State Superannuation Board v Trade Practices Commission

[1982] FCA 52

Re: STATE SUPERANNUATION BOARD
And: TRADE PRACTICES COMMISSION (1982) 60 FLR 165
No. VG12 of 1981
Trade Practices - Crown - Statutes

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Franki(1), Northrop(2) and Ellicott(3) JJ.

CATCHWORDS

Trade Practices - Application of Trade Practices Act - Corporation - Whether State Superannuation Board (Victoria) a financial corporation - Meaning of financial corporation - Whether Trade Practices Act applies to Crown in right of State -

Commonwealth Constitution s.51(xx) - Trade Practices Act 1974 (Cth.) ss. 2A, 4, 155.

Crown - Whether Trade Practices Act applies to Crown in right of State - Whether State Superannuation Board the Crown or an emanation of the Crown in right of the State of Victoria - Whether entitled to the shield of the Crown in all respects or in respect of investment function -

Superannuation Act 1958 (Vict.) - Trade Practices Act 1974 (Cth.) ss. 2A, 4, 155.

Trade Practices - Superannuation Board - Whether Trade Practices Act applies to State Superannuation Board - Shield of the Crown - Whether Board an emanation of Crown in right of State - "Financial corporation" - Whether Board a "financial corporation" - Principles to be applied - The Constitution (63 & 64 Vict. c. 12), s. 51(xiii), (xiv), (xx) - Trade Practices Act 1974 (Cth), ss. 2A, 4(1), 47(1), 155 - Superannuation Act 1958 (Vic.), ss. 5, 6, 6A, 6C, 7, 8, 10, 49(2), 50(1), 53, 55, 58, 62, 63.

Crown - Shield of Crown - Whether Trade Practices Act applies to Crown in right of State - Whether State Superannuation Board the Crown or an emanation of Crown in right of State - Whether entitled to shield of Crown - Principles to be applied - The Constitution (63 & 64 Vict. c. 12), s. 51(xx) - Trade Practices Act 1974 (Cth), ss. 2A, 4(1), 47(1) - Superannuation Act 1958 (Vic.), ss. 5, 6, 6A, 6C, 7, 8, 10, 49(2), 50(1), 53, 55, 58, 62, 63.

Statutes - Interpretation - Trade practices - "Financial corporation" - Corporation constituted by statute - Considerations determining whether body "financial corporation" - Principles to be applied - Meaning of "financial corporation" - The Constitution (63 & 64 Vict. c. 12), s. 51(xx) - Trade Practices Act 1974 (Cth), ss. 4(1), 47(1).

HEADNOTE

The appellant, a body corporate constituted by an Act of the Parliament of the State of Victoria, has the purpose of providing pensions for Victorian public servants and for employees of certain instrumentalities. Its duties included the administration of a superannuation fund and the investing of the fund, inter alia, by way of loans secured by mortgages. The respondent Commission required the appellant by notice purportedly pursuant to the Trade Practices Act, s. 155, to produce certain documents to the respondent on the ground that the appellant may have engaged in exclusive dealing in breach of the Trade Practices Act (the Act). The appellant commenced proceedings in the Federal Court of Australia seeking, inter alia, declarations that it was not a "corporation" within the terms of the Act and that s. 47 of the Act, which prohibits exclusive dealing, did not apply to it because the Act did not apply to the Crown in the right of a State and because the appellant was the Crown in the right of the State of Victoria or an emanation of that Crown. The primary judge dismissed the action and an appeal was made to the Full Court.

Held: Per curiam: (1) In determining whether a corporation is a financial corporation within s. 51(xx) of the Constitution the following considerations should be applied: (a) What does the corporation in fact do? (b) The purpose for which the corporation was formed is not decisive but the Act under which it was established is of some assistance in determining whether the financial activities of the corporation are a substantial as distinct from incidental part of its function. (c) Neither the fact that a corporation is established under a special Act of Parliament nor for a "governmental purpose" would prevent it from being a "financial corporation".

R. v. Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979), 143 CLR 190, followed.

Strickland v. Rocla Concrete Pipes Ltd. (1971), 124 CLR 468, referred to.

R. v. Trade Practices Tribunal; Ex parte St. George County Council (1974), 130 CLR 533, doubted. Huddart Parker & Co. Pty. Ltd. v. Moorehead (1909), 8 CLR 330; Bank of New South Wales v. Commonwealth (1948), 76 CLR 1, considered.

(2) Even if the normal relationship of trustee and beneficiary existed between the appellant and contributors to the fund it would not preclude a finding that the appellant was a "financial corporation" by virtue of its investment of the fund.

Fouche v. Superannuation Fund Board (1952), 88 CLR 609, referred to.

(3) The fact that the appellant obtained the moneys which it invested as contributions from contributors and not by loans does not preclude it from being a "financial corporation".

(4) The appellant's activity of managing and investing the fund is a substantial activity not merely incidental to some other and is sufficient to characterize it as a "financial corporation" within the terms of the Act.

Ku-ring-gai Co-operative Building Society (No. 12) Ltd. (1978), 36 FLR 134, followed.

(5) The Trade Practices Act 1974 does not bind a corporation entitled to claim the shield of the Crown in right of a State.

Bradken Consolidated Ltd. v. Broken Hill Pty. Co. Ltd. (1979), 145 CLR 107, followed.

(6) Whether a body set up by legislation is the Crown or an emanation of the Crown in right of the State depends on the intention of the legislature ascertained from the relevant legislation.

(7) If the functions conferred on that body by statute are appropriate for the government to undertake and if the government has power under the legislation to control the exercise of those functions or the composition of its governing board, there will be strong grounds for holding that it is an emanation of the Crown.

(8) In the present case the appellant is not the Crown or an emanation of the Crown with regard to the management and investment of the fund and is therefore not entitled to that immunity.

The appeal should be dismissed.

HEARING

Melbourne, 1981, August 3; October 19-20; 1982, April 15. #DATE 15:4:1982

APPEAL.

Appeal from a judgment of the Federal Court of Australia (Brennan J.) to the Full Court of that court.

D. Dawson Q.C., S.G., D. G. Graham Q.C. and R. A. Sundberg, for the appellant.

A. R. Castan Q.C. and P. J. Jopling, for the respondent.

Cur. adv. vult.

Solicitor for the appellant: Crown Solicitor for the State of Victoria.

Solicitor for the respondent: B. J. O'Donovan, Commonwealth Crown Solicitor.

E. F. FROHLICH

ORDER

1. The appeal is dismissed.

2. The appellant is to pay the respondent's costs of the appeal.

JUDGE1

I have read and agree with the reasons for judgment of Ellicott J. in this matter.

I would dismiss the appeal with costs.

JUDGE2

The Trade Practices Commission (the Commission) claims that the State Superannuation Board of Victoria (the Board) is a corporation as defined by s.4 Trade Practices Act 1974. The Commission, having reason to believe that the Board was capable of furnishing information and providing documents relating to matters that constitute or may constitute contraventions of s.47(1) of the Trade Practices Act, namely that the Board had engaged in the practice of exclusive dealing in the course of lending money on the security of mortgages of land, served on the Board a notice under s.155 of the Trade Practices Act dated 19 November 1979 requiring the Board to furnish the information and to produce the documents specified in the notice. The Board, claiming that it was not a corporation within the Trade Practices Act and thus could not engage in conduct in contravention of s.47(1) of that Act, made application to the Court under s.163A of that Act seeking declarations that it was not a corporation as defined by s.4 of that Act, that the notice under s.155 was invalid and that its failure or refusal to comply with the requirements of the notice would not be in contravention of s.155. The Board sought also an injunction restraining the Commission from taking any steps to enforce compliance with that notice. On 19 December 1980, the Court, constituted by Brennan J., by judgment dismissed that application. The Board appeals from the whole of that judgment. The grounds of the appeal were stated in the notice of appeal as follows:

1. "The learned Judge erred in fact and in law in finding and holding that the Appellant was a 'financial corporation' within the meaning of that expression in the Trade Practices Act 1974 (Cwlth)."

1. "The learned Judge should have found and held that the Appellant was not a 'corporation' within the meaning of that expression in the said Act."

The Board is a body corporate constituted by the Superannuation Act 1925 (Vic.) and continued under the Superannuation Act 1958 (Vic.), see definition of "the Board" in s.3(1) of the 1958 Act. The 1925 Act established a Superannuation Fund (the Fund) and in the 1958 Act "the Fund" is defined in s.3 as meaning the Superannuation Fund established under the 1925 Act and continued under the 1958 Act.

Before making further reference to the Trade Practices Act and a detailed reference to the provisions of the 1958 Act, it will be useful to make some observations of a general nature concerning the relationship between the Fund, the Board and the contributors to the Fund. The object of the Superannuation Act is to make provision for payment of pensions and other benefits to members of the services and the statutory bodies of the State of Victoria referred to in the 1958 Act and their dependants on death or retirement. The Act establishes the Fund into which are to be paid the contributions to be made by the officers and employees, the payments by the State of Victoria and the income derived from the investment of the Fund. The Fund is to be managed and controlled by the Board which is incorporated and at present consists of six members who, subject to the Act, manage and control the Board which in turn manages and controls the Fund. To that end the Act imposes duties and confers powers upon the Board. This analysis may be compared with the analysis of the provisions of the Superannuation Act 1938-1950 (Tas.) by the High Court in Fouche v. The Superannuation Fund Board (1952) 88 C.L.R. 609 per Dixon, McTiernan and Fullagar JJ. at p.628. In that case the members of the Tasmanian Board had invested some Fund property in a manner which constituted a breach of trust. Subsequently, those members were replaced and the High Court held that they were liable at the suit of the Board to make good to the Fund the loss which the Fund incurred by reason of the breach of trust. In that case, the High Court was considering the nature of the relationship between the members of the Board and the Board itself. They were not concerned to determine the nature of the relationship between contributors and the Fund or whether the members of the Board were trustees, or the nature of the Board itself. At p.640 the Court said:
"We do not think, indeed, that the contributors are beneficiaries in the proper sense: they have, of course, an interest in the trust fund which would probably give them standing in a court of equity, but they have not such a beneficial interest in the fund as has an ordinary cestui que trust. The trust is not a trust for persons but for statutory purposes. . . . we can see no escape from the view that the individual members of the board owed a duty to the corporation which they constituted and whose property and affairs they controlled and managed. Nor can we doubt that this duty is enforceable in equity. . . . the plaintiff board is seeking an equitable remedy, and, the administration of a trust fund being involved, it is clear that there is ample jurisdiction in equity to give appropriate relief if a breach of duty is proved."

In s.4 Trade Practices Act the relevant part of the definition of "corporation", unless a contrary intention appears, is:
"'corporation' means a body corporate that . . . (b) is a trading corporation formed within the limits of Australia or is a financial corporation so formed;"
In the same section "financial corporation" is defined as meaning:
"a financial corporation within the meaning of paragraph 51(xix) of the Constitution and includes a body corporate that carries on as its sole or principal business the business of banking (other than State banking not extending beyond the limits of the State concerned) or insurance (other than State insurance not extending beyond the limits of the State concerned);"
Section 47(1) of that Act provides:
"47.(1) Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing."

During the course of the hearing of the appeal, the Court gave leave to the Board to contend that the Trade Practices Act does not apply to or bind it because it is an instrumentality or agent or authority of the Crown in right of the State of Victoria. The two issues raised by the appeal are:

1. whether the Board is a corporation within the Trade Practices Act; and

2. whether the Board has the protection of what was described as the shield of the Crown.

The long title to the 1925 Superannuation Act is:
"An Act to make provision on a Contributory Basis for Superannuation Benefits for certain Public Officers and Employees and Benefits for certain of their Dependants, and for other purposes."
That Act established the Fund, s.5(1), which provided:
"5.(1) There shall be established a Fund to be called 'The Superannuation Fund,' into which shall be paid the contributions of officers and the payments and repayments into the Fund by the Treasurer under this Act; and from which shall be paid the benefits provided for in this Act."
Part V of the 1925 Act made provision for a State Superannuation Board, s.61(1), the relevant parts of which were:
"61.(1) There shall be a State Superannuation Board which shall consist of four members who shall be appointed by the Governor-in Council. . . "
The Act then made provision for the term of office of the members, their removal, their remuneration, and their meetings. Under s.70 the Board was constituted a body corporate by the name "The State Superannuation Board".

Since 1925 the Superannuation Act has been amended on very many occasions and was consolidated in 1928 and 1958 but the substance of the structures of the Fund and the Board as established by the 1925 Act have been retained, see the 1958 Act as amended and in particular the definitions of "the Board" and "the Fund" in s.3, the establishment of the Fund, s.5, the establishment of the Board, s.49(1), the constitution of the Board, s.49(2), the continuity of the Board, s.49(7) and the incorporation of the Board, s.58. See also s.9(2) and (3) of Act No. 779 of 1968. Hereinafter the words "the Act" are used to refer to the 1958 Act in force as at 1 January 1981.

In his reasons for judgment now reported in 49 F.L.R. 216, Brennan J. made a detailed examination of the provisions of the Act and the relevant facts, see pp.218-225. That examination and those facts were not challenged on appeal and I incorporate them in these reasons.

The main functions of the Board are to receive contributions, to receive the Government subvention, to manage and invest the Fund and to pay the pensions and other benefits to the persons entitled thereto. The obligations and privileges of the contributors to the Fund are set out in the Act and regulations made under the Act. The Board performs the administrative tasks to service those obligations and privileges. The administrative functions of the Board are performed by clerical staff who are employed under the provisions of the Public Service Act 1958 (Vic.) and their salaries are paid by the State of Victoria, s.61 and s.62. In addition, the Board employs specialist staff, particularly in the investment area, whose salaries are paid out of the Fund. One object of the Board is to obtain the best possible return on investments of the Fund for the benefit of contributors. Monies of the Fund not invested are to be banked by the Board in accordance with the Audit Act 1958 (Vic.) and held as monies of the Crown, s.7. Investments of the Fund are in the name of the Board. The accounts relating to the Fund are audited by the Auditor-General, (Vic.), s.8. The Board is empowered to borrow from the Treasurer for the purposes of the Fund, s.9, but normally no monies are borrowed. The Board is required to report annually to the Treasurer and the report is tabled in Parliament, s.63.

In considering the principles of law to be applied in determining whether the Board is a corporation under the Trade Practices Act, Brennan J. analyzed R. v. Trade Practices Commission; Ex parte St. George County Council (1974) 130 C.L.R. 533 (hereinafter called "St. George"), R. v. Judges of the Federal Court of Australia; Ex parte The Western Australian National Football League (Incorporated) (1979) 143 C.L.R. 190 (hereinafter called "Adamson") and Re Ku-ring-gai Co-operative Building Society (No. 12) Ltd. (1978) 36 F.L.R. 134 (hereinafter called "Ku-ring-gai"). After referring in some detail to St. George and Adamson, at p.227 he said:
"In the light of the judgments in Adamson's case, it appears to me that the balance of judicial opinion would categorize as a trading corporation a corporation whose trading activity is its substantial activity or is among its substantial activities. Trading need not be the corporation's predominant or principal activity, but the substantiality of its trading activity cannot be determined without reference to the other activities of the corporation, if any. Trading activity which is merely incidental to a predominant or principal activity is prima facie insufficient to confer the character of a trading corporation. To state the test in this way may not reflect the breadth of the test expressed in the judgment of Barwick C.J., and is more restrictive than the test propounded by Murphy J.; but I apprehend that the tests expressed in those judgments go further than the tests expressed in the judgments of the other members of the court."

The Solicitor-General for Victoria, who appeared for the Board, submitted that that principle was incorrect, that Adamson had not directly or by implication overruled St. George and that the Federal Court was bound to apply the principles enunciated by the majority in St. George and in particular to have regard to the purpose of the Board as being for the purposes of the State of Victoria.

A careful reading of the judgments in St. George and in Adamson suggests to me that the principles enunciated by the majority in St. George cannot be regarded as being binding upon the Federal Court except insofar as they apply to the particular facts of that case. With respect, I would adopt what was said by Mason J. in Adamson at pp.232-3:
". . . it is the prosecutors' submission that the Court is required to consider exclusively the purpose for which the association was incorporated, not its current activities, whatever they may be, in resolving that question. Despite its invocation by the prosecutors I do not think that the St. George County Council Case is authority for this proposition, though there are statements in the majority judgments which tend to support it ((1974) 130 C.L.R., at pp.551-552, 562). The case decided no more than that a county council created under the Local Government Act, 1919 (N.S.W.), as amended, for local government purposes was not a 'trading corporation' for the purposes of s.51 (xx.) and the statutory definition of that expression contained in the Restrictive Trade Practices Act. Of the majority, McTiernan J. said that a trading corporation was a trading company which was incorporated ((1974) 130 C.L.R., at p.548). Menzies and Gibbs JJ. denied that a 'trading corporation' in s.51(xx.) is 'a corporation which is trading' ((1974) 130 C.L.R., at pp.551-552, 561).

We are not constrained to accept a view which commended itself to three members only of this Court, however influential their opinion may be. The interpretation and application of the expression 'trading corporation' is not foreclosed by that opinion or by a majority constitutional decision in which no more than five members of this Court participated. For my part, I prefer the minority view as expressed in the St. George County Council Case, in particular the remarks of Barwick C.J. ((1974) 130 C.L.R., at pp.542-543), when his Honour said that to fall within s.51(xx.) it is not necessary that a corporation be formed for trading or financial purposes and that 'the activities of a corporation at the time a law of the Parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description'.

'Trading corporation' is not and never has been a term of art or one having a special legal meaning. Nor, as the Chief Justice pointed out, was there a generally accepted definition of the expression in the nineteenth century. Essentially 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."

In any event there were a number of significant factors present in St. George which are absent in the present case. Possibly the most important factor was that in St. George there was an express statutory power which authorized the Governor by proclamation to constitute municipalities, shires or parts thereof as a county district for local government purposes (emphasis added), and for each county district so constituted to provide for a county council which became the body corporate. Generally, see Gibbs J. at pp.555-560 and 563-4, and Menzies J. at pp.549-552. The concept of "municipal corporations" was well known at the time of the Constitution and their trading activities were always subordinate to their community purposes. The council had a power to raise revenue by imposing a rate on land which was more compatible with municipal corporations than with trading corporations. The council was constituted to engage in trading activities and in fact engaged in those activities, but was constrained to so conduct its trading activities as to avoid making a profit. McTiernan J. expressed the view that the definition of "corporation" contained in the then Act did not purport to be co-extensive with the meaning of the words "trading corporations" as contained in s.52(xx) of the Constitution, but was directed to private or free enterprise only, see pp.546-7.

In the present case, the Act establishes the Fund for the purposes of providing pensions and other benefits to officers and employees of the State of Victoria and certain statutory bodies created under State law. The Act establishes the Board as a body corporate to manage and control the Fund. The main functions of the Board have been referred to and each of those functions is substantial. The purpose of the Board is to perform those functions, the details of which are specified in the Act.

The Commission did not suggest that the Board was a trading corporation within the meaning of those words and the definition of "corporation" in the Act. The issue is whether it is a financial corporation. A Full Court of the Federal Court in Ku-ring-gai considered the nature of a financial corporation. That case was decided after St. George and before Adamson. In that case Bowen C.J. said at p.138:
"In my opinion a financial corporation is one which borrows and lends or otherwise deals in finance as its principal or characteristic activity or, depending on which approach one takes, it is a corporation formed for the purpose of borrowing and lending or otherwise dealing in finance. If it does so in the way of trade it may also be a trading corporation, but that is not a necessary feature of a financial corporation."
Brennan J. said at p.150:
"In the present case the relevant inquiry is whether either of the applicant corporations is a financial corporation. Unless some feature of its constituion, or purpose of incorporation, or management, would place it in a category which is exclusive of the category of financial corporation, its predominant activity must be regarded in order to ascertain whether it answers the relevant description. Its predominant activity is the activity which it was formed to undertake - the borrowing of moneys to lend to its members, the lending of those moneys, the receipt of repayments and the ultimate repayment of the moneys to the source from which they came. These are money dealings. The activities of borrowing in order to lend and lending at interest are financial activities which give to each corporation the character, and place it within the category of financial corporation. It is no doubt right to describe the applicant societies as co-operative societies or, more fully, as co-operative terminating building societies, but that description neither places them in, nor removes them from, the category of financial corporations. Nor do the features of each society - its constitution, organization and management, the source and nature of its borrowings, its subjection to governmental controls - identify it as falling within some category of corporation which excludes financial corporations."
Deane J. said at pp.158-9:
"The phrases 'trading corporation' and 'financial corporation' in the context of both s.51(xx) of the Constitution and the definition of 'corporation' in the Act are composite ones. Each phrase refers to a corporation which can appropriately be categorized by reference to activity whether actual or intended. The fact that a corporation was formed for purposes or with objectives that might legitimately be advanced through trading, or that it in fact trades, will not necessarily mean that it can be appropriately categorized as a trading corporation. Nor will the fact that a corporation was formed for purposes or with objectives that might legitimately be advanced by involvement in financial transactions or that it occasionally has dealings in finance necessarily mean that it can appropriately be categorized as a financial corporation. Trading activity or dealing in finance (whether actual or intended) will be decisive of categorization only where the overall circumstances are such that the corporation can appropriately be categorized by reference to such activity."

". . . the phrase 'financial corporation' is a composite one. It does not refer to solvency. An obvious reference point is to the activity of commercial dealing in finance. Another possible reference point is the provision of management or advisory services in relation to financial matters. I use the words 'dealing in finance', for want of a better expression, to refer to transactions in which the subject of the transaction is finance (such as borrowing or lending money) as distinct from transactions (such as the purchase or sale of particular goods for a monetary consideration) in which finance, although involved in the payment of the price, cannot properly be seen as constituting the subject of the transaction. A common but not invariable characteristic of the relevant type of transaction is that the obligation on each side is to pay money."

In determining whether the Board is a financial corporation it must be remembered that in the definition of "corporation" the words "financial corporation" are to be given the same meaning as those words in s.51(xx) of the Constitution. The word "financial" forms part of a composite expression which is used to describe corporations of a particular kind rather than the activities engaged in by those corporations. The words "financial corporation" do not constitute a term of art having a special menaing. Likewise, despite references to the contrary contained in the submissions of the Solicitor-General, there was no generally accepted definition of the meaning of those words at the end of the 19th Century. Essentially, it is a description or label given to a corporation when its financial activities form such a significantly large proportion of its overall activities as to merit its description as a financial corporation, c.f. Mason J. in Adamson at p.233. For present purposes it is not necessary to consider the definition of the words "financial corporation" contained in the Act. That definition is designed to include not only financial corporations coming within s.51(xx) of the Constitution, but also any body corporate that engages in activities of the kind described in s.51(xiii) and (xiv) of the Constitution even if that body corporate is not a financial corporation within s.51(xx). Although the connotation of the words "financial corporation" remains constant, their denotation may change, see Ku-ring-gai per Bowen C.J. at p.138. In the present case the real difficulty is to determine whether the Board, at the present time, comes within the meaning of the words "financial corporation", or in other words its financial activities form such a significantly large proportion of its overall activities to merit it being described as a financial corporation.

In my opinion, the essential feature which denotes a corporation being a financial corporation is that it performs the function or engages in the activities of dealing in finance in the sense expressed by Deane J. in Ku-ring-gai. It is not necessary that a corporation acquires capital for the purpose of lending money nor is it necessary that the corporation borrows money for the purpose of lending. The Board manages or invests the Fund. In performing that function the Board engages in the activity of dealing in finance insofar as it engages in the activity of investing the funds including the investment of monies on the security of mortgage. Those activities constitute a commercial dealing in finance and form a significantly large proportion of the Board's activities. In my opinion the Board is a corporation under the Trade Practices Act.

In accordance with his submissions, the Solicitor-General for the State of Victoria contrasted the provisions of s.51(xiii) and (xiv) of the Constitution with s.51(xx). Placita (xiii), (xiv) and (xx) are set out:
"(xiii) Banking other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks and the issue of paper money:

(xiv) Insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned:"
. . .

"(xx) Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth:"
He contended that the meaning to be given to the words "financial corporations" in placitum (xx) and in the Trade Practices Act had to be determined in the light of placita (xiii) and (xiv). Otherwise, he contended, corporations carrying on the business of banking or insurance would be financial corporations and the express provisions of placita (xiii) and (xiv) would be rendered unnecessary, particularly the exclusion of State banking and State insurance not extending beyond the limits of the State concerned.

Those contentions are rejected. In any one case it is a question of characterization to determine whether a particular law comes within a particular power conferred by the Constitution, and in that context the powers conferred by the various placita in s.51 of the Constitution are not to be treated as being mutually exclusive, see for example Strickland v. Rocla Concrete Pipes Ltd. (1971) 124 C.L.R. 468. The relevant provisions of the Trade Practices Act are dependent upon placitum (xx) and are not directed to the activities of corporation whose activities otherwise come within the activities referred to in placita (xiii) and (xiv). This principle is recognized and applied in the definition of "financial corporation" in s.4 of the Trade Practices Act. A corporation created by a State for the purpose of enabling that corporation to engage in the activity of commercial dealings in finance does not cease to be a corporation under placitum (xx), because under placita (xiii) and (xiv) specific activities are excluded from the power when those activities are carried on by a State except when extending beyond the limits of the State concerned. For present purposes, the relevant provisions of the Trade Practices Act are directed to corporations and those provisions are within the powers conferred under placitum (xx) of s.51 of the Constitution. The fact that the Board was incorporated by the State of Victoria and engages in the activity of commercial dealings and finance does not prevent the Board from being "a financial corporation" under the Trade Practices Act and under placitum (xx).

Pursuant to leave, the Solicitor-General contended as a quite distinct proposition that the Board was an instrumentality or agent of the Crown in right of the State of Victoria and was entitled to all its rights, powers and privileges, and that the Trade Practices Act does not bind the Crown in the right of a State. He relied upon Bradken Consolidated Ltd. v. The Broken Hill Pty. Co. Ltd. (1979) 53 A.L.J.R. 452 (hereinafter called "Bradken"). Peculiar features associated with that case make the decision in some respects unsatisfactory. A number of the Justices adverted to that fact. It is sufficient to say that in that case the applicants conceded that the Commissioner for Railways for the State of Queensland, although a body corporate, was not a trading corporation and thus not a corporation under the Trade Practices Act. Likewise, it was conceded that the Commissioner was an instrumentality or agent of the Crown in the right of the State of Queensland and thus was entitled to all its rights, powers and privileges including immunities. The Trade Practices Commission was not a party to those proceedings. The Court, by majority, held that the Trade Practices Act did not apply to bind the Crown in right of a State and, by implication, that even though a body corporate was a corporation under the Trade Practices Act, nevertheless, if it was entitled to the immunities of the Crown, it was not bound by the Act. In this regard, no reference was made to the definition of "financial corporation" contained in the Trade Practices Act which expressly purports to bind a State with respect to corporations referred to therein. Further, Stephen J. indicated that the whole question of the nature of the principles of immunity of the Crown under a Federal system of government should be considered after having the benefit of full argument on the point from both sides on the record, being argument which had not been put in that case.

In order to protect the interests of the respondent, counsel argued that Bradken was wrongly decided insofar as it was decided that the Crown in right of a State was not bound under the Trade Practices Act. He argued also that Bradken did not bind this Court to hold that the immunity applied to a corporation where that corporation was a trading or financial corporation as defined in the Trade Practices Act, even though it was an instrumentality or agent of the Crown in right of a State. Although this latter argument was persuasive, based as it was on the definition of "financial corporation" and the provisions of s.2A of the Trade Practices Act which had been inserted into the Act in 1977, in my opinion this Court is bound to follow Bradken. Accordingly, only one issue arises for determination by this Court, namely whether the Board is an instrumentality or agent of the Crown in right of the State of Victoria and thus within the shield of the Crown and not bound by the provisions of the Trade Practices Act.

On this issue I have had the benefit of reading the reasons for judgment prepared by Ellicott J. and am in complete agreement with them. For the reasons expressed by him, the Board, in my opinion, is not an instrumentality or agent of the Crown in right of the State of Victoria and is not entitled to be immune from the requirements of the Trade Practices Act. The Board is a corporation under that Act and, in my opinion, is bound by the provisions of that Act.

I would dismiss the appeal with costs.

JUDGE3

This is an appeal from a judgment and order of Brennan J. sitting as a Judge of this court (as he then was) and dismissing an application by the State Superannuation Board of Victoria ("the appellant") in which it sought (inter alia) a declaration that it is not "a corporation" for the purposes of the Trade Practices Act 1974.

The appellant is a body corporate constituted by the Superannuation Act 1925 (Vict.) and continued as such under the Superannuation Act 1958 (Vict.) ("the Act"). It is charged with the administration of the Superannuation Fund established by the 1925 Act and continued under the Act for the purpose of providing pensions for Victorian public servants and those employed by certain public instrumentalities of Victoria. It is also charged with the investment of the Fund and the investments made include loans on the security of mortgages of land.

On 19 November 1979 the Trade Practices Commission ("the respondent") wrote to the appellant stating that enquiries made by it suggested that the appellant, in the course of lending moneys on the security of mortgages of land, may have engaged in the practice of exclusive dealing in contravention of s.47(1) of the Trade Practices Act 1974. In purported pursuance of s.155 of that Act the appellant was furnished with a notice requiring it to give certain information and produce certain documents to the respondent. Thereupon it commenced these proceedings seeking declarations that it is not "a corporation" as defined by s.4 of the Trade Practices Act, that s.47 thereof does not apply to it, that the notice was not validly given and that any failure or refusal to comply with it would not constitute a contravention of s.155. It sought an injunction restraining the respondent from taking any step to enforce compliance with the notice.

Brennan J. in his decision under appeal held that the appellant was "a financial corporation" and therefore "a corporation" within the meaning of s.4 of the Trade Practices Act.

The incorporation of the appellant is confirmed by s.58 of the Act. It consists of six members appointed by the Governor in Council (one of whom shall be appointed as chairman), three of whom are contributors of the Fund elected by contributors. The three non-elected members must include an actuary and the government statist. Members are appointed for five years and are eligible for re-appointment. They can be removed from office only by resolutin of both Houses of Parliament after suspension by the Governor in Council for misbehaviour or incompetence.

Contributors to the Fund are officers in the employment of the Victoria Government and certain governmental authorities and institutions. The estimated number of contributors as at 30 June 1980 was 90,228. The scheme is contributory and, in practice, contributions are deducted fortnightly from contributor's salaries and sent to the appellant. On receipt they are checked and then credited to the particular officer's contribution account. In 1980 the amount so credited was approximately $67M.

A contributor is classified, after medical examination, as a contributor for full benefits, a limited contributor or a service benefits contributor. This function is entrusted to the appellant which engages the part-time services of 15 private medical practitioners to advise.

Contributors are entitled to a pension on retirement on or after attaining retirement age or on the ground of ill health or of physical or mental incapacity to perform duties. The appellant has the task of determining, on medical advice, whether a contributor is unable by reason of ill health or mental or physical incapacity to perform duties. Approximately 500 retired on the ground of ill health during the year ended June 1980.

The Victorian Government makes substantial contributions in accordance with the Act. These payments are made not when the contributor contributes but when the time comes to pay a pension. They are paid into the Fund (s.18) which pays the contributor his pension.

The receipt of contributions, the management and investment of the Fund, the payment of pensions and the receipt of the Government's subvention are all functions entrusted to the appellant. In addition it administers two smaller funds, the Parliamentary Superannuation Fund and the Married Women's Superannuation Fund. It has a clerical staff of 86 employed under the provisions of the Public Service Act whose salaries are paid by the Victorian Government. In addition the appellant itself employs 8 persons in property management whose salaries are paid by the Fund.

The management of the Fund is complex. The Fund is large and there is a large number of individual transactions involved. It's management requires considerable clerical work, a great deal of administration at the executive level and the sound exercise of financial and actuarial judgment and management skills. Taking account of the enhancement in the value of the Fund's assets, the Fund is yielding annually a fraction over 10% on the total investment. In the management of the Fund, the appellant draws on its indigenous expertise in forming its financial judgments and it receives advice from a budget investment officer, property consultant, accountant and other staff skilled in matters of finance. The appellant's main powers of investment are found in s.6 of the Act. They include power to invest in trustee's securities, semi-government debentures, loans guaranteed by the Government of Victoria and loans secured by mortgage. In the last-mentioned case, the aggregate amount that may be invested therein is determined by the Treasurer. With his consent the appellant may expend money standing to the credit of the Fund in purchasing land in Victoria, constructing buildings, repair and maintenance or alteration and paying outgoings incurred in connection with the management of the land or buildings.

Although there is no evidence of a specific policy determining the investments made by the appellant there are some factors which are taken into account in making them. Thus with inflation, the appellant decided to invest in the purchase of property for rental. By an understanding with the Government, the appellant has not withdrawn support from semi-government loans.

Although the appellant is statutorily independent, the Government has sometimes exercised influence upon the appellant when it thinks a particular investment ought to be made. Housing loans to contributors are an authorised investment. Rates of interest are fixed in line with prevailing market rates.

Subject to this the appellant exercises its own discretion within the limits of its powers as to the kinds of investment it makes and the persons with whom it deals.

The longer term investments fall into four main classes - semi-government and local government loans, commercial loans, housing loans and property purchases. In addition available funds are invested in the short term money market. As at 30 June 1980 the funds in investments stood at $487M. Such a portfolio requires considerable management and the appellant devotes a substantial proportion of its time to management of the Fund, as does the staff.

The statistics of the longer term investments newly made in each of the years ended 30 June 1977 to 30 June 1980 (inclusive) were as follows:-

1977 1978 1979 1980

(To nearest $000)

Investment in -

Semi-Government and

Local Government loans 5,500 37,082 38,420 29,370

Commercial loans 17,556 16,879 28,651 46,024

Housing loans 8,041 10,431 10,869 13,760

Property purchases 3,470 4,094 6,048 324

Total: 34,567 68,486 83,988 89,478

Commercial loans originate in applications made by prospective borrowers. The appellant does not advertise but is well known as a lender of money on the security of mortgage and a large number of applications are received each year. Between 1 January 1980 and 3 December 1980 it considered 144 applications, 66 of which it rejected. As at March 1980 current commercial loans had been made to 300 borrowers who had borrowed approximately $111M.

Housing loans are made available to contributors. These are processed by the appellant's staff. There are approximately 400 applications a year and loans totalling approximately $13M were made in the year ended 30 June 1980.

The appellant has also acquired 4 city properties costing approximately $43M.

The funds for longer term investments are derived from three sources, namely, a surplus of contributions received over amounts paid out, from interest on funds invested and from maturing investments or moneys repaid. In 1980 approximately $89M was invested in longer term investments. Of this the surplus on contributions accounted for $18M, interest and return on funds for $39.6M and matured investments and repayment of moneys lent for $33M. The Fund generated a surplus on its operations of the order of $57.5M.

The large cash flow which is a feature of the Fund's management leaves the appellant with cash surpluses from time to time and these are invested each working day on the short term money market. The available surplus varies greatly, depending on the appellant's commitment to make particular investments, the maturing of investments, the receipt of contributions and government's subventions and the fortnightly payment of pensions.

The Solicitor-General for Victoria, appearing for the appellant made three major submissions - that the court is bound in the light of the decision in The Queen v. Trade Practices Tribunal & Ors. Ex parte St. George County Council ((1974) 130 C.L.R. 533) to find for the appellant, that the financial activities of the appellant were not such as to make it a "financial corporation" within the meaning of the Trade Practices Act, and that in any event, the appellant is an agency of the Crown or within the shield of the Crown and therefore because of the decision of the High Court in Bradken Consolidated Limited v. B.H.P. ((1979) 53 A.L.J.R. 452) the Trade Practices Act does not apply to it.

Is the appellant a financial corporation within the meaning of the Trade Practices Act 1974.

Section 47 of the Trade Practices Act prohibits a corporation in trade or commerce from engaging in the practice of exclusive dealing. "Corporation" is defined in s.4(1) as meaning, inter alia, a body corporate that is a trading corporation formed within the limits of Australia or is a financial corporation so formed. The terms "financial corporation" and "trading corporation" are also defined by s.4(1) which provides:-
4(1) "financial corporation" means a financial corporation within the meaning of paragraph 51(xx) of the Constitution and includes a body corporate that carries on as its sole or principal business the business of banking (other than State banking not extending beyond the limits of the State concerned) or insurance (other than State insurance not extending beyond the limits of the State concerned);
"trading corporation" means a trading corporation within the meaning of paragraph 51(xx) of the Constitution.

Section 51 (xiii) (xiv) and (xx) of the Constitution provides:-
"The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-
. . . . . . . . . . .
(xiii) Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money:
(xiv) Insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned
. . . . . . . . . . .
(xx) Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth:

Subject to the other provisions of the Act, these definitions rely heavily on the scope of the legislative power conferred by s.51(xx) on the Commonwealth. The full extent of that power has not yet been defined by the High Court. In Strickland v. Rocla Concrete Pipes Ltd. ((1971) 124 C.L.R. 468) (Concrete Pipes Case) the High Court held that it was sufficiently wide to cover the regulation of the trading activities of trading and financial corporations but expressly declined to define the limits of the power (see e.g. at pp.490-491). It has not, for instance, since disapproving Huddart, Parker & Co. Pty. Limited v. Moorehead (1909) 8 C.L.R. 330) in that case, decided whether s.51(xx) empowers the Commonwealth Parliament to regulate the incorporation or the internal affairs of trading or financial corporations or whether it extends beyond regulation of their trading activities to other matters such as the effect on the environment of their activities or industrial relations with their employees. There are dicta in High Court decisions preceding the Concrete Pipes Case which touch on these questions. However, most of them are obiter and are found either in Huddart Parker's Case (supra) or in cases such as Bank of N.S.W. v. The Commonwealth (1948) 76 C.L.R. 1 which were decided at a time when that case had not been disapproved.

The extent of the power, therefore, remains to be determined in future cases. In determining the meaning of "trading corporation" and "financial corporation" in pl. (xx) one must do so without the assistance that might otherwise have been derived from a fuller exposition of what aspects of corporate life and activity the power embraces.

It is clear, however, that the power, being found in the Constitution, will not be construed narrowly (The Queen v. Federal Court of Australia; Ex parte W.A. National Football League (Adamson's Case) (1979) 143 C.L.R. 190 at pp. 201-208) that it covers corporations however incorporated e.g. whether under the ordinary companies law of a State or Territory or as a statutory corporation under its own act. As a result of decisions of the High Court including and since the Concrete Pipes Case and, in particular, Adamson's Case (supra) it is also clear that a corporation is not a trading corporation simply because it trades or carries on financing activities irrespective of the extent thereof. (e.g. Adamson's Case at p. 234). What is in issue here is whether the nature of a corporation as a trading or financial corporation is only to be determined by considering the purposes for which it was formed or whether it is determined as well or solely by reference to what it in fact does. Put another way it raises the question whether the words refer to a particular type of corporation or whether they refer to what a corporation does.

There has been a degree of judicial disagreement on this question. The appellant's counsel, as already indicated, contends, in the light of the St. George County Council Case (supra), that the placitum describes a particular type of corporation, that this is determined by reference to the purposes for which it is formed and that it does not matter that in fulfilling those purposes its main or even sole activity is trading. The appellant, therefore, it is argued, being formed for the purpose of providing superannuation benefits to government and related employees, is not a trading or financial corporation whether for the purpose of doing so it engages in trading or financing activities or not.

In my opinion, this court is not bound by the decision in the St. George County Council Case to hold, as the appellant contended, that it is not a financial corporation. The subsequent decision of the High Court in Adamson's Case makes that clear.

The St. George County Council Case involved a majority decision by McTiernan, Menzies and Gibbs JJ. Although they agreed in the conclusion, there was, in my view, no consistency of approach. What the appellant seeks to extract from the decision is that the High Court decided that a governmental corporation could not be "a financial corporation" within the meaning of the Act. In determining whether it does so it should be borne in mind that it was a decision on the Restrictive Trade Practices Act 1971 and that there are differences between the relevant provisions in that Act and the present Act.

McTiernan J. clearly formed the view that the Act was directed to corporations which he described as "free enterprise corporations". He did not attempt to define the constitutional limits of the phrase "trading corporation" in pl. (xx). This clearly emerges from the following passage in his Honour's judgment (ibid at p. 546):-
"The words of the definition are 'a trading corporation' not any trading corporation. It can hardly be contended that the legislature intended any corporation which trades. The preamble of the Restrictive Trade Practices Act 1971 (Cth) expressed an object with which the Act was made. The object is: 'To preserve Competition in Trade and Commerce to the extent required by the Public Interest'. This is naturally an object directed to - that is, pertaining to - private enterprise."

His Honour went on to indicate that in the operative provisions of the Act, Parliament intended to legislate with respect to "a free enterprise corporation". Although the Council conducted a municipal trading undertaking this was not sufficient to put it into the category of a trading corporation and even though it produced revenue this did not change its character from public to private. His Honour at p. 547, expressed the view that the legislation was not intended to include within the jurisdiction of the Trade Practices Tribunal "a body within the central government of a State or a local authority" which was by legislation a supplier of goods or services within the State.

Menzies J. agreed that the fact that a corporation trades was clearly insufficient by itself to bring it into the classification of a trading corporation. His analysis of the provisions which governed the St. George County Council led him to the view that it was unquestionably a corporation established for local government purposes which had defined trading powers. His Honour felt that in 1900 trading corporations and municipal corporations were well categorised classifications. He concluded that trading corporations did not comprehend corporations for local government purposes.

Gibbs J's approach was similar to that of Menzies J. He regarded the word "trading" as forming part of a composite expression and as indicating the essential attribute of the kind of corporation to which it refers. The words "foreign corporation" and "financial corporation" describe corporations of a particular kind rather than corporations of any kind which happen to act in a particular way.

The same he thought was true of the words "trading corporation" (ibid p. 561). In his view a trading corporation is one formed for the purpose of trading (ibid p. 562). He thought that the St. George County Council was formed for the purpose of conducting a trading undertaking, that this was its main, if not only activity, and that it's activities could properly be described as trading even though it was required to endeavour so to conduct its undertaking as to avoid making a profit. However, he nevertheless concluded that it was not a trading corporation. His view is contained in the following passage (at p.564):-
"To say that the County Council was formed for the purpose of trade seems to me to state a half truth and ignore a number of significant circumstances that reveal its true nature. . . . . When all these facts are considered the proper conclusion, in my opinion, is that the County Council is a corporation constituted for the purpose of local government to provide an essential service to the inhabitants of an aggregation of local authority areas, under conditions thought most likely to appear beneficial to them. It is properly described as a municipal corporation".

At p.565 his Honour said:-
"When all the circumstances are considered it is incomplete and misleading to describe the County Council as a corporation formed for the purpose of trading. The purpose of the formation is more properly described as that of fulfilling a function of local government."

I do not think this case can be relied upon as authority for any proposition other than that a corporation (such as the St. George County Council) is not a trading corporation within the meaning of s.51(xx) of the Constitution.

I am unable to derive from it a conclusion that a governmental corporation cannot be a trading or financial corporation within the meaning of the Act. Even if the views of Menzies J. and Gibbs J. (as he then was) were the views of a majority of the court, they should not, in my opinion, be regarded as supporting so broad a proposition as - no corporation formed for what might be described as "governmental purposes" is capable of being a trading or financial corporation within placitum (xx).

This conclusion is, I think supported by the subsequent decision of the High Court in Adamson's Case. Indeed, in the latter case, the Court, in my view, has thrown considerable doubt on whether the St. George County Council Case can now be regarded as correctly decided. I make the latter comment because many of the statements of the majority in Adamson's Case (a bench of 7 justices) appear to me to be inconsistent with what the Court held in the St. George County Council Case (a bench of 5).

In order to appreciate the effect of the decision in Adamson's Case it is necessary to refer to the views of Barwick C.J. and Stephen J. (the minority in the St. George County Council Case.

Barwick C.J. (St. George County Council Case supra at p. 539) said that the description of "trading corporation" in his opinion referred not to the purpose of corporation but to the activities of the corporation at the relevant time. At p.541 he said:-
"No doubt during and at the end of the nineteenth century, corporations were classified for various purposes and, on occasions, special rules made applicable to corporations in one category which were not applicable to corporations in another. Trading corporations were both known and referred to as such. But there does not appear to have been any generally accepted definition of a trading corporation. It was assumed, I think, that such a corporation could be identified by its activities. If its nature was being sought, it was to be found in what it did." (underlining added).

His Honour thought it would be a misreading of the relevant words in s.51(xx) to treat them as requiring that the corporation be formed for a purpose. The power was not a power to legislate with respect to trading but with respect to some corporations, but a corporation whose predominant and characteristic activity was trading, whether in goods or services, would satisfy the description and the ends which such a corporation seeks to serve by trading are irrelevant to its description. His Honour summarised it in this passage (at p.543):-
"If, upon that consideration, the corporation can fairly be described by reason of those activities, their extent and relative significance in the affairs of the corporation as a 'trading corporation' it will, in my opinion, be nothing to the point that it is also a government or State or municipal corporation. The effect of the trading activities of such a corporation upon and in the community will not be lessened or necessarily affected by the fact that it is a State or municipal instrumentality."

Stephen J. (ibid at p.568) thought that the use of the word "trading" necessarily involved reference to function, either to the activities which a corporation was intended to undertake or to those which it in fact did undertake. He thought that in that case there was no distinction to be drawn between the two. He said (at p.568):-

"The description 'trading corporation', like that of 'banking corporation' or 'mining company', is a description of actual or intended activities. . . . "

At p.570 he said:-

"It may be proper to describe the distribution of gas, water and electricity as traditional incidental functions of local government and in this sense the activity of the County Council is a typical activity of local government. This does not, however, make it inappropriate to describe the County Council as a trading corporation."

His Honour emphasised however that every corporation which happens to trade is not a trading corporation and that engaging in trading activities ancillary to some other principal activity does not make it one.

This analysis clearly shows that even as between the minority justices in the St. George County Council Case there was a difference of approach.

Adamson's Case was concerned with the Trade Practices Act 1974. In that case a majority of four of seven justices held that the Western Australian National Football League and the West Perth Football Club were trading corporations within the meaning of the Act. In that case Barwick C.J. reaffirmed the view he had expressed in the St. George County Council Case. He thought that the only sure guide to the nature of the company was a purview of its current activities and that a corporation would satisfy the description of trading corporation if trading was a substantial corporate activity. He said (at p. 208):-
"Its activities rather than the purpose of its incorporation will designate its relevant character. But so to say assumes that such trading activities are within its corporate powers, actual or imputed. It is the corporation which satisfies the description which is the subject matter of the power. Thus its corporate capacity or incapacity cannot be ignored. But once it is found that trading is a substantial and not a merely peripheral activity not forbidden by the organic rules of the corporation, the conclusion that the corporation is a trading corporation is open."

His Honour concluded that in that case each of the companies in question, in promoting football matches, was engaged in a commercial venture for profit which was an activity of trade. His Honour refused to regard the St. George County Council Case as requiring him to hold otherwise. Indeed, he thought the Court as composed in Adamson's Case was free to reconsider and, if need be, to depart from the views expressed in the St. George County Council Case.

Mason J. (with whom Jacobs J. agreed) regarded the St. George County Council Case as authority for no more than that a County Council so created was not a trading corporation. For himself he preferred the minority view of Barwick C.J. in that case when the Chief Justice said (ibid. at pp. 542-3) that to fall within s.51(xx) it is not necessary that a corporation be formed for trading or financial purposes and that "the activities of a corporation at the time a law of the Parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description". (See Adamson's Case supra per Mason J. at p.233).

In applying the principle to the facts of that case Mason J. said (at p.234):-
"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. Whether the trading activities of a particular corporation are sufficient to warrant its being characterized as a trading corporation is very much a question of fact and degree."

Murphy J. thought that the constitutional description "trading corporation" includes those bodies incorporated for the purposes of trading and also those corporations which trade. His Honour went on to say (at p.239):-
"Even though trading is not the major part of its activities, the description, 'trading corporation' does not mean a corporation which trades and does nothing else or in which trading is the dominant activity. A trading corporation may also be a sporting, religious or governmental body. As long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it being a trading corporation."

Gibbs J. (as he then was), one of the minority in Adamson's Case, reaffirmed the view he had expressed in the St. George County Council Case.

Stephen J. also dissented because he thought that both the predominant object and the sole activity of the corporation in question was remote from trading and from profit making. He did however reaffirm his view that functions both intended and actually undertaken were of prime importance in deciding whether a corporation was a trading corporation. Aickin J. agreed with him.

In my opinion, an analysis of Adamson's Case shows that the majority of the Court regarded what a corporation in fact did as determining whether it is a trading corporation within s.51(xx). At the same time not every corporation which trades is a "trading corporation" nor will trading activity which is purely incidental be sufficient to characterise it as such. On the other hand the purpose for which it is formed is not decisive. Thus in that case the fact that the corporations were established to promote a particular sport did not prevent each of them from being a "trading corporation".

I think it is also clear from the decision of the majority in that case that neither the fact that a corporation is established under a special Act of Parliament nor for a purpose which could be described as "a governmental purpose" would prevent it from being a trading corporation.

Adamson's Case was concerned only with the term "trading corporation". However, in my opinion, similar considerations should be applied in determining whether a corporation is a financial corporation within s.51(xx).

It follows that, in my view, this Court is not bound by the St. George County Council Case to hold that the appellant is not a financial corporation. Senior Counsel for the applicant submitted that this Court was bound by the St. George County Council Case and that case determined the result of the issue whether the applicant was a financial corporation. I do not agree. I consider that the St. George County Council Case is an authority binding on this court only in relation to the position of a municipal corporation such as the St. George County Council incorporated under a local government act. The fact that the applicant is established under a special act of the Victorian Parliament, was so established for the purposes of giving government employees superannuation benefits and might be described as a government corporation, does not prevent it from also being a financial corporation. In deciding whether it is such a corporation the determining factor is what it actually does. The critical question in the light of the authorities is whether financing in the sense I will shortly mention is a substantial and not a mere ancillary part of its activities.

This does not mean that the Act under which and the purposes for which it was established, are irrelevant. Indeed, the Act provides a framework within which it conducts its activities and is of some assistance in determining whether those activities which point to it being a financial corporation are a substantial as distinct from an ancillary or incidental part of its function.

Brennan J. held that its activity of managing and investing the Fund was a substantial activity not merely incidental to some other and was sufficient to characterise it as a financial corporation. With respect, I agree with his Honour's conclusion.

It is unnecessary for present purposes to define the full extent of those activities which are contemplated within the expression "financial corporation". I think it clearly includes, as this court held in Re: Ku-ring-gai Co-operative Building Society (No. 12 Ltd.)v (1978) 36 F.L.R. 134, commercial dealing in finance such as the borrowing and lending of money.

Sections 5 and 6 of the Act make it clear that the investment of the Fund into which the contributions of officers are paid and out of which benefits are provided was intended to be a primary and essential part of the appellant's functions. The income from the investment of the Fund forms part of it. The calculation of the benefits which officers were likely to receive no doubt depended on the surpluses which it was expected the Fund would receive. Indeed, ss.6(3) and 10 make this abundantly clear. Furthermore, the investment of the Fund in loans was clearly intended to be a major source of income. Investment in land is permitted but only with the consent of the Treasurer (s.6A). Moneys held uninvested may be lodged for the time being at call or on fixed deposit with the Treasurer or a Bank (s.7).

The provision of pensions and benefits to officers was clearly the purpose of establishing the appellant but the receipt of contributions and the investment of the Fund so created was intended to be a major activity of the appellant.

And so it has turned out in practice. As at 30 June 1980 there were approximately 90,000 contributors who during the previous year paid contributions totalling over $67M. As at that date 27,000 pensions were being paid and the amount paid to pensioners during the previous year was about $80M. At 30 June 1980 the Fund's investments stood at approximately $487M and during the previous year almost $90M was invested. Of this approximately $89M was invested ($29.37M in semi-government and local government loans, $46M in commercial loans and $13.76M in housing loans). During the year 1980 the interest and return on funds invested was $39.6M. In addition the appellant is left with temporary cash surpluses from time to time and these are invested from day to day on the short term money market. Taking account of the enhancement in the value of the Fund's assets, the Fund is yielding annually slightly over 10% on the total investment. The management and investment of the Fund involves a large number of individual transactions and a great deal of sound financial and actuarial judgment and managerial skill.

I have referred mainly to the year ended 30 June 1980 but the figures for earlier years show a similar pattern.

Thus, not only is it an intended major function of the appellant to invest the Fund in loans, but, in practice, large amounts are invested by it at commercial rates of interest with a view, one must assume, to obtain the maximum return on the Fund consistent with proper management.

In my opinion the activities of investing and reinvesting the Fund in loans of various descriptions and receiving income therefrom and the capital repayments thereof are activities which characterise the appellant as a financial corporation. They are an essential part of its functions and they are appropriately described as commercial dealings in finance.

It was argued that because the appellant did not borrow the moneys which it invested it was not a financial corporation. I am unable to accept this argument. The fact that the appellant obtains the moneys as contributions from contributors and not loans makes no difference. It is engaged in investing and in reinvesting the moneys it receives. It is dealing in finance. A corporation which obtained capital from the issue of shares and, in accordance with its objects, used that capital in a similar way would, in my view, clearly be a financial corporation. What gives it this character is its dealing with or lending money and obtaining a return on it. The appellant receives moneys from officers or from borrowers (on the repayment of loans) and deals with it in precisely the same way.

It is therefore a financial corporation within the meaning of the Act.

It was also submitted that the appellant was a trustee of the funds it received and that this also prevented it from being characterised as a "financial corporation". Reliance was placed on Fouche v. The Superannuation Fund Board (1952) 88 C.L.R. 607.

In my opinion there is no substance in this argument. First, I do not think that the normal relationship of trustee and beneficiary exists between the appellant and contributors. The contributors have no beneficial interest in the Fund. They no doubt have enforceable rights in relation to it but this is different. The trust as established by the Act is one for statutory purposes (cf. Fouche's Case supra at p. 640). As such, the proprietary rights in the Fund are vested in the appellant (subject to s.7(1)) and its obligation is to administer them in accordance with the Act. Once it is held, as I have held, that a corporation can be a financial corporation, notwithstanding that it is formed by a special statute, to effect particular purposes it makes no difference that those purpses involve the administration of a fund so as to benefit a defined class of people. Secondly, even if the officers had a beneficial interest in the Fund, I do not think this would preclude a finding that the appellant was a financial corporation by virtue of its investment of the Fund.

As I have approached the matter, it is what it does, rather than the purpose it serves in doing it, that is critical. This does not mean that this is not a relevant matter. It is not, however, a determining factor.

Is the appellant entitled to the shield of the Crown and therefore not bound by the Trade Practices Act?

It appears that this issue was not clearly raised before the learned trial Judge.

As it turns out this involves two questions. First, whether the Crown in right of a State is bound by the Trade Practices Act and secondly, if so, is the appellant the Crown.

On the first question the Solicitor-General for Victoria relied strongly on the decision of the High Court in Bradken Consolidated Ltd. and Another v. The Broken Hill Proprietary Co. Ltd. and Others v(1979) 53 A.L.J.R. 452). He submitted that it decided that the Crown in right of the State was not bound by the Trade Practices Act.

Counsel for the respondent submitted (for the purpose only of preserving the point) that it was wrongly decided but also that it did not so decide. He argued that it was not concerned to deal with any State instrumentality other than one which was not a trading or financial corporation as defined.

There are, I think, strong arguments to support the view that State instrumentalities which are "financial corporations" within the meaning of the Trade Practices Act, are bound by it. The definition of "financial corporation" evinces an intention to include within it State banks and State insurance corporations engaged in interstate trade and such bodies could include those entitled to the shield of the Crown (see Inglis and Another v. The Commonwealth Trading Bank of Australia (v1969) 119 C.L.R. 334). The definitions of "financial corporation" and "trading corporation" by providing that they cover any corporation within the meaning of s.51(xx) of the Constitution, are some indication in the Trade Practices Act that Parliament intended that that act should bind those which represent the Crown. Furthermore, there is much to support the view that s.2A inserted in the Trade Practices Act by Act No. 81 of 1977 and relied upon by the appellant, was inserted not for the purpose of limiting the operation of the Act, but of extending it and making sure that the Commonwealth's involvement in a prohibited act or practice was covered by the Trade Practices Act even if the Commonwealth was not acting through a corporation.

I find it unnecessary to decide whether considerations such as these should lead to the view that the Act does bind a State instrumentality which falls within the definition of "financial corporation". Notwithstanding the persuasive argument of counsel for the respondent to the contrary, I am satisfied on analysis that the High Court did, in Bradken's Case decide that the Trade Practices Act does not bind a corporation entitled to claim the shield of the Crown in right of a State whether or not it is a trading or financial corporation within the meaning of s.51(xx) of the Constitution. (See Gibbs J. at p.454). In so deciding, they were seeking, but were unable to find, any positive legislative intention to prevent the application of the principle that an act of the Commonwealth does not bind the Crown, including the Crown in the right of a State, unless there is a positive indication of an intention so to do.

This leaves for consideration whether the appellant is the Crown or an emanation of the Crown in right of the State of Victoria and is therefore entitled to rely on the shield of the Crown.

Whether a body set up by legislation is so entitled either generally or in particular respects depends on the intention of the legislature ascertained from the relevant legislation. The nature of the functions the body is established to perform, the capacity of the executive government to control its operations, the existence and degree of any external control over the exercise of its functions, the rights it has or others have over any assets committed to it and its obligations, if any, to supply information to the government, are all important matters to be taken into account.

The question, in effect, is whether the body is the alter ego of the Crown. Therefore, if the functions conferred on it by statute are appropriate for the government to undertake, if the government has power under the legislation to control the exercise of those functions or the composition from time to time of its governing board or council, there will be strong grounds for holding that it is an emanation of the Crown.

Both parties relied on the decision of the High Court in Superannuation Fund Investment Trust v. Commissioner of Stamps (S.A.) ((1979) 53 A.L.J.R. 614). In that case, four of the five Justices who sat were equally divided on the question whether the investment trust established under the Superannuation Act 1976 (Commonwealth) was the Crown or a manifestation or emanation of the Crown in right of the Commonwealth.

The Trust established by the Commonwealth Act has as its sole function the management of the Fund and the investment of the moneys standing to its credit. The Fund represents the contributions made by Crown employees and other employees of Commonwealth authorities or of companies or bodies in which the Commonwealth has a controlling interest or for which it is financially responsible.

The Trust has no functions in relation to the collection of contributions from employees or the assessment of payment of benefits to them. These latter functions are committed by the legislation to a Commissioner. By and large, payments out of the Fund are by way of reimbursement of the Consolidated Revenue Fund out of which benefits are paid.

The members of the Trust are appointed by the executive government. They can be removed by it but only in certain events such as misbehaviour, mental incapacity, bankruptcy etc.

The Trust is bound to supply information on request to the Treasurer and to report to Parliament annually. It's accounts must be audited by the Auditor-General. The costs of and incidental to the management of the Fund by the Trust are payable out of moneys appropriated by Parliament for the purpose. Wide powers of investment are given to the Trust but this is subject to a statutory direction to invest a certain proportion in public securities. There is power to invest in land in Australia but this is conferred subject to and in accordance with the regulations.

Although they differ in their conclusions, there is no discernable difference between the four Justices as to the principles which should be applied in a case such as this. Their Honours disagreed however as to the emphasis to be placed on the various factors. Barwick C.J. agreed with Mason J. who said at p.622:-

"Although the Trust is a separate corporate entity the control which the Crown has over its membership and its activities shows that it is an alter ego of the Crown. Thus its members are appointed and liable to removal by the Executive Government, it is bound to furnish information to the Treasurer at his request and it must submit its annual report and financial statements to the Treasurer after they have been audited by the Auditor-General. The Trust, in determining the investment policy which it will pursue within the prescribed investments which it is authorized to make (see s.42(2) and (4)), is free of directions by the Treasurer and the Government, but this in itself does not show that it has been established as a body independent of the Crown."

In coming to this conclusion his Honour relied on the decision of the court in Goodfellow v. Commissioner of Taxation of the Commonwealth of Australia ((1977) 51 A.L.J.R. 437)v.

Stephen J. (at p.619) said he had placed most weight upon the entire independence of the members of the Trust in relation to their investment function. This appeared to him to be of considerable importance and to have been so treated in many of the precedent cases. He went on to say:-
"The importance of the presence or absence of control by the executive government in ascertaining whether or not a statutory corporation possesses a particular immunity or privilege of the Crown is a consequence of the very nature of that inquiry, concerned as it is with the nexus between the corporation and the Executive. If a corporation is no more than the passive instrument of the Crown, subject in a high degree to control by the Executive, it is appropriate enough that its acts be viewed as those of its master and that it be itself treated as the alter ego of the Crown, enjoying accordingly those immunities and privileges with which the Crown is clothed. If, on the contrary, a statutory corporation is essentially autonomous, its acts being in no sense the outcome of directions by the Executive but truly its own, there will be little reason to clothe it with any of those immunities or privileges. . . . . . it is the existence of the statutory ability to control, or its absence, that is to be looked at."

On the question of governmental functions his Honour (at p. 618) referred to the fact that the Trust was an integral part of a scheme created to provide superannuation for Commonwealth public servants and said:-
"The appellant relied upon this circumstance as demonstrating an intimate connexion between the Trust's activities and matters central to government. In a sense this is true: but not in the sense in which it has been said in the past that there exist certain traditional functions of central government to which the shield of the Crown will most readily be applicable, functions such as the maintenance of law and order and the defence of the realm. The superannuation of employees, viewed as a subject-matter, has no such inherent governmental character. That in the present case the employer will usually be the Commonwealth is of course a relevant consideration, indeed it is the genesis of this appeal and provides the reason for this superannuation scheme being the subject of elaborate Commonwealth legislation. But it does not of itself appear to me to provide any firm ground for concluding that the legislative intent was that because the Trust had the duty of investing moneys of the Fund it should therefore attract the so-called shield of the Crown".

Aickin J. relied on the absence of any power to control the activities of the Trust and the nature of its function as an investment manager which function was not, in his view, an ordinary or usual function of Government. At pp.626-627 he said:-
"I am, however, satisfied that where a body has committed to it only one narrowly defined function (that is the investment and management of investments) in respect of which it has any discretion at all, and the Parliament has provided a scheme in which in the performance of that function the executive government is precluded from the exercise of any control or influence whatever, then there is no basis for saying that the body is an organ of, part of, or an agent of the executive government, that is of the Crown. The mere power of appointment of the persons who will together exercise this one discretionary function does not appear to me to constitute control of the Trust or of its function, there being no power to dismiss except for misconduct or incapacity."

These references demonstrate that cases such as this raise questions of degree and, in borderline cases, minds may differ.

In this case I am of the opinion that the appellant is not the Crown or an emanation of the Crown in relation to any of its functions. Even if I were of the view that it was an emanation of the Crown in relation to the function of collecting contributions and paying benefits, I would not regard it as the emanation of the Crown with regard to the management and investment of the Fund.

Here the Board consists of six members appointed by the Governor in Council (s.49(2)). Three of these, however, must be contributors elected by contributors unless there is no candidate or no person has been elected (s.49(2)). Members are appointed for five years and are eligible for reappointment (s.50(1)). A member may be suspended by the Governor in Council for misbehaviour or incompetence but must be restored unless each House of Parliament within twenty-one days of a statement being laid before it about the member requests the Governor to remove the member from office (s.53). If it does the member is removed upon the passing of a resolution by the Governor in Council (s.53(3). The remuneration of members of the board is fixed by the Governor in Council (s.55).

These provisions demonstrate that the Board is not appointed or removed at the whim of the executive and is largely independent of executive control. The Board's powers of investment in relation to the Fund are not subject to any control or direction except in relation to the purchase of land and the proportion which may be invested in loans on the mortgage of land (ss.6(1C),6A). Moneys held uninvested may be lodged on call or on fixed deposit pursuant to s.7 and while so lodged in a bank shall be held to be moneys of the Crown. There is no provision to the effect that otherwise moneys or investments held by the Board are to be held as moneys or investments of the Crown.

Although until recently the staff of the Board had to be appointed under and be subject to the provisions of the Public Service Act in 1975 the Board was empowered to employ such persons as it considered necessary for or in relation to the management of lands or buildings and might at any time dismiss any such person and such a person is not to be subject to the Public Service Act (s.6C).

The cost of the administration of the Act which would include the management and investment of the Fund are paid out of moneys appropriated from time to time by Parliament (s.62). The accounts of the Board in relation to the Fund are to be audited under the Audit Act (s.8).

The Board in each year must submit to the Minister to be laid before both Houses of Parliament a report dealing with the general administration and working of the Act. (s.63). There is no other requirement for the provision of information to the Treasurer or any other member of the executive.

In my opinion the legislature's intention was to establish a board which was independent of the control of the executive government in most respects. Although the Governor in Council appoints the members three of them must be persons elected by contributors unless the electors have failed or declined to do so. The members must include an actuary and the Government Statist. It seems to me that the Victorian Parliament, in these provisions, has decided to rely on the skill and expertise and representative character of members of the board to ensure the proper administration of the Fund rather than subjecting it to the overall control of a Minister.

So far as investment is concerned the Parliament has left the board with a wide discretion as to the particular investments. As already indicated, the Treasurer can fix an upper limit in relation to housing loans and can control investment in and expenditure on land but it does not follow from this that the executive is thereby controlling the investment of the Fund by the board. The board is left with a very wide discretion.

The Board is also required to report annually to Parliament through the Minister but this is not in itself an indicia that the body is an emanation of the Crown. If it were required to provide information at the request of the Minister this would be a more significant circumstance in favour of it representing the Crown. The functions which it performs clearly extend beyond those conferred on the Superannuation Trust under the Commonwealth Act and no doubt the provision of superannuation benefits is part of the remuneration of the Crown employees and other associated employees covered by the Victorian Act. They are also functions which it would be appropriate for the Crown to undertake even though they are not what one might regard as part of the traditional functions of government. However the fact that the appellant receives the contributions and administers the provisions relating to benefits as well as managing and investing the Fund does not, in my opinion, require the conclusion that it is in so doing, the representative of the Crown. It is clearly appropriate for the Crown to vest those functions in an independent statutory body and in my view the real test as to whether it has done so depends on the degree of control which the executive has over the exercise of those functions.

For the reasons I have given, the Victorian Parliament, in this case, has established a body which is relatively independent of such control and one which is not the Crown or an emanation of the Crown.

It follows therefore that although I feel constrained to hold in light of Bradken's Case that the Crown in right of a State is not bound by the Trade Practices Act 1974 the appellant is not the Crown or an emanation of the Crown and is therefore not entitled to that immunity. It is therefore bound by the Act and is not, for the reasons I have given, entitled to a declaration that it is not a corporation within the meaning of the Trade Practices Act.

I would dismiss the appeal with costs.