the heads of power on which you draw for support in relation to each

particular section.

MR GRIFFITH: Yes. Your Honour, could we do that by listing

heads of power and then putting all the sections

under that head that we say is supported by those

heads?

HIS HONOUR:  What is the difference between the two?

MR GRIFFITH:  Your Honour, I suppose it just means you keep

repeating yourself many times in a column because,

for example, internal management, Your Honour,

basically is supported by those array of powers I

have referred you to and it just goes right through

every one of them, dealing with powers and functions

of general meetings.

HIS HONOUR:  I must say that my experience is that when you

are asked to identify heads of power in relation to

a particular section, Mr Solicitor, it has the

effect of concentrating the mind - - -

MR GRIFFITH:	Mar'\e'llously, Your Honour, because that is why - - -
HIS HONOUR:	- - -because I strongly suspect that the umbrella approach that you want to adopt enables you, as it

S1T2/8/PLC 18 17/8/89

were, to adopt a very general approach and just to sign a series of sections. '

MR GRIFFITH:  No, Your Honour, that is not intended. What we

found, Your Honour, is because we were picking up

these various definitions, that we were extending

in respect of any provision a whole lot of

possibilities which we took the view, Your Honour, that

if it was supported by corporations, you did not have

to go to all the others. If it was not - or you

could go independently to the others but there did

not seem to be much function in it and that is why

our suggestion was produced, Your Honour. That can

be done, Your Honour, but we would submit that the

case should not just pause while we are doing this.

After all, the plaintiffs have had many months,

Your Honour, to formulate their attack on this

legislation.

HIS HONOUR:  Now, what do you want done? Apart from an order

made in relation to you, what do you want the

plaintiffs to do?

MR GRIFFITH: 

Your Honour, firstly, given that it seems the

opportunity for a hearing is October or not at all
this year, I think all the parties are minded to

say, "Well, it must be October".

HIS HONOUR: 

Yes, I have assumed that that is the position.

MR GRIFFITH: Yes, very much the case. Now, Your Honour, it

does seem to us in that context it is necessary

for us to all work together to be at all ready in a

form which will maximize the assistance the parties

can give to the Court to identify the issue.

HIS HONOUR:	I entirely agree with that.
MR GRIFFITH:	And, Your Honour, it also does seem to us, and

I have had general discussions that seem to confirm

that, that in this sort of case there is no role

for trial by ambush or anything of that sort.

The issues are; -really, arrayed out and the question

is, well -

HIS HONOUR:  I agree entirely with that.

MR GRIFFITH:  Yes. Now, Your Honour, we think it is appropriate,

as Your Honour has indicated, that there should be

directions given in this case that there should be,

we would suppose, quite substantial submissions, not

merely an outline of argument, of the basic exposure

of the case. Now, Your Honour, as to that: firstly,

given the breadth of attack, that is a substantial

function in itself; secondly, Your Honour, we would

have thought the earlier the parties started exchanging

SlT2/9/PLC 19 17/8/89

information about what their respective cases are,

the better; and thirdly, we suppose, Your Honour,
that if the issues are to be narrowed on the basis of

which it is Stbmitted is appropriate, well, that should

be determined fairly early rather than late so

there is not unnecessary work done working up all

the possible extended arguments if they are not going

to be pursued before the Court in this round.

HIS HONOUR:	Mr Solicitor, I am prepared to put the matter in the list next Monday wee~ innnediately after the
Adelaide sittings of the Court,with a view to
ascertaining what progress has been made in the
meantime an~ further, I am prepared to put it in the
list at weekly intervals if need be to ensure that
adequate progress is being
MR GRIFFITH:	We are grateful to Your Honour.
HIS HONOUR:	In saying that, I am not reflecting any apprehension

that the parties will not be endeavouring to make appropriate progress·but just to ensure that that progress is made.

MR GRIFFITH: Well, I think, Your Honour, really, the parties

have called that down by issuing this sunnnons in

the form of it seeking appropriate orders and, with

respect, I feel that is very useful if Your Honour

is prepared to do that.

Your Honour, we, ourselves,will firstly complete

this schedule that Your Honour has indicated.

HIS HONOUR:  Perhap you could do that within seven days.

And then, I think, both parties should be giving

attention, contemporaneously, to the question of

whether or not they can identify representative

sections.

MR GRIFFITH:  Yes. Your Honour, what we would desire of the

plaintiffs, if they are prepared to do it, is for

them to give us what they say is their essential

propositions for invalidity.

HIS HONOUR:	Yes. Now, how soon do you want that?
MR GRIFFITH:	Your Honour, we would like it - even if it is

only in draft without prejudice form, as soon as the

plaintiffs can give it to us, preferably in a matter

of days so that we can respond and make progress

to get to a point for when we come back to Your Honour.

HIS HONOUR:  Yes. Now, can I interrupt you at this stage,

Mr Solicitor and ask Mr Handley and Mr Davies what

their attitude is to that?

MR GRIFFITH: Yes.

SlT2/10/PLC 20 17/8/89

MR HANDLEY:	Would Your Honour just pardon me a moment?
MR DAVIES:	Your Honour, I simply just said to my learned

friend I would like to see the list first,

Your Honour. I think we could give them at least a draft outline in brief form of our propositions

within days of receipt of that list.

HIS HONOUR:  Mr Solicitor, could you identify the heads of

power on or before Tuesday of next week?

MR GRIFFITH:  Your Honour, we could give it in a form

similar to our friend's, a draft, being the best

we can do at the time.

HIS HONOUR:	When could you do that by?
MR GRIFFITH:	We expect to do that by Tuesday, Your Honour.

HIS HONOUR:  Very well. I will direct the defendant to provide

the plaintiffs with a specification of the heads of
power on which the defendant intends to rely to
support the validity of the various sections under
challenge in these proceedings on or before Tuesday

of next week.

It is to be understood that that list will be

a draft list in the sense that the defendant will be

at liberty to vary it if so advised thereafter

subject to any order of the Court.

MR GRIFFITH:  Your Honour, just thinking of possible issues:

if, for example, it is our contention that in so far

as it applies to corporations formed within a

territory, the whole Act is supported by the territories

,:,ower. Would it be sufficient to conply with tite order if ~

had a general statement to that effect in our list

because otherwise we would just have one down for

territory companies and we do not get very far?

It would just seem to be otiose to, in each case,

say it went so far as it is a territory's company,
it is good under the territories power.	We do not

see that as being in issue between the parties,

Your Honour.

HIS HONOUR:  I would not have thought it was. What is your

attitude to that, Mr Handley and Mr Davies?

MR DAVIES:  With respect, the territories, we would be happy

with that because we do not see it as an issue.

As my learned friend says, it is not. With the others,

we would not, of course, that are in issue.

HIS HONOUR: That is all right so far as the territories

power is concerned, Mr Solicitor.

MR GRIFFITH:  Yes. Well, Your Honour, we would just be repetitious

to be sure. Your Honour, if we could do that by

SlT2/ll/PLC 21 17/8/89

Tuesday, we would be assisted, Your Honour, , by, say,

Friday lunchtime, the plaintiffs could give us some

propositions.

HIS HONOUR:  Well now, I will ask the plaintiffs what they have

to say about that. What is your immediate reaction

to that, Mr Handley; Mr Davies?

T2 MR DAVIES: Again, in a draft form, Your Honour. We would

prefer perhaps the following Monday rather than

that Friday which would give us a little extra time.

HIS HONOUR: If we make it the following Monday, then I think

I would sit on the following Tuesday rather than the

Monday. would have no objection to that, Mr Solicitor?

MR GRIFFITH:  No, Your Honour, but we woul hope if the plaintiffs

are in a position by Friday lunchtime they had gathered

their thoughts that they could give us a draft so

far without - - -

MR DAVIES:  If we could do it before then, we would do so,

but if we have until Monday, then - - -

MR GRIFFITH: Because, Your Honour, the next thing we would

want to think and that is why I suggested Friday

lunchtime is to see whether, by the time it came back

to Your Honour, we could either have some

representative sections or parts. Now, obviously,

the incorporation part we would probably just agree
to refer to that and that will determine the

basic issue on corporation and in that way - so

we might be in a more or less agreed position before

Your Honour as to the form of the case.

HIS HONOUR:  Mr Davies, I do not really think that you are

dependent on the list that Dr Griffith is going to

give you. I would have thought by Friday afternoon

of next week the plaintiff should be in a position

to be able to formulate, in draft form, the general

propositions on which they rely to support their	claims of invalidity in relation to the sections
under challenge and therefore I am minded to direct
the plaintiffs that they provide that material,
file and service it on or before Friday of next week. Then I will sit on the following Tuesday which I
think will allow the defendant and the plaintiffs time to give consideration to the possibility of identifying representative sections and at the same
time formulate more clearly what they have in mind
for the future in the case.

MR DAVIES: If Your Honour pleases.

HIS HONOUR:	Is that satisfactory from your point of view?
MR HANDLEY:	Yes, Your Honour.  Can I just mention one point to

Your Honour? In our summons for directions we

refer to "Sections, implications and doctrines", and

SlT3/l/PLC 22 17/8/89

I would ask if Your Honour would incorporate that

in the direction to my learned friend as well as the

direction to us.

HIS HONOUR:  Yes, I will. I think I can do it in this way,

Mr Handley, by saying that my reference to heads of

power in the direction that I made so far as the

defendant is concerned is to include the expression

that you have used so that it covers implications

and doctrines as well as sections.

MR HANDLEY:	If the Court pleases. It does not apply to us, I do not think.
HIS HONOUR:	Likewise, in the particulars that the plaintiffs are to provide I expect them to identify implications
and doctrines as -well as the sections.

MR HANDLEY: Yes, thank you, Your Honour.

HIS HONOUR: Anything else, Mr Solicitor?

MR GRIFFITH: Well, Your Honour, one problem to us,

in as much as we rely on provisions of the

CONSTITUTION,is that implications and doctrines

are more things that work against rather than for power so that we might be hard pressed to articulate the implication of doctrine other than

to say we have got it within the head of power.

HIS HONOUR:  Well, you may be hard pressed. I mean, that is only

because there is a scarcity of material on which to

rely.

MR HANDLEY: 

We are happy with silence, Your Honour.

HIS HONOUR: 

I gathered you were, Mr Handley.

MR GRIFFITH: 

We were going to mention that ourselves in that

there is a reference in the plaintiffs' heading to
sections, implications and doctrines they expect

us to rely and then all they list is placitums in

section 122. Now, we would expect the same sort of

frankness and volunteering from the plaintiffs. If
they have implications and doctrines - one obvious

case which now we can put on one side, Your Honour,

on the issue of validity of section 250, an

interference with essential function of State, that

plaintiffs will spell that out. It may well be,

at the first opportunity, namely, next Friday, the volunteer there.

HIS HONOUR: 

Yes.

MR HANDLEY: 

I had rather thought we would not even go into section 250 in the light of - - -

MR GRIFFITH: 

No, we are not.

SlT3/2/PLC 23 17/8/89

HIS HONOUR:	He was only using it as a hypothetical example.
MR HANDLEY:	Yes, thank you, Your Honour.

HIS HONOUR: In those circumstances, I will stand the matter

over on that footing until Tuesday week. Now, is there any particular time on that Tuesday morning

that would be suitable for counsel.

MR GRIFFITH: In Sydney, Your Honour?

HIS HONOUR: In Sydney.

MR GRIFFITH: Morning, Your Honour.

HIS HONOUR:  Yes, but I was thinking 10.15, Mr Solicitor, or would

you prefer a later time. It applies to you and

Mr Davies, really.

MR DAVIES:  Yes, I would probably prefer a little later to ensure

that I can be here i~ time.

HIS HONOUR:  I will tentatively make it 11 o'clock on the

Tuesday and if there is any change the parties will

be notified.

MR HANDLEY: If Your Honour pleases.

AT 12.03 PM THE MATTER WAS ADJOURNED

UNTIL TUESDAY, 29 AUGUST 1989

SlT3/3/PLC 24 17/8/89