Legal database - View: Cases: Bank of New South Wales v Commonwealth

Bank of New South Wales v Commonwealth
76 CLR 1
[1948] 2 ALR 89
1948 - 0811A - HCA

(Judgment by: Rich and Williams JJ)

Bank of New South Wales
v Commonwealth

Court:

High Court of Australia

Judges: Latham CJ

Rich J and Williams J Starke J
Dixon J
McTiernan J

Subject References:
Constitutional law
Powers of Commonwealth Parliament
Banking
Acquisition of property
Freedom of trade, commerce and intercourse
Interference with States

Legislative References:
Constitution (Cth) - ss 51(xiii); 51(xx); 51(xxxi); 51(xxxix); 75(iii); 92; 105A
Banking Act 1947 No 57 - The Act

Hearing date: MELBOURNE 9 February 1948; 10 February 1948; 11 February 1948; 12 February 1948; 16 February 1948; 17 February 1948; 18 February 1948; 19 February 1948; 20 February 1948; 23 February 1948; 24 February 1948; 25 February 1948; 26 February 1948; 27 February 1948; 1 March 1948; 2 March 1948; 3 March 1948; 4 March 1948; 5 March 1948; 8 March 1948; 9 March 1948; 10 March 1948; 11 March 1948; 12 March 1948; 15 March 1948; 16 March 1948; 17 March 1948; 18 March 1948; 19 March 1948; 22 March 1948; 23 March 1948; 24 March 1948; 25 March 1948; 31 March 1948; 1 April 1948; 2 April 1948; SYDNEY 13 April 1948; 14 April 1948; 15 April 1948; 11 August 1948;
Judgment date: 11 August 1948

Sydney

Judgment by:
Rich and Williams JJ

RICH AND WILLIAMS JJ. These are five actions in which the plaintiffs claim that the Banking Act 1947, hereinafter called the Act, or alternatively certain sections and parts of the Act, are beyond the powers of the Commonwealth Parliament, contrary to the Constitution of the Commonwealth and invalid. The important sections and parts of the Act are ss. 13, 14, 15, 17 to 21 inclusive, 24, 25 and 56 and Parts VI. and VII.

The plaintiffs can be divided into three classes-(1) the eight private banks (that is banks carried on for private profit) incorporated in Australia which are enumerated in the first part of the First Schedule to the Act; (2) the three private banks incorporated in the United Kingdom which are enumerated in the second part of the First Schedule to the Act; and (3) the States of Victoria, South Australia and Western Australia. Joined as plaintiffs with four of the banks in the first class, namely the Bank of New South Wales, the Commercial Banking Company of Sydney Limited, the National Bank of Australasia Ltd and the Commercial Bank of Australia Ltd , there is in each case a director and shareholder suing on behalf of himself and all other holders of shares on any register in Australia and a shareholder suing on behalf of himself and all other holders of shares on any register outside Australia. Joined as plaintiffs with three of the remaining banks, namely the Bank of Adelaide, the Ballarat Banking Company Limited, there is in each case a director and shareholder suing on behalf of himself and all other holders of shares. The eighth plaintiff the Queensland National Bank Limited is in voluntary liquidation and the liquidator is a co-plaintiff. No objection was raised to the form of the actions so far as they are actions by a shareholder on behalf of himself and all other shareholders, but it is impossible to say whether it would be in the pecuniary interest of shareholders or not that their shares in the Australian Banks should be acquired under the Act, so that they cannot be said to be numerous persons having the same interest in the subject matter of the action within the meaning of rule 8 of Order II. of the rules of this Court, and we do not regard the actions as other than actions by the shareholders who are parties on their own behalf.

Section 3 states that the several objects of the Act include-(a) the expansion of the banking business of the Commonwealth Bank as a publicly-owned bank conducted in the interests of the people of Australia and not for private profit; (b) the taking over by the Commonwealth Bank of the banking business in Australia of private banks and the acquisition on just terms of property used in that business; (c) the prohibition of the carrying on of banking business in Australia by private banks.

A statement of objects in an Act can operate like a preamble "as a key to open the meaning of the makers of an Act and the mischiefs it was intended to remedy," Halsbury, Laws of England, 2nd ed., vol. 31, p. 461, but in the end the objects of the Act must be ascertained from its actual operation and effect.

Considerable care has been taken to leave to the sole and uncontrolled discretion of the Treasurer the determination of the extent to which the relevant provisions of the Act shall be applied to the private banks enumerated in the First Schedule. The Act is therefore capable of a complete or partial operation depending on the extent to which the Treasurer chooses to exercise his discretion. It is not an Act the necessary operation and effect of which will be to transfer the banking business of every one of these banks to the Commonwealth Bank and to prohibit them all from carrying on banking business in Australia. Further the operation of the Act is restricted to prohibiting the corporations at present carrying on the business of banking in Australia for private profit from further carrying on such business, and to the transfer of their businesses to the Commonwealth Bank, so that its operation is not as wide as its objects indicate. But as the Banking Act 1945 prohibits persons other than corporations carrying on banking business in Australia and corporations from carrying on such business without a licence the objects of the Act can be achieved by refusing any further licences. The complete operation of the Act will therefore have the effect in every practical sense of changing the present banking structure of Australia from one in which the Commonwealth Bank of Australia acts as a central bank and is in competition with the private banks in the general banking business into one in which the whole of this general banking business shall be conducted by the Commonwealth Bank subject only to such competition as may be provided by State Banks. This purpose could be achieved either by the Commonwealth Bank taking over the businesses of the private banks voluntarily or by compulsion, or possibly by the private banks being prohibited from carrying on business which would force those seeking banking facilities to go to the Commonwealth Bank, or partly by one or other of these means.

The Act therefore contains provisions by which the business of the private banks at present carrying on business in Australia may be acquired by the Commonwealth Bank and by which the carrying on of the business of banking in Australia by these banks may be prohibited. Two methods are provided by which the business of a private bank may be acquired by the Commonwealth Bank. The first method, which is confined to the banks incorporated in Australia, is contained in Divisions 2 and 3 of Part IV. of the Act, and combines provisions for the voluntary or compulsory acquisition of the shares of these banks situated or deemed by law to be situated in Australia with provisions for the compulsory transfer of their management, direction and control from the directors appointed in accordance with their memoranda and articles of association or other constating instruments (hereinafter called regulations) to directors appointed by the Governor of the Commonwealth Bank with the approval of the Treasurer. The second method which can be applied to all the plaintiff banks is contained in Division 4 of Part IV. and provides for the voluntary or compulsory taking over of their businesses in Australia by the Commonwealth Bank. The business is taken over by the Commonwealth Bank acquiring all the assets of the private bank which are situated in Australia at the date of acquisition and assets which relate to banking transactions and become Australian assets after that date; and discharging the private bank from all liabilities which are situated in Australia at the date of the acquisition and all liabilities which relate to banking transactions and become Australian liabilities after that date, and by transferring these liabilities to the Commonwealth Bank.

The Act embodies, but with important variations, two methods which are now well recognized by which one company may absorb the business of another-that is to say by the former company purchasing the assets and undertaking to discharge the liabilities of the latter, or the former company acquiring all or substantially all or at least sufficient shares in the capital of the latter to obtain a controlling interest, that is to say at least sufficient shares to pass a special resolution. But the important distinction between these methods of absorption and those provided by the Act is that where shares are acquired the nominees of the Commonwealth Bank are placed in the management, direction and control of the business and affairs of the private bank not by the Commonwealth Bank exercising its rights as a shareholder but by the Act: and that in the case of the acquisition of assets the private bank is discharged from its contractual liabilities and the rights of its creditors compulsorily novated to rights against the Commonwealth Bank.

The Act confers on the Treasurer the sole right to decide in his absolute discretion whether either, and if so, which method of acquisition shall be applied to each of the Australian private banks and the time of application, whether and when the businesses of each of the private banks incorporated in the United Kingdom and elsewhere shall be taken over, and whether there shall be simultaneous applications of the provisions of the Act to one or more or all of the banks or whether the Act shall be applied to the banks one by one. Obviously the transfer of the businesses in Australia of the plaintiff banks to the Commonwealth Bank is a task of great magnitude, and may explain the presence in the Act of the method of acquisition provided for by Divisions 2 and 3 of Part IV., because by this method the separate business of each of the Australian banks can be continued as a mere adjunct of the Commonwealth Bank for as short or as long as period as the Treasurer thinks fit. But it is plainly intended that the business of each of these Banks may at some convenient future time be taken over by the Commonwealth Bank, and s. 19 (1) (b) therefore authorizes the directors nominated by the Governor of the Commonwealth Bank to dispose of the business in Australia of each bank to the Commonwealth Bank with the approval of the Treasurer. Further it would seem that the provisions of Division 4 of Part IV. may be applied to a private bank incorporated in Australia after it has already been subjected to the provisions of Divisions 2 and 3 of that Part. Indeed, unless this is done, the employees have no statutory rights to become employees of the Commonwealth Bank. Ultimately the Commonwealth Bank can acquire the businesses of all the private banks.

But s. 51 (xxxi.) of the Constitution requires that laws for the acquisition of property shall provide for the acquisition on just terms. The requirement applies whether the law authorizes the Commonwealth or some person or corporation to acquire the property: McClintock v The Commonwealth ^[[190]] ; Jenkins v The Commonwealth ^[[191]] . Section 15 of the Act therefore provides that: "The Commonwealth Bank shall pay fair and reasonable compensation in respect of the acquisition of shares by the Commonwealth Bank under section thirteen of this Act," and s. 25 that: "The Commonwealth Bank shall pay fair and reasonable compensation in respect of the acquisition of property by the Commonwealth Bank under the last preceding section" (that is, section twenty-four). Part V. provides for the constitution of a new Federal Court of Claims, and Part VI, for the determination of claims for compensation in respect of the acquisition of shares and assets by that Court and not in any other manner.

Part VIII. gives a statutory right to persons employed by an Australian private bank to continue to be employed by that bank after the date upon which shares in that bank have become vested in the Commonwealth Bank, and a statutory right to persons employed by a private bank the business of which is taken over by the Commonwealth Bank to be employed by the Commonwealth Bank.

Section 56 provides that upon the taking over of the business of a private bank by the Commonwealth Bank, the Commonwealth Bank shall be substituted for the private bank as a party to all instruments under which any money may be payable or property transferable to or by a private bank.

Section 61 provides that the Commonwealth guarantees the payment of all compensation payable by the Commonwealth Bank under the Act.

Prior to the Act, each of the plaintiff banks was carrying on business under the authority of s. 8 of the Banking Act 1945. This authority could only be revoked if the Governor-General was satisfied that the bank had ceased to carry on banking business in Australia. Section 46 (1) of the Act provides that "notwithstanding anything contained in any other law or in any charter or other instrument, a private bank shall not, after the commencement of this Act, carry on banking business in Australia except as required by this section." The existing authorities of the plaintiff banks are therefore revoked, and s. 46 makes it unlawful for them to carry on business except to the extent provided by the later sub-sections. In the meantime, each bank, however difficult it might be for it to maintain its business in such circumstances, is nevertheless required by sub-s. 2 to carry on business in Australia indefinitely and to provide any facility or service provided by it in the course of its banking business on 15th August 1947. Each bank, except a bank the business of which has been taken over by another private bank between this date and the date of the Act, must continue to carry on business until (1) its business is taken over by the Commonwealth Bank (sub-s. 3); or (2) the Treasurer by notice published in the Gazette and given in writing to a private bank, requires it to cease upon a date stated in the notice carrying on banking business in Australia (sub-ss. 4 to 8).

It will be convenient at this stage to refer to s. 6 of the Act. This section conveys an intimation to the Court that it is the intention of Parliament that every provision of the Act shall operate to the full extent to which it can operate consistently with the Constitution. It intimates that the true meaning of each provision is first to be ascertained in the context of the whole Act. Unless this meaning is inconsistent with the Constitution, the provision is to have this meaning and operate accordingly although every other provision of the Act should be totally inconsistent with the Constitution and wholly invalid. If any provision of the Act is inconsistent with the Constitution, it is nevertheless to operate to the full extent to which it can operate consistently with the Constitution. But the Court is not a legislative but a judicial body. It cannot legislate; that is the function of Parliament. It can only read down a provision which is in excess of power so that it will have an operation consistent with the Constitution where the provision contains independent portions within power which are severable, or the provision is capable of operating in a distributive manner in respect of each and every part of the subject matter and its operation can be confined to those parts which are within power: Pidoto v Victoria ^[[192]] . When each provision which is inconsistent with the Constitution has been examined and if possible read down so as to have a residue of consistency or if this is impossible rejected, the Act is to be regarded as an Act consisting of those provisions which are consistent with the Constitution still having their original meaning and of the above residues, and this collation is to be the Banking Act 1947, notwithstanding that what is left of the Act may result in the Act having a different effect in substance from the true meaning of the Act as a whole.

When the Act is construed in the light of the several objects set out in s. 3, particularly the third object, and of this remarkable manifestation of parliamentary intention, it becomes clear that s. 46 is intended to have an operation independent of the validity of any other provisions of the Act. The Act therefore authorizes the Treasurer in his absolute discretion and in his own time to determine the banking business in Australia of each of the plaintiffs with compensation by causing the Commonwealth Bank to take over its business, or to close down its business without any compensation, or to compel it to carry on business indefinitely. The Act can only be completely valid if the Commonwealth Parliament can pass laws (1) prohibiting any banking business other than the business carried on by State banks being carried on in Australia; (2) compelling any person engaged in the business of banking to carry on that business indefinitely; (3) compelling any person who has a contract with a bank carrying on business in Australia to novate that contract into a contract with another bank carrying on business in Australia; (4) altering the regulations of any corporation formed under the laws of any State carrying on the business of banking in Australia, and taking the management, direction and control of its business and affairs out of the hands of the directors appointed by the shareholders and placing them in the hands of the nominees of another bank; (5) authorizing any bank carrying on business in Australia compulsorily to acquire shares in any other bank carrying on business in Australia: (6) authorizing any bank in Australia compulsorily to acquire the business of any other bank carrying on business in Australia.

The defendants contend that the Act is authorized by the powers, separately or in conjunction, of the Commonwealth Parliament to make laws, subject to the Constitution, for the peace, order and good government of the Commonwealth with respect to the subject matters enumerated in s. 51, placita (xiii.), (xx.), (xxxi.), and (xxxix.). The text of these placita is as follows:

(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.
(xx.): Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.
(xxxi.): The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.
(xxxix.): Matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth.

The defendants submit that a Federal law is authorized by the Constitution if it is relevant to, that is to say if it touches and concerns, a specific matter on which the Commonwealth Parliament has power to legislate, and that it is wrong to inquire whether the law is in its pith and substance or true nature and character a law on one or more of the specific matters of Federal legislative powers or is a law on a matter not transferred by the Constitution to the Commonwealth Parliament and therefore exclusively vested in in the States. The test of pith and substance or true nature and character of the law was first used by the Privy Council in order to decide whether a law was a law upon one of the classes of subjects over which the Canadian Parliament has exclusive power under s. 91 or the Parliaments of the Provinces exclusive power under s. 92 of the Canadian Constitution. And in the recent case of Prafulla Kumar Mukherjee v Bank of Commerce, Limited, Khulna ^[[193]] , where the same test was applied to the Government of India Act 1935, there were three lists of powers, a Federal legislative list with respect to which the Federal legislature had exclusive powers, a provincial list with respect to which the provincial legislatures had exclusive powers, and a concurrent list with respect to which the Federal and provincial legislatures had concurrent powers. But there is in the judgment of the Privy Council the specific statement that the same test is to be applied however the powers are distributed between the parliaments in a federal system. In Gallagher v Lynn ^[[194]] , at p. 870, Lord Atkin said: "These questions affecting limitation on the legislative powers of subordinate parliaments or the distribution of powers between parliaments in a federal system are now familiar, and I do not propose to cite the whole range of authority which has largely arisen in discussion of the powers of Canadian Parliaments. It is well established that you are to look at the `true nature and character of the legislation': Russell v The Queen ^[[195]] , at pp. 839, 840, `the pith and substance of the legislation.' If, on the view of the statute as a whole, you find that the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorized field. The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden field."

The cases have been argued at great length and with great care on behalf of the plaintiffs and of the defendants. We only propose to deal with some of the more outstanding questions that have arisen because, after careful consideration, we have reached the following conclusions:(1) that on the true construction of placita (xiii.), (xx.) (xxxi.) and (xxxix.) of s. 51 of the Constitution none of the material provisions of the Act is authorized by these placita; (2) that on any construction, ss. 13, 14, 17 to 21 inclusive, and 24 are not authorized by these placita; (3) that if placitum (xxxi.) is wide enough to authorize the acquisition of the shares or the taking over of the businesses, the acquisitions fail because the Act does not provide just terms; (4) that the Act in all its material sections is contrary to clause 5 (9) of the Financial Agreement and to s. 92 of the Constitution. We shall proceed shortly to explain our reasons for reaching these conclusions.

The complete validity of the Act must rest on the power of the Commonwealth Parliament to select one person or corporation and confer on that person or corporation the sole right to carry on the whole of the banking business in Australia other than the business carried on by State banks. The conferment of such a privilege on one bank must be a partial exercise of a power to prohibit all persons and corporations except State banks carrying on this business. The corporation selected in the Act is the Commonwealth Bank, but it would be equally within power to select one of the private banks. The defendants contend that this power of selection is conferred by pl. (xiii.) or alternatively by pl. (xx.) of s. 51 of the Constitution. The only decision on pl. (xx.) is Huddart Parker & Co Pty Ltd v Moorehead ^[[196]] . Very conflicting views of the meaning of this placitum were there expressed. But there was agreement that the placitum does not authorize the Commonwealth Parliament to create corporations but relates to legislation with respect to corporations as existing entities. For the purposes of private international law, each of the States of Australia is regarded as a foreign country in the courts of another State, so that bodies incorporated in one State are just as much foreign corporations in another State as bodies incorporated abroad. The language of the placitum indicates an intention to give the Commonwealth Parliament power to make laws from time to time with respect to the conditions, subject to the performance of which, corporations of all kinds created beyond Australia and trading and financial corporations incorporated in Australia should be entitled to carry on business throughout Australia or in any part thereof. It was contended that the power was sufficiently wide to enable the Commonwealth Parliament to prohibit such corporations carrying on business at all in Australia. But the power operates on such corporations as existing entities, and we think that it would be inconsistent with a power to legislate depending on such a basis, particularly where corporations formed within the limits of the Commonwealth are subject to the power to the same extent as foreign corporations, to construe the power as wide enough to authorize the Commonwealth Parliament simply to prohibit one or more or all of such corporations carrying on business in Australia at all. It was also contended that the placitum would authorize the Commonwealth Parliament to legislate directly to alter the regulations of such corporations, but since the power is with respect to existing corporations and the regulations are part of their formation such legislation would be beyond power. All that the Commonwealth Parliament could do would be to impose conditions appropriate to the carrying on of a particular class of business which might require corporations engaged in the business to alter their regulations in accordance with the law of the place of their incorporation so as to be in a position to comply with the conditions.

But it is unnecessary to pursue the meaning of the power because we are of opinion that it does not apply to corporations whether created abroad or within Australia engaged in the business of banking. Placitum (xiii.) contains an express exclusion of State banks from this head of power. It was held in Melbourne Corporation v The Commonwealth ^[[197]] that "State banking" means banks constituted and controlled by States. The ordinary way to constitute such banks would be to incorporate them. Such banks would be trading or financial corporations formed within the limits of the Commonwealth. If pl. (xx.) was intended to apply to banks, the Commonwealth Parliament would thereby acquire legislative powers over State banks from which it is expressly excluded by pl. (xiii.). It was contended that the placita could be reconciled by implying an exclusion of State banks from pl. (xx.), but to do this would require the insertion at the end of this placitum of some such words as "other than trading or financial corporations formed within the limits of the Commonwealth which are banks constituted and controlled by States the business of which does not extend beyond the limits of the States concerned." We can find no justification for such an implication, and in our opinion the placita can only be reconciled by applying the maxim generalia specialibus non derogant, and by regarding corporations which are banks as placed in the separate category expressly provided for by pl. (xiii.) and therefore as corporations outside the generality of the classes of corporations referred to in pl. (xx.).

The crucial matter is therefore to determine the meaning of pl. (xiii.). It authorizes the Commonwealth Parliament to make laws with respect to (1) Banking other than State banking; (2) State banking extending beyond the limits of the State concerned; (3) The incorporation of banks; and (4) The issue of paper money. It thus contains four legislative powers. It is clear, of course, that in a Constitution there may be considerable overlapping in the various heads of legislative power and in the sub-heads contained in any head, but we can see no reason why a Constitution, like any other statute or document, should not be subject to the general rule that every clause should be construed with reference to the context of the other clauses of the Act, so as, so far as possible, to make a consistent enactment of the whole statute and to give a meaning if possible to every part thereof: Lamplugh v Norton ^[[198]] , at p. 459; Canada Sugar Refining Co Ltd v The Queen ^[[199]] , at p. 741; A. Lewis & Co (Westminster) Ltd v Bell Property Trust Ltd ^[[200]] , at p. 348. Accordingly when pl. (xiii.) gives a power to legislate with respect to banking and a further power to legislate with respect to the incorporation of banks, the framers of the Constitution could not have intended by the word "banking" to authorize laws with respect to the incorporation of banks. The origin of the placitum is s. 91 (15) of the British North America Act 1867, which gives the Canadian Parliament exclusive legislative authority over "banking, the incorporation of banks, and the issue of paper money." The additional words "other than State banking, also State banking extending beyond the limits of the State concerned" have been incorporated in the placitum. In Tennant v Union Bank of Canada ^[[201]] , at p. 46 Lord Watson in delivering the judgment of the Privy Council said that banking is "an expression which is wide enough to embrace every transaction coming within the legitimate business of a banker." This definition has been repeated in two recent judgments of the Privy Council: Attorney-General for Canada v Attorney-General for Quebec ^[[202]] , at pp. 41, 42: Attorney-General for Alberta v Attorney-General for Canada ^[[203]] , at p. 517. It would seem therefore that Lord Watson had taken the view that the words "incorporation of banks" authorized laws relating to the existence of banks as corporate bodies while the word "banking" authorized laws relating to the conduct of banking business. The word "banking" had been given this meaning by Lord Watson when s. 91 (15) of the Canadian Constitution was adopted with amendments in the Australian Constitution. The amendments strengthen the view that the word was intended to have this meaning in pl. (xiii.) because the only power of the Commonwealth Parliament over State banking is over State banking extending beyond the limits of the State concerned. It has no power over the creation or regulations or winding up of State banks. It can only make laws with respect to the banking transactions which they carry on beyond the limits of their own State. The meaning given to the word "banking" by Lord Watson is accordingly consistent with the meaning which the word must have where it occurs in the expression "State banking extending beyond the limits of the State concerned." Laws with respect to banking are not therefore laws which deal with the incorporation, regulations and winding up of banks, but are laws with respect to the conduct of the business carried on by banks.

It was contended that a power to make such laws was wide enough to authorize laws selecting the persons or bodies to engage in the conduct of such business. But the Commonwealth Parliament has the same power over the conduct by State banks of inter-State business as it has over the conduct by other banks of their business whether intra-State or inter-State. If therefore the power is wide enough to authorize the selection of banks other than State banks which alone may be allowed to carry on intra and inter-State business, it must also be wide enough to authorize the selection of the State banks which alone may be allowed to carry on inter-State business. But the Commonwealth Parliament cannot suppress State banks, and it would be most unreasonable to construe the latter power as a power to authorize some State banks to conduct business beyond the limits of their own States to the exclusion of others and to prohibit all State banks from having branches or even agencies anywhere beyond the limits of their own States, either within or without Australia, or even from having dealings with one another. The use of the word "extending" assumes and implies that State banks can lawfully extend and continue to extend their businesses beyond the limits of their own States. The power must be a power to regulate the conduct of the inter-State business of such banks. This power over this portion of State banking is of the same quality as the power over the conduct of all banking business by other banks. The latter power is not therefore a power to prohibit all or some corporations other than State banks engaging in the business of banking, but a wide power to regulate the conduct of banking business. In Attorney-General for Ontario v Attorney-General for the Dominion ^[[204]] , at p. 363 Lord Watson said in reference to the power in s. 91 of the Canadian Constitution to regulate trade and commerce that: "A power to regulate, naturally, if not necessarily, assumes, unless it is enlarged by the context, the conservation of the thing which is to be made the subject of regulation." He cited a passage in the judgment of Lord Davey in Municipal Corporation of the City of Toronto v Virgo ^[[205]] , at p. 93: "Their Lordships think there is marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it, and indeed a power to regulate and govern seems to imply the continued existence of that which is to be regulated or governed."

For these reasons we are of opinion that s. 46 (1) and sub-ss. (4) to (8) are not authorized by pl. (xiii.), and are totally inconsistent with the Constitution and incapable of being read down in accordance with s. 6, and are therefore wholly invalid. Sections 13 and 24 are attempted exercises of the power conferred on the Commonwealth Parliament by pl. (xxxi.) to make laws for the acquisition of property. But property can only be acquired under this power for any purpose in respect of which the Commonwealth Parliament has power to make laws. Laws providing for the compulsory acquisition of shares in one bank by another bank and for the compulsory taking over of the business of one bank by another bank are not in any sense a purpose of a law with respect to the conduct of banking business. Sections 13 and 24 are therefore also wholly invalid. Sections 14 and 17 to 21 inclusive are, for reasons more particularly stated hereafter, laws which attempt to alter the regulations of bodies incorporated under State legislation and are not laws with respect to the conduct of banking business by such bodies but are company laws. Placitum (xiii.) authorizes the Commonwealth Parliament to make laws with respect to the incorporation of banks. This power would probably authorize s. 6 of the Banking Act 1945 which provides that only corporations shall carry on banking business in Australia and would also probably authorize a law for the incorporation of a particular bank. But the word used is "banks" and not the words "bank or banks" and the phrase "a law with respect to the incorporation of banks" in its ordinary signification would appear to point rather to a power to make a general law governing the incorporation, regulations and winding up of banks. The banking power in the Australian Constitution is not, like the banking power in the Canadian Constitution, an exclusive power. It is a concurrent power. Unless the Commonwealth Parliament legislates with respect to the incorporation of banks, banks, like other bodies, can be incorporated under State laws. If the Commonwealth wishes to legislate with respect to the incorporation of banks and to occupy this legislative field, its legislation will prevail over State legislation by virtue of s. 109 of the Constitution. Persons desirous of engaging in the business of banking in Australia would then have to be incorporated under Federal law. But such a power would not authorize laws altering the regulations of bodies incorporated under State laws. Sections 17 to 21 inclusive are therefore wholly invalid. Section 46 (2) may be regarded from two aspects. Regarded as a law incidental to the taking over of the business of a plaintiff bank by the Commonwealth Bank and intended to preserve that business in the meantime it might be valid. But when the law for the taking over of the business fails, s. 46 (2) must fail also. Regarded as an independent law s. 46 (2) must fail because a power to make laws with respect to the conduct of the business of banking would not authorize a law compelling a person or corporation already engaged in the business of banking to continue to carry on that business indefinitely any more than it would authorize a law compelling a person or corporation to commence to carry on that business. Laws with respect to the conduct of the business of banking are laws which operate on persons and corporations while engaged in that business.

We shall now discuss the validity of the Act on the basis that, contrary to our opinion, the Commonwealth Parliament can under its power to make laws with respect to banking prohibit any person or corporation from carrying on the business of banking, and therefore select one or more banks and grant to it or them a monopoly of this business in Australia other than the business carried on by State banks. On this construction of the power the Commonwealth Parliament must also have power to prohibit State banks doing any business beyond the limits of their own States, and therefore power to authorize some State banks to do business and to deny to others the right to carry on business beyond such limits either anywhere or as prescribed. On this construction, subject to the questions that arise with respect to s. 92 of the Constitution and the contentions of the States, s. 46 (1) and (4) to (8) would be valid. But because a law may be made giving a monopoly to the Commonwealth Bank, it does not follow that laws may also be made giving the Commonwealth Bank power compulsorily to acquire shares in other banks whilst they are still permitted to carry on banking business, or compulsorily to acquire their businesses, or authorizing the Governor of the Commonwealth Bank to appoint his nominees as directors of such banks to direct, manage and control their business and otherwise to alter their regulations.

Questions immediately arise with respect to the validity of (1) ss. 13 and 14; (2) Division 3 of Part IV.; (3) s. 24 of the Act. We shall proceed to deal with these questions.

Questions (1) and (2). Section 13 (1), (2) and (3) authorize the Treasurer to give a notice which will have the effect of vesting the Australian shares in an Australian private bank in the Commonwealth Bank upon a date specified in the notice. This is a law with respect to the acquisition of property. Such a law can only be valid provided that (a) the acquisition is on just terms and (b) it is for a purpose in respect of which the Commonwealth Parliament has power to make laws. The regulations of all the Australian private banks contain provisions authorizing the directors in the exercise of their discretion to refuse to register any transfer of shares. The regulations of two of these banks prohibit a corporation becoming a member. The nature of the property in a share was described by Lord Russell of Killowen in Inland Revenue Commissioners v Crossman ^[[206]] , at p. 66:"A share in a limited company is a property the nature of which has been accurately expounded by Farwell J. in Borland's Trustee v Steel ^[[207]] . It is the interest of a person in the Company, that interest being composed of rights and obligations which are defined by the Companies Act and by the memorandum and articles of association of the company. A sale of a share is a sale of the interest so defined, and the subject matter of the sale is effectively vested in the purchaser by the entry of his name in the register of members. It may be that owing to provisions in the articles of association the subject matter of the sale cannot be effectively vested in the purchaser because the directors refuse to and cannot be compelled to register the purchaser as shareholder. The purchaser could then secure the benefit of the sale by the registered shareholder becoming a trustee for him of the rights with an indemnity in respect of the obligations. In the case of the sale of such a share the risk of a refusal to register might well be reflected in a smaller price being obtainable than would have been obtained had there been no such risk. The share was property with that risk as one of its incidents." Unless a person who acquires a share in a company becomes registered as the holder of that share he does not become a member of the company or as it is sometimes said does not become the legal owner of the share in the sense that he is entitled directly to exercise the rights conferred and is subject directly to the obligations imposed upon the members of a company by the regulations. Until he is registered he is only the equitable owner of the shares in the sense that the vendor who is registered is under certain fiduciary duties towards him e.g. to exercise his vote and to dispose of any dividends as the purchaser shall direct. The word "vest" when used with reference to the acquisition of property in shares would not, if it stood alone, be sufficient to make the person who acquired the shares more than the equitable owner with a right to apply to be registered as a member, if he was eligible for membership under the regulations, and thereby become the legal owner of the shares. A law under pl. (xxxi.) can only authorize the Commonwealth Bank to acquire the property in the shares which the member of the company has power to dispose of under its regulations, that is to say, the equitable title to the shares and the same right that a purchaser of the shares who duly presented a transfer for registration would have to become a member of the company. But it is obvious that the risk would be great that the directors of the Australian private banks would refuse to register the Commonwealth Bank as a member, even where the regulations authorized corporations to become members. Section 14, which applies not only to shares compulsorily acquired under s. 13 but also to shares voluntarily purchased under s. 12, therefore reinforces these sections and overrides the regulations of the company by providing that the Commonwealth Bank shall become a member of the company, although the directors refuse to consent and although the regulations provide that a corporation shall not become a member of the company. Section 14 also authorizes the Commonwealth Bank to transfer any such shares to any person and provides that the regulations of the company shall also be overridden in a similar manner in favour of such person. We do not think that the section is authorized by pl. (xxxix.). In Attorney-General for the Commonwealth v Colonial Sugar Refining Co Ltd ^[[208]] , at p. 256 Viscount Haldane L.C., in delivering judgment of the Privy Council, said that the words of this placitum "do not seem ... to do more than cover matters which are incidents in the exercise of some actually existing power, conferred by statute or by the common law." In The Commonwealth v New South Wales ^[[209]] it was held that it was not incidental to the compulsory acquisition of land under the Lands Acquisition Act 1906 to require the Registrar-General of New South Wales to register a copy of the Governor-General's notification as if it were a duly executed instrument of transfer under the Real Property Act (N.S.W.). It was pointed out that the Commonwealth law itself gave a complete statutory title to the land independently of State law and the Commonwealth could rely on that title if it wished; but that if the Commonwealth wished to be registered as the proprietor of the land under the Real Property Act, it must comply with the conditions imposed by State law. That case does not appear to have much bearing on the present case because the Court was there dealing with the acquisition of tangible property, whereas a share is intangible property consisting of legal rights and obligations, and it can not be incidental to the acquisition of such property to alter its very nature by providing that it should have proprietary rights extraneous to those comprised in the chose in action at the date of acquisition. So far as the case has any bearing, it supports the view that the Commonwealth could not become a member of an Australian bank otherwise than in accordance with the regulations of that bank.

To be valid therefore s. 14 must be a law with respect to banking. It was urged that the Commonwealth Bank by virtue of its right to vote at general meetings and in particular to participate in the election of directors would exercise some control over the management of the business of the private bank of which it was a member. But such control would be remote. The real control of the business of a company resides in the directors (Gramophone & Typewriter Ltd v Stanley ^[[210]] ; Quin & Axtens Ltd v Salmon ^[[211]] ; Scott v Scott ^[[212]] ). Section 14 is therefore supplemented by Division 3 of Part IV. which substitutes the nominees of the Governor of the Commonwealth Bank as directors of the company in lieu of the directors elected by the shareholders and confers on the new directors wide powers not given to the directors by the regulations of the company. In an attempt to make ss. 13 and 14 and Division 3 laws with respect to banking within the meaning of pl. (xiii.) s. 9 provides that: "The powers specified in Divisions 2 and 3 of this Part are conferred for the purpose of facilitating the control by the Commonwealth Bank of the banking business in Australia of private banks and for the purpose of furthering the expansion of the banking business of the Commonwealth Bank." But an acquisition of shares in one company by another company is simply an investment by the latter company of part of its funds in the capital of the former company. It does not in any real sense facilitate control by the latter company of the business of the former company or expand the business of the new shareholder. Division 3 would no doubt facilitate control by the Commonwealth Bank of the business in Australia of private banks. It would give the Commonwealth Bank complete control of the business of any Australian bank to which the Division may be applied. It is a control in perpetuity because the nominee directors remain in office although the Commonwealth Bank may have disposed of all its shares in the Australian bank. Shareholders and other persons having proprietary interests in the Australian shares which are acquired by the Commonwealth Bank at the same time as it obtains such control and whose interests are then converted into claims for compensation would not be affected by such change of control, but the holders of ex Australian shares might be gravely prejudiced by the change and particularly by the power conferred by the division on the new directors nominated by the Commonwealth Bank to dispose of the business in Australia to that bank. The rights of such shareholders would only be converted into claims for compensation if and when their shares became Australian shares. Since this might never happen and such conversion might never take place, the value of their shares might depend upon the consideration for which the business will be disposed of to the Commonwealth Bank.

In R. v Registrar of Titles (Vict.); Ex parte the Commonwealth ^[[213]] , at p. 392 and in Commonwealth v New South Wales ^[[214]] Isaacs J. said that an acquisition under pl. (xxxi.) includes both voluntary and compulsory acquisitions. An agreement freely entered into between parties truly at arms length for a voluntary acquisition would contain intrinsic evidence that the acquisition was on just terms, but it would be difficult to describe an agreement made by the directors of an Australian private bank nominated by the Commonwealth Bank for the sale of the business to the latter bank as a voluntary sale. A sale under s. 19 (1) (b) might be made to the Commonwealth Bank by the latter bank acting under s. 38 of the Commonwealth Bank Act 1945 or under s. 22 of the Banking Act 1947. In each case the sale would have to be approved of by the Treasurer on behalf of both the vendor and the purchaser companies, and this supervision of both parties would not be conducive to complete freedom of contract. We are prepared to accept the submission of the defendants that there is nothing in ss. 10 and 19 (3) to relieve the nominee directors from the ordinary fiduciary obligation of directors with respect to property under their control. But it is an established principle of equity that a trustee should never be placed in a position where his duty and his interest conflict, and such directors in their dealings with the bank by which they were nominated would plainly be placed in this position. A sale by them of the business of an Australian private bank to the Commonwealth Bank would not necessarily be a sale on just terms. We are of opinion that Division 3 of Part IV., coupled with ss. 13, 14 and 46, is intended to provide a method by which the Commonwealth Bank may control for a period and then acquire the business of each Australian private bank as a going concern at an appropriate time. Section 19 (1) (b) is therefore in its true nature and character legislation for the acquisition of property by the Commonwealth Bank and must provide just terms for the acquisition, otherwise it is invalid. For the reasons already given, we are of opinion that just terms are not provided, so that s. 19 (1) (b) does not comply with pl. (xxxi.) and is invalid. If it is struck out, Division 3 remains as a law for the management and control of the Australian private banks being placed in the hands of directors nominated by the Commonwealth Bank. Such legislation might be valid as an intermediate step towards the final absorption of the businesses of the Australian private banks by the monopolistic bank. But the power to legislate with respect to banking in its widest meaning could not justify a law placing the nominees of one bank, whether an agent of the Commonwealth or not, permanently in the management and control of the business of another bank. In our opinion therefore ss. 17 to 20 of Division 3 are invalid.

We are also of opinion that s. 14 and Division 3 of Part IV. are beyond the constitutional powers of the Commonwealth Parliament on the ground that they are in their true nature and character legislation altering the regulations of bodies incorporated under State laws, but the power to legislate on this subject resides in the States. It might be a law with respect to banking to provide that bodies incorporated under State laws desirous of engaging in the business of banking should include in their regulations certain provisions which were reasonably required to safeguard the interests of their depositors and other creditors as a condition of such bodies being authorized to carry on the business of banking. It would be a law with respect to the incorporation of banks to make a general law regulating the incorporation of all persons desirous of carrying on the business of banking and requiring that they should be incorporated under this law. But a law which seeks directly to alter the regulations of a body incorporated under State law simply because it is carrying on the business of banking is not a law with respect to banking, but a law with respect to the capacities and internal organization of corporations, that is to say a law on a matter exclusively within the sphere of State legislative power. If such laws are authorized by the Constitution it must follow that if any body incorporated under State laws is engaged in any business in respect of which the Commonwealth Parliament can legislate e.g. in trade and commerce among the States, the Commonwealth Parliament can make a law leaving that corporate body with the shell of its name and incorporation under State law but substituting a completely new set of regulations for its regulations made in conformity with that law.

There is also, we think, a further objection to ss. 13 and 14, namely, that to give to the Commonwealth Bank a power compulsorily to acquire shares in another bank is not a purpose in respect of which the Commonwealth Parliament has power to make laws within the meaning of pl. (xxxi.). The Commonwealth Bank was first established by the Commonwealth Bank Act 1911 which provided that the bank should be a body corporate with perpetual succession and a common seal and with power to hold land and to sue and to be sued in its corporate name. This Act, after having been amended on several occasions, was repealed and replaced by the Commonwealth Bank Act 1945 which preserves and continues the corporate identity and existence of the Bank. But there have never been any corporators. The word "incorporation" in pl. (xiii.) must be given its ordinary meaning at the date of the Constitution. In English law it has always been of the essence of the legal conception of a corporation that there should be a person in the case of a corporation sole or persons in the case of a corporation aggregate to be incorporated. It would seem therefore that the incorporation of the Commonwealth Bank must rest on pl. (xxxix.) and that the validity of the incorporation, which has not been challenged, must depend on similar principles as those enunciated in M'Culloch v Maryland ^[[215]] . It may be that as Griffith C.J. said in Heiner v Scott ^[[216]] , at p. 393: "Probably the true effect of the Act (that is, the Commonwealth Bank Act 1911) is a declaration that the Commonwealth may itself carry on the business of banking under the name of the `Commonwealth Bank of Australia.' " His Honour then assumed that the power to incorporate banks in pl. (xiii.) was sufficient to establish the legal existence of the corporation. But it is unnecessary to pursue the point because on either view the purpose in respect of which the Commonwealth Parliament has power to make a law is the incorporation of the bank. This law might confer upon the bank such ancillary powers of investment and of engaging in other businesses as it is usual to confer on banks to enable them to carry out their banking functions and compete with other banks. But these ancillary powers are not in our opinion purposes in respect of which the Parliament has power to make laws within the meaning of pl. (xxxi.). This placitum enables the Commonwealth Parliament to make a law for the acquisition of property on just terms whenever the acquisition of property forms part of the effective exercise of any of its legislative purposes. The only legislative purpose in the present cases is the incorporation of the Commonwealth Bank. The Bank must have banking chambers and the necessary furniture, stationery and other equipment to carry on business and a law might be made for the compulsory acquisition of the real and personal property necessary for this purpose. But a power to invest the funds of the Bank in shares in other companies including other banks would not make the investment of these funds a legislative purpose of the Commonwealth. If it were a purpose, the Commonwealth Parliament could, by conferring investment powers upon any body which it could lawfully incorporate by a law made under s. 51 of the Constitution, confer power on the corporation compulsorily to acquire shares in any company in which it was authorized to invest. By conferring a power to invest in land Parliament could authorize the corporation compulsorily to acquire vast areas of land not required to carry on its business. During the argument we were referred to the practice of banks in other countries in carrying on the business of executors and trustees as ancillary to the business of banking. If such a practice spread to Australia, it would be lawful for the Commonwealth Parliament to empower the Commonwealth Bank to engage in such a business. If such a power were a purpose of the Commonwealth it would be within the authority of the Commonwealth Parliament to make a law for the compulsory acquisition by the Commonwealth Bank of the businesses of all the trustee companies and thereby make the Commonwealth Bank the sole corporation carrying on the business of executor and trustee in Australia. These illustrations are sufficient to show that such powers are in no sense purposes within the meaning of pl. (xxxi.). The purpose of a law made with respect to the incorporation of a bank is to incorporate the bank and to equip it with the necessary property to carry on the business of banking. The object of including powers in its charter to invest its funds and carry on certain businesses is to define some of the ancillary activities in which the corporation may engage in the course of carrying on this business. But they are not legislative purposes of the Commonwealth. For these reasons we are of opinion that ss. 13 and 14 and Division 3 of Part IV. are not authorized by pl. (xiii.), (xxxi.) or (xxxix.) and are wholly invalid.

Question (3). Section 24 provides for the compulsory taking over of the business of any or all of the private banks by the Commonwealth Bank. The taking over consists in the acquisition by the Commonwealth Bank of all the assets of the private bank and the discharge of the private bank from all its liabilities and the assumption of these liabilities by the Commonwealth Bank. The assets only can be property within the meaning of pl. (xxxi.). The liabilities are not property within its meaning. It was contended that a law for the assumption of the liabilities simultaneously with the acquisition of the assets of a business would be justified under pl. (xxxi.) on the ground that just terms would require that the owner of a business who was deprived of the assets should at the same time be relieved from the liabilities associated with the assets. This contention, if carried to its logical conclusion, would mean that where the amount of the liabilities exceeded the value of the assets, the owner would not only lose his business but would become indebted to the acquirer for the difference between the amount of the liabilities and the value of the assets. If the contention is sound, we can see no logical reason why it would not also be just, upon the acquisition of premises in which the business of a boarding house is being carried on or even the acquisition of a dwelling house, for the law to discharge the owner from the tradesmen's debts and reduce the amount of compensation accordingly. It is not unusual where a business is purchased for the contract to provide that the purchaser shall discharge the liabilities of the business. But such a term rests on the agreement of the parties. The purchaser in effect agrees at the request of the vendor to apply part of the purchase money in paying some of the latter's debts. But just terms require that the legislation shall provide for the payment to the owner of the business of the full equivalent in money for the value of the assets of which he is deprived. He and not the acquirer should be given the discretion to decide whether or not the latter should undertake the discharge of the liabilities of the business on his behalf. The draughtsman of the Act appears to have recognized the difficulty of bringing a law for the assumption of liabilities as an incident of the taking over of a business within the scope of pl. (xxxi.), because s. 25 provides that the Commonwealth Bank shall pay fair and reasonable compensation in respect of the acquisition of property under s. 24, and s. 42 refers to the compensation payable in respect of the acquisition under s. 24 of the Act of the assets of a private bank. These sections do not therefore expressly provide for the deduction of the amount of the liabilities from which the private bank is discharged from the value of the assets, and the defendants were content to submit that it was for the Court to decide to what extent the fact that the private bank had been discharged from its liabilities should be taken into account in assessing the compensation payable in respect of the acquisition of the assets. Unless this discharge is taken into account the amount of compensation payable in respect of the acquisition of shares would be determined on a different basis to the compensation for the taking over of a business because in the former case the liabilities would be taken into account in assessing the compensation and in the latter they would not. We have no doubt that it was the intention of Parliament that the amount of the liabilities should be deducted from the value of the assets and that the balance should be the sum payable for compensation. The presence of the words "in respect of" in ss. 25 and 42, the words "fair and reasonable" in s. 25 and the reference in s. 42 to the taking over of the business, indicating that the terms of the taking over are to be taken into consideration, suffice in our opinion to enable the Court to give effect to this intention. But there is then the paradox that if the liabilities are to be taken into account, the Act does not provide just terms because it does not provide for the payment to the private bank of the full equivalent in money for the value of the assets taken. The private bank is placed in the same position as it would be if the liabilities were secured on the assets and it was merely the owner of the equity of redemption.

The explanation of the paradox is that pl. (xxxi.) does not authorize the taking over of a business, at any rate in the manner provided in the Act. The reason why the Act provides for the discharge of the private bank from its liabilities and the assumption of these liabilities by the Commonwealth Bank is that the liabilities consist substantially of the indebtedness of the private bank to its customers whose accounts are in credit. The assets of the private bank also consist substantially of the indebtedness to it of its customers whose accounts are overdrawn. One of the several objects of the Act is to expand the business of the Commonwealth Bank. This object would be advanced as the customers of each private bank became customers of the Commonwealth Bank. The Act therefore seeks compulsorily to transfer the accounts of all the customers of the private banks to the Commonwealth Bank. The Commonwealth Bank would only need the other assets of a private bank, consisting substantially of the bank buildings and their contents and the services of its staff, if the Commonwealth Bank is able to obtain this new business. The transfer of all these accounts is effected by s. 56 of the Act which provides for the novation of all the contracts with the private banks into contracts with the Commonwealth Bank whether moneys are payable under these contracts by or to the private bank. The accounts of the customers with the private banks become accounts with the Commonwealth Bank whether the accounts are in credit or overdrawn. The section substitutes the name of the Commonwealth Bank for that of the private bank as a party to every contract existing between the private bank and a third person, so that the contract becomes a contract between the Commonwealth Bank and that person in lieu of the contract between the private bank and that person.

In every case the Act operates to discharge one contract and to substitute a new one. The customers of the private bank are given no option of doing without a bank account or choosing a new bank from those then carrying on business. They are recruited as customers of the Commonwealth Bank. The customers include States which have accounts with private banks. It is true that s. 58 provides that nothing in the Act shall require a State or person being a customer of a private bank the business of which in Australia has been taken over by the Commonwealth Bank under this Act, to continue as a customer of the Commonwealth Bank. But if a person can be compelled to become a customer of a bank he can be compelled to remain a customer. The only nexus with the business of banking is that one of the parties to the original contract is a private bank. Because of this nexus selected members of the public are compelled to make a contract with another bank. In Attorney-General for Canada v Attorney-General for Quebec ^[[217]] Lord Porter said:"The relation between banker and customer who pays money into the bank is stated in words which have ever since been accepted in Foley v Hill ^[[218]] , as `the ordinary relation of debtor and creditor, with a super-added obligation arising out of the custom of bankers to honour the customer's drafts.' No question of possession of or property in the deposit arises. The obligation is mutuum not commodatum. Once the deposit is made there remains only a debt due from the banker to the customer." If this nexus be sufficient, the mere existence of a bank must afford a justification for a law compelling persons to lend their money to a bank or borrow from a bank and otherwise to enter into such contracts with that bank as the Commonwealth Parliament thinks fit. But the banking power on its widest construction is a power to select the persons or corporations who are to engage in the business of banking and to regulate the conduct of that business between such selected bankers and those members who choose to become their customers. A person does not reach the threshold of the power until he starts to bring about the relationship of banker and customer with a particular bank. Until then, he is beyond its scope. A law which seeks to force a person into this relationship is a law with respect to this person's liberty to enter into such contracts as he thinks fit. Such a law is beyond the scope of any of the enumerated specific subjects of legislative power conferred upon the Commonwealth Parliament by the Constitution and is therefore a law which continues within the exclusive powers of the States. For these reasons we are of opinion that the provisions of ss. 24 and 56 with respect to the discharge of a private bank from its liabilities and the assumption of those liabilities by the Commonwealth Bank are totally inconsistent with the Constitution and incapable of being read down under s. 6 and wholly invalid. We are also of opinion that the acquisition of the assets and the taking over of the staffs of the private banks are so interlocked with the assumption of these liabilities by the Commonwealth Bank that the whole of the provisions for the taking over of the business of a private bank in the manner provided by the Act from part of one inseverable scheme, and that the whole of ss. 24 and 56 are invalid. For similar reasons s. 22, sub-ss. (8) (b) and (d) are invalid.

Sections 13 and 24 are laws for the compulsory acquisition of property. They must therefore comply with the conditions of pl. (xxxi.). One of these conditions is that these laws shall provide just terms for the acquisition of the shares and assets. Shares in an Australian private bank are divided into two classes by s. 13. (1) Australian shares which presumably comprise all the shares on the Australian registers of these banks. (2) All other shares which presumably comprise all the shares on the registers of these banks outside Australia. Any of these shares which become Australian shares after the date on which the Australian shares are vested in the Commonwealth Bank become vested in that Bank upon the date upon which they become Australian shares. It was contended on a number of grounds that the Act does not contain just terms for the acquisition of the shares under s. 13 or the taking over of the businesses under s. 24, but we need only refer to two which affect both methods of acquisition-(1) that the Act provides that the compensation shall be assessed by the Federal Court of Claims and in no other manner, and that this infringes s. 75 (iii.) of the Constitution which provides that in all matters in which the Commonwealth or a person suing or being sued on behalf of the Commonwealth is a party the High Court shall have original jurisdiction; (2) that the Act does not contain just terms because it does not authorize the Federal Court of Claims to award interest on the compensation moneys from the date of the acquisition of the shares or the taking over of the businesses as the case may be.

Ground (1). The Commonwealth Bank was first incorporated by the Commonwealth Bank Act 1911. It was financed in its carly stages by loans made out of consolidated revenue. It has never had any corporators. The original incorporation of the bank has been continued by the Commonwealth Bank Act 1945 which is the Act at present in force. It has important functions, duties and powers under this Act and the Banking Act 1945. Both Acts were assented to on the same date. Section 11 of the Commonwealth Bank Act provides that the Commonwealth Bank shall act as a central bank. By s. 13 (a) the Bank is empowered to regulate the note issue in accordance with Part VII. of the Act. Section 12 provides that the Bank shall, in so far as the Commonwealth requires it to do so, act as banker and financial agent of the Commonwealth. Part IV. provides that the Bank shall carry on a general banking business. The Bank has a Rural Credits Department (Part VIII.), Mortgage Bank Department (Part IX.) and Industrial Finance Department (Part X.). One half of the net profits arising from the carrying on of the business of central banking and general banking are paid each year into the National Debt Sinking Fund. Otherwise the net profits are retained by the Bank. The Bank has important functions under the Banking Act 1945. It controls the payment of moneys into and out of the special accounts by the private banks (ss. 20 and 21), the mobilization of foreign currency (s. 23), advances and investments by banks (ss. 27 and 28), and with the approval of the Treasurer may make regulations for the control of interest rates payable to or by banks or to or by other persons in the course of any banking business carried on by them and discount rates charged by banks or by any other persons in the course of any banking business carried on by them (s. 39). Section 8 of the Commonwealth Bank Act 1945 provides that it shall be the duty of the Commonwealth Bank within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the Bank, will best contribute to (a) the stability of the currency of Australia; (b) the maintenance of full employment in Australia; and (c) the economic prosperity and welfare of the people of Australia. Section 25 provides that the Bank shall be managed by the Governor. But the Governor is subject to the provisions of s. 9. This section provides that (1) The Bank shall, from time to time, inform the Treasurer of its monetary and banking policy; (2) In the event of any difference of opinion between the Bank and the Government as to whether the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia, the Treasurer and the Bank shall endeavour to reach agreement; (3) If the Treasurer and the Bank are unable to reach agreement, the Treasurer may inform the Bank that the Government accepts responsibility for the adoption by the Bank of a policy in accordance with the opinion of the Government and will take such action (if any) within its powers as the Government considers to be necessary by reason of the adoption of that policy; (4) The Bank shall then give effect to that policy. The ultimate control of the monetary and banking policy of the Bank is therefore vested in the Treasurer. The Governor of the Bank has wide powers of management. But all these powers are vested in him for the purpose of carrying into effect the monetary and banking policy of the Government. The Governor of the Bank is in an analogous position to the Treasurer as that of a general manager of a company to the board of directors. The control of the note issue is plainly a governmental function. Other functions such as the control of the special accounts, advances, investments, and discount rates could be the function of an independent central bank but are plainly made by ss. 8 and 9 governmental functions. Section 7 provides that the Bank may sue and be sued in its corporate name. Section 10 provides that the Commonwealth shall be responsibile for the payment of all moneys due by the Bank but nothing in this section shall authorize any creditor or other person claiming against the Bank to sue the Commonwealth in respect of his claim. Persons who have claims against the Bank may therefore, and in view of s. 10 probably must, sue the Bank and not the Commonwealth as the principal, and the Bank may sue persons against whom it has claims as the principal. But it is not unusual for a statute to provide that a corporate body which is an agent of the executive shall be the party to sue and be sued in respect of the functions it is performing on behalf of the Crown. If such a body is sued the question arises whether it is an agent of the Crown and entitled to claim the prerogatives, privileges and immunities of the Crown. There is a valuable collection of the authorities on this point in the judgment of Jordan C.J. in Skinner v Commissioner for Railways ^[[219]] , at p. 109. To these authorities may be added three later decisions of the Court of Appeal in Minister of Supply v British Thomson-Houston Co Ltd ^[[220]] ; Minister of Health v Bellotti ^[[221]] and Tyne Improvement Commissioners v Armement Anversois Societe Anonyme ^[[222]] ; and three later decisions of this Court: Grain Elevators Board (Vict.) v Dunmunkle Corporation ^[[223]] ; Chaff and Hay Acquisition Committee v J. A. Hemphill & Sons Pty Ltd ^[[224]] and Rural Bank of New South Wales v Shire of Bland ^[[225]] . The three decisions of the Court of Appeal show that an Act may make a person or corporation the principal for the purpose of suing or being sued by members of the public although that person or corporation is an agent of the Crown. The problem whether a corporation is an independent entity or an agent of the Crown must be resolved by a consideration of the purpose and effect of the particular Act by which the statutory body is established and of any other Acts which relate to its corporate functions, duties and powers. A corporation may be an agent of the Crown for some purposes and an independent entity for other purposes. In Heiner v Scott ^[[226]] Isaacs J., Gavan Duffy J. and Rich J. said: "We do not think the Act" (that is the Commonwealth Bank Act 1911) "constitutes the Bank universally the agent of the Commonwealth in the sense necessary to make all its acts the acts of the Commonwealth itself-in other words Sovereign Acts." But the Court was there concerned with the question whether the Queensland Stamp Act, which imposed a stamp duty on every inland bill of exchange payable on demand (including a cheque on a banker), was an interference with the efficiency of an instrumentality of the Commonwealth, and therefore impliedly forbidden by the rule (since exploded) laid down by this Court in D'Emden v Pedder ^[[227]] . To come within the rule the appellant had to establish that the carrying on of the ordinary business of banking by the Commonwealth Bank was an exercise of the executive power of the Commonwealth. The remarks of their Honours, and similar remarks by Griffith C.J. ^[[228]] were on this question. In the present case it is a different problem. The problem is simply whether the Commonwealth Bank is an agent of the Commonwealth or an independent entity, and it can be an agent of the Commonwealth whether or not it is performing governmental functions in the strict sense. Taking into account the provisions of the Commonwealth Bank Act 1945 and the Banking Act 1945 already mentioned, we are of opinion that the Commonwealth Bank is an agent of the Commonwealth. The absence of any corporators is the first significant circumstance. This points to an intention on behalf of the Commonwealth to transmute a part of itself into the outward form of a corporation as a convenient means of carrying on a Commonwealth activity. The Commonwealth therefore created the Bank to act as its banker and financial agent and carry on the business of banking. In the course of time the Bank has become more and more identified with the Commonwealth. Since 1945 it has been subject to government control and has been performing several functions which are governmental functions. Section 183 of the Commonwealth Bank Act 1945 provides that the property, income and operations of the Bank and of the Savings Bank shall not be liable, and shall be deemed never to have been liable, to income tax or land tax under any law of the Commonwealth, or to taxation under any law of a State to which the Commonwealth is not subject. This section could only be valid with respect to State law if the Bank is an agent of the Commonwealth. Even if the Bank is not an agent of the Commonwealth for all purposes it is in our opinion clearly the agent of the Commonwealth for the purpose of the Banking Act 1947. The Act handcuffs the Bank to the Treasurer. It is not the Governor of the Commonwealth Bank but the Treasurer who decides whether and when to acquire the shares or to take over the business of one or more or all of the private banks incorporated in Australia or the business of one or more or all of the private banks incorporated elsewhere, so that the Commonwealth Bank is completely subject to the dictation of the Treasurer in these matters. Even where the Act confers some initiative on the Commonwealth Bank o r its nomi nees as in ss. 18, 19 (b) and (c), 22 (5), 40 (2) and 44 (1), this initiative can only be exercised subject to the approval of the Treasurer. Such subjugation is quite inconsiste nt with the Bank being an independent entity.

The next question is whether a proceeding against the Commonwealth Bank for compensation under the Act is a matter in which a person is being sued on behalf of the Commonwealth within the meaning of s. 75 (iii.) of the Constitution. The choice is between holding that a person being sued on behalf of the Commonwealth is limited to a person who is appointed as a nominal defendant to represent the Commonwealth or that a person is being sued on behalf of the Commonwealth where that person was acting as its agent in the transaction out of which the claim arose. It was usual in Australia before federation for the States to have Acts providing for the appointment of a nominal defendant to be sued on behalf of the Crown. But there was never any Act so far as we know providing for the appointment of a person as a nominal plaintiff to sue on behalf of the Crown. Such an appointment would have been quite unnecessary because the Crown has always had the right to sue in its own courts. The words were given the wider construction by Starke J. in the unreported case of War Service Homes Commissioner v Kirkpatrick and we are of opinion that his Honour was right. The decision is in line with that of Phillimore J. in Graham v Public Works Commissioners ^[[229]] , and the three recent decisions of the Court of Appeal already cited. Proceedings for compensation under the Act are therefore matters in which a person, that is the Commonwealth Bank, is being sued on behalf of the Commonwealth, so that this Court has original jurisdiction under the Constitution of which it cannot be deprived by the Act. The provisions in Divisions 1 and 2 of Part VI., that the compensation shall be determined by the Federal Court of Claims and not in any other manner are therefore invalid to the extent to which they prevent claims for compensation being brought in this Court.

The next question is whether the provisions of Divisions 1 and 2 can be read down so as to confer on the Federal Court of Claims a jurisdiction under the Act concurrent with the jurisdiction of this Court under the Constitution but exclusive of the jurisdiction of any other court. It was contended that the Act could be construed as giving a claimant for compensation who failed to make an agreement with the Commonwealth Bank a right to elect either to issue a writ in this Court claiming compensation or to proceed in accordance with the Act and have the compensation determined by the Federal Court of Claims. But we find it impossible to reconcile a right to claim compensation in this Court with Divisions 1 and 2. These Divisions can only operate on the basis that the Federal Court of Claims has an exclusive jurisdiction. For instance, s. 44 provides that unless the Commonwealth Bank is required by the private bank to refer its offer of compensation to that Court within a specified time the offer shall be deemed to have been accepted by the private bank. There are also the provisions of ss. 40 and 45 which make a determination of the amount of the compensation by that Court a condition precedent to the liability of the Commonwealth Bank to pay compensation. To reconcile the Act with s. 75 (iii.) of the Constitution, Divisions 1 and 2 must therefore be struck out of the Act altogether. Sections 15 and 25 would then be the only sections left relating to compensation. If these sections could be construed as intended to create a right of action independent of the particular manner of enforcing it prescribed by Divisions 1 and 2, just terms would be provided because a shareholder or private bank could bring an action claiming compensation in any competent court. But the view that the sections are intended to create independent rights is full of difficulty. In the case of taking over a business there would only be one large amount to be assessed. Even then an action based on s. 25 could be brought in the Supreme Court of a State under the Judiciary Act 1903-1947, s. 39 (2) or in the Federal Court of Claims or in this Court. In the case of claims arising out of the acquisition of shares, some of the amounts claimed might be small and actions based on s. 15 might also be brought under s. 39 (2) of the Judiciary Act in the inferior courts of the States. It could hardly have been intended that the Act should operate so as to give rise to such a multiplicity of actions in so many courts. The failure of Divisions 1 and 2 cannot impart to ss. 15 and 25 any greater effect than they were intended to have if these Divisions had been valid. When the whole of the provisions of the Act relating to compensation are considered, we do not think that the sections were intended to give a right of action other than a right to have the compensation determined in accordance with Divisions 1 and 2 and not in any other manner. In other words the sections are introductory only to the operative provisions which follow. For these reasons we are of opinion that the provisions of the Act for the acquisition of the shares and the taking over of the businesses fail because the Act does not contain any valid provisions for the payment of compensation.

Even if this opinion is erroneous, and there is no constitutional objection to the Act providing that compensation shall be determined by the Federal Court of Claims and in no other manner, there is the second ground that just terms are not provided because that Court has no power to award interest. It is empowered to determine the amount of compensation payable in respect of the acquisition of the shares (s. 40 (1)) and of the assets (s. 42). In these sections compensation means no doubt the same thing as fair and reasonable compensation in ss. 15 and 25. We have already expressed the opinion that a Federal law for the acquisition of income-producing property must, in order to provide just terms, empower the tribunal which is to assess the compensation to award interest from the date the acquirer enters into possession, so that, if the law provides for the assessment of "compensation," this word, read in the light of constitutional requirement, should be construed as including such a power in its content (The Commonwealth v Huon Transport Pty Ltd ^[[230]] ; Marine Board of Launceston v Minister of State for the Navy ^[[231]] ). The same opinion has recently been expressed by the Supreme Court of the United States in United States v Thayer-West Point Hotel Co ^[[232]] . But this opinion has not been adopted by the majority of this Court who appear to think that we are bound by Swift & Co v Board of Trade ^[[233]] and the very recent case of Newport Borough Council v Monmouthshire County Council ^[[234]] , to hold that, whatever may be the view in the United States, the word "compensation" in English law does not connote more than the payment of the equivalent in money of the capital value of the property taken. Accordingly, before interest can be awarded, the Act must so authorize the tribunal charged with the duty of determining the compensation expressly or by implication. The Act does not give an express right to the Federal Court of Claims to award interest, and we do not think that the insertion of the words "fair and reasonable" before the word "compensation" in ss. 15 and 25 would be thought sufficient by a majority of this Court to create a right by implication. There is however an exception to the rule in Swift & Co v Board of Trade ^[[235]] , which does appear to have the approval of a majority of this Court. The exception is where there is a compulsory purchase of property of such a nature that, if it had been purchased under a contract, the Court of Equity could have decreed specific performance. By analogy to the general equitable rule under which a purchaser who takes possession is charged with interest on his purchase money from that date until it is paid, the Court in assessing compensation can, in the absence of a statutory prohibition, order the payment of interest on the amount awarded from the date that the compulsory purchaser entered into possession. The point was taken that this power to award interest is dependent upon the tribunal which is assessing the compensation being a court invested with equitable jurisdiction. But in Inglewood Pulp & Paper Co v New Brunswick Electric Power Commission ^[[236]] , where interest was awarded on this principle, the tribunal was a judge of the Supreme Court of New Brunswick sitting as an arbitrator. He refused to award interest. The relevant statute allowed an appeal upon any question of law or fact to the Appeal Division of the Supreme Court. There was an appeal and the Appeal Division allowed the interest refused by the arbitrator. The Privy Council upheld the Court of Appeal. In Monmouth County Council v Newport Corporation ^[[237]] the tribunal was also an arbitrator and not a court invested with equitable jurisdiction. But the case was not disposed of on that ground. In the Court of Appeal ^[[238]] Lord Greene said: "On behalf of the county council it was argued that interest could be awarded on the principle on which it is awarded by courts of equity against purchasers who have gone into possession. This argument, in my opinion, cannot be supported. There is no analogy between a statutory transfer of an area from one authority to another (a thing which cannot be carried out contractually) and a contract of sale and purchase or a compulsory purchase under, for example, the Land Clauses Act."

It would seem therefore that the power to award interest does not depend on the tribunal being a court invested with equitable jurisdiction but on the kind of property acquired. But it is by no means certain that there is the requisite analogy between the relevant provisions of the Act and the terms of a contract for the voluntary purchase of shares or of a business which would be capable of being specifically enforced. Provisions that a purchaser should be registered as a member of a company despite the articles of association, and that the vendor of a business should be discharged from his liabilities could have no place in a voluntary contract. The assessment of compensation in respect of either form of acquisition is likely to be prolonged. Shareholders deprived of their shares and banks deprived of their businesses will have lost the right to retain possession of income-producing assets in the meantime. Just terms will not therefore be provided unless the Federal Court of Claims can award interest. In Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth ^[[239]] , at p. 334 Williams J. said and we now repeat that "terms to be just should be clear and not obscure." The draughtsman of the Act must be presumed to have been aware of the conflict of opinion in this Court with respect to the power of a tribunal to award interest, so that, to clarify the position and to ensure just terms, the Act should have expressly empowered that Court to award interest.

It was contended for the States that the Act is invalid because it infringes clause 5 (9) of the Financial Agreement. Section 105A (5) of the Constitution provides that this agreement and any variation thereof shall be binding upon the Commonwealth and the States parties thereto notwithstanding anything contained in this Constitution or the Constitution of the several States or in any law of the Parliament of the Commonwealth or of any State. The history of the agreement appears in New South Wales v The Commonwealth ^{[[No. 1]]} ^[[240]] . In that case ^[[241]] Starke J. said that the agreement "is part of the organic law of the Commonwealth. It can only be varied or rescinded by the parties thereto. Nothing in the Constitution or the Constitutions of the States can affect it or prevent its operation. It creates rights and duties as between the Commonwealth and the States upon and in respect of which the judicial power of the Commonwealth can be exerted." The agreement sets up an Australian Loan Council consisting of the representatives of the Commonwealth (the Prime Minister or a Minister nominated by him in writing) and of the States (the Premier or a Minister nominated by him in writing) to regulate inter alia the annual borrowings of the Commonwealth and the States. Clauses 4, 5 and 6 relate to the future borrowings of Commonwealth and States. Clause 4 (1) provides, so far as material, that except in cases where the Loan Council has decided that money shall be borrowed by a State, the Commonwealth shall, subject to the decisions of the Loan Council and subject also to clauses 5 and 6 of this agreement, arrange for all borrowings for or on behalf of the Commonwealth or any State. Clause 4 (4) provides, so far as material, that moneys shall not be borrowed by the Commonwealth or any State otherwise than in accordance with this agreement. Clause 5 relates to borrowing by the States and clause 6 to borrowing by the Commonwealth. Clause 5 (1) to (8) gives the States the right, subject to any maximum limits decided upon by the Loan Council from time to time for interest brokerage discount and other charges, to borrow moneys within the State from authorities, bodies, funds or institutions (including savings banks) constituted or established under Commonwealth or State law or practice and from the public by counter sales of securities and to use any public moneys of the State which are available under the laws of the State.

Clause 6 (1) to (6) gives the Commonwealth a similar right to borrow moneys within the Commonwealth and to use any public moneys of the Commonwealth which are available under the laws of the Commonwealth. Clause 5 (9) provides that, notwithstanding anything contained in this agreement, any State may use for temporary purposes any public moneys of the State which are available under the laws of the State, or may, subject to maximum limits (if any) decided upon by the Loan Council from time to time for interest, brokerage, discount and other charges, borrow money for temporary purposes by way of overdraft or fixed, special or other deposit, and the provisions of this agreement other than this sub-clause shall not apply to such moneys. Clause 6 (7) contains similar provisions in favour of the Commonwealth. Clauses 5 and 6 therefore confer upon the States and Commonwealth respectively limited powers of borrowing money on their own behalf which do not require the approval of the Loan Council, although the Loan Council can fix maximum limits for interest brokerage discount and other charges. These powers fall into the two classes, namely borrowings authorized by clause 5 (1) to (8) and clause 6 (1) to (6) and those authorized by clause 5 (9) and clause 6 (7). It was contended that clauses 5 (9) and 6 (7) were not intended to create contractual rights and obligations, but were in the nature of saving clauses inserted in the agreement to make it clear that it was intended to except from its operation the practice of the States and of the Commonwealth of using for temporary purposes any public moneys which were available and of borrowing money by way of overdraft or fixed, special or other deposit. We accept the opinion already expressed by the Chief Justice and Williams J. in Melbourne Corporation v The Commonwealth ^[[242]] that clause 5 (9) (and it necessarily follows clause 6 (7)) create positive rights and obligations flowing from the agreement. It necessarily follows from clause 4 (4) that the whole of the rights of the Commonwealth and of the States to borrow are included in the agreement and that no such rights exist outside the agreement. There would be a clear breach of clause 4 (4) if the States or the Commonwealth borrowed moneys by way of overdraft in excess of the maximum limits decided upon by the Loan Council for interest and other charges. Clauses 5 (9) and 6 (7) create rights to borrow for temporary purposes by way of overdraft or fixed, special or other deposit and impose obligations on the exercise of these rights. The introductory words "notwithstanding anything contained in this agreement" cannot have been intended to except clauses 5 (9) and 6 (7) from the agreement altogether, because the sub-clauses conclude by providing that "the provisions of this agreement other than this sub-clause shall not apply to such moneys." The function of the introductory and concluding words is to make it clear that the rights and obligations of the States and Commonwealth with respect to the kinds of borrowings for temporary purposes described in the sub-clauses are wholly contained in these sub-clauses. In Stirling v Maitland ^[[243]] , at p. 1047] Cockburn C.J. said: "I look on the law to be that, if a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative. I agree that if the company had come to an end by some independent circumstance, not created by the defendants themselves, it might very well be that the covenant would not have the effect contended for; but if it is put an end to by their own voluntary act, that is a breach of covenant for which the plaintiff may sue." The proposition has been applied in many subsequent cases. Two recent cases are Southern Foundries (1926) Ltd v Shirlaw ^[[244]] and Greenhalgh v Mallard ^[[245]] . In Shirlaw's Case Lord Atkin said ^[[246]] : "That proposition in my opinion is well established law. Personally I should not so much base the law on an implied term, as on a positive rule of the law of contract that conduct of either promisor or promisee which can be said to amount to himself `of his own motion' bringing about the impossibility of performance is in itself a breach." The proposition is, in our opinion, directly applicable to clause 5 (9) and clause 6 (7) of the Financial Agreement. A contract is construed by reference to the state of facts existing at the date when it is entered into. At the date of the Financial Agreement there was a chain of banks carrying on general banking business in Australia and the intention of clause 5 (9) and clause 6 (7) was plainly to give the States and the Commonwealth the right to borrow moneys on overdraft from these banks. That right can only continue to exist in any real sense so long as that banking structure is not destroyed by either the States or the Commonwealth. Compliance with the proposition in Stirling v Maitland ^[[247]] therefore requires that neither the States nor the Commonwealth should of their own volition put an end to that state of circumstances. The Banking Act 1947 violates the proposition.

If the matter rested in contract the Act would be a grave breach of the agreement by the Commonwealth: Magrath v The Commonwealth ^[[248]] . But the agreement derives overriding statutory force from s. 105A of the Constitution. It binds the Commonwealth notwithstanding anything contained in the Constitution. Any exercise of legislative power under s. 51 which is inconsistent with the agreement is to that extent invalid. There is evidence that borrowings for temporary purposes by the States have in recent years been financed by the issue of Treasury bills, and that the practice of borrowing money on overdraft from the private banks is now in abeyance. But the rights created by clause 5 (9) cannot be destroyed by disuse. Section 105A (4) provides that the agreement may be varied or rescinded by the parties thereto. Unless and until clause 5 (9) is so varied or rescinded, these rights must continue to have the same force and effect as they had at the date the agreement was made. The proposition in Stirling v Maitland ^[[249]] is directly infringed by s. 46 (1) and (4) to (8) of the Act. It is indirectly but equally infringed by ss. 13 and 14, Division 3 of Part IV. and s. 24 of the Act. All these provisions of the Act are therefore invalid. In view of this conclusion it is unnecessary to deal with the other contentions of the States and we express no opinion upon them.

Section 92 provides, so far as material, that trade commerce and intercourse among the States whether by means of internal carriage or ocean navigation shall be absolutely free. We adhere to the opinion already expressed by Rich J. in Peanut Board v Rockhampton Harbour Board ^[[250]] , at p. 277 and Williams J. in Australian National Airways Pty Ltd v The Commonwealth ^[[251]] , at pp. 107, 110 that the freedom guaranteed by s. 92 is a personal right attaching to the individual. The same opinion has been expressed by several judges of this Court; see for instance O'Connor J. in Fox v Robbins ^[[252]] , at pp. 126, 127; Higgins J. ^[[253]] ; Isaacs J. in R. v Smithers; Ex parte Benson ^[[254]] , at p. 113 in James v South Australia ^[[255]] , at p. 32 and particularly in James v Cowan ^[[256]] , at pp. 418, 419 (a judgment described by Lord Atkin in delivering the judgment of the Privy Council on appeal ^[[257]] as a convincing judgment). In that case ^[[258]] Isaacs J. referring to the expropriation of goods by a State, said: "The question is, how has the personal right of trading inter-State by the former owner been interfered with? That is a personal right, not a property right." In the Peanut Case ^[[259]] Dixon J. said: "The provisions operate directly upon the individual grower's liberty of disposing of the peanuts he produces for sale." In O. Gilpin Ltd v Commissioner for Road Transport and Tramways (N.S.W.) ^[[260]] , at p. 211 Dixon J. said: "Trade, commerce and intercourse among the States is an expression which describes the activities of individuals. The object of s. 92 is to enable individuals to conduct their commercial dealings and their personal intercourse with one another independently of State boundaries." In James v Commonwealth ^[[261]] , at pp. 43, 44, Lord Wright, in delivering the judgment of the Privy Council, said section 92 may seem to be, "a constitutional guarantee of rights, analogous to the guarantee of religious freedom in s. 116, or of equal rights of all residents in all States in s. 117." He referred to s. 92 as "the declaration of a guaranteed right" ^[[262]] . It is to be noted that His Lordship groups with s. 92 ss. 116 and 117, that the provision in s. 116 that no religious test shall be required as a qualification for any office or public trust under the Commonwealth is an express personal guarantee, and that s. 117 is also an express personal guarantee. His Lordship would appear therefore also to have been of opinion that the freedom guaranteed by s. 92 is a personal right.

In our opinion a banker who carries on business in more than one State is engaged in trade, commerce and intercourse among the States. It was said by Willes J. in Harris v Amery ^[[263]] , at p. 154 in a passage cited by Jessel M.R. in Smith v Anderson ^[[264]] , at p. 259 that banking is not strictly a trade. Presumably that was because his Lordship considered that trade consisted of trafficking in goods, that is to say the buying and selling and exchange of goods. But in a modern community it is clear, we think, that traffic in intangibles is just as much trade and commerce as traffic in tangibles. In Brandao v Barnett ^[[265]] , at p. 809 ^{[[8 E.R. 1622, at p. 1631]]} Lord Campbell said that "there is no finding that the exchequer bills ... were in the possession of the defendants in the course of their trade as bankers." In Foley v Hill ^[[266]] , at p. 1008] Lord Brougham made several references to a banker as a person carrying on a trade. He said that the trade of a banker consisted of using the money which he received from his customers as his own and trading with it. In Forget v Baxter ^[[267]] , at p. 475 Sir Henry Strong, in delivering the judgment of the Privy Council, said, in reference to the business of stockbrokers: "It cannot be doubted ... that the purchases and sales of shares by the appellants ... in the ordinary course of that business were operations of commerce." The same view has recently been expressed by Frankfurther J. in the Supreme Court of the United States in Freeman v Hewit ^[[268]] , at p. 275]. In reference to a sale by a broker to a purchaser in one State of securities owned by a person in another State he said: "Of course this is an interstate sale. And constitutionally it is commerce no less and no different because the subject was pieces of paper ... rather than machines." In Bank of India v Wilson ^[[269]] cited in W. & A. McArthur Ltd v Queensland ^[[270]] , at p. 547 it was held that both a bank and a telegraph company were carrying on a trade within the meaning of the Acts relating to inhabited houses. Pollock B. ^[[271]] referred to the meaning of trade as including that of "an occupation; particular employment, whether manual or mercantile, distinguished from the liberal arts or learned professions." The same view of the meaning of trade was expressed by Sutherland J. in Atlantic Cleaners & Dyers Inc. v United States ^[[272]] , at p. 1209]. He cited Bank of India v Wilson ^[[273]] and also a statement by Mr. Justice Story to the same effect. In Aristoc Ltd v Rysta Ltd ^[[274]] , at p. 102 Lord Wright said, in a passage cited by Rich J. in Australian National Airways Pty Ltd v The Commonwealth ^[[275]] : " `Trade' is a very wide term: it is one of the oldest and commonest words in the English language. Its great width of meaning and application can be seen by referring to the heading in the Oxford English Dictionary. But it must always be read in its context." The power of Congress under the Constitution of the United States is to regulate commerce with foreign nations and among the several States. It was held in Paul v Virginia ^[[276]] , at p. 361] and several subsequent cases that issuing a policy of insurance was not a transaction of commerce but in United States v South-Eastern Underwriters Association ^[[277]] these cases were overruled and it was held that the business of insurance when conducted across State lines is part of inter-State commerce. A number of definitions of the meaning of banking were handed in during the argument of which the definition of a bank in the Imperial Dictionary cited in Russell on Banker and Customer in Australia, 3rd ed. (1935), p. 52, is short and precise-"Bank.-An establishment which trades in money; as establishment for the deposit, custody and issue of money, as also for granting loans, discounting bills, and facilitating the transmission of remittances from one place to another; a company or association carrying on such business." In In re Shields' Estate ^[[278]] , at p. 198 Fitzgibbon L.J. said, in a passage cited with approval by Isaacs J. in Commissioners of the State Savings Bank of Victoria v Permewan, Wright & Co Ltd ^[[279]] , at p. 471: "In my opinion, the essence of the trade, business, or calling of a banker, is not primarily or essentially to be found in the mode in which he disposes of the money which is deposited with him, but in the mode in which he receives the money of others. If he keeps open shop for the receipt of money from all who choose to deposit it with him; if his business is to trade for profit in money deposited with him for the purpose, he answers the description of a `Banker'." In Punjab Co-operative Bank Ltd , Amritsar v Commissioner of Income Tax, Lahore ^[[280]] , at p. 1072 Viscount Maugham, in delivering the judgment of the Privy Council, said: "In the ordinary case of a bank, the business consists in its essence of dealing with money and credit." It seems to be clear that in Citizens Insurance Co of Canada v Parsons ^[[281]] the Privy Council would have considered banking to be within the regulation of trade and commerce, that is within Class 2 of s. 91 of the British North America Act, if banking had not been specifically mentioned in Class 15 of that section. The powers of the Canadian Parliament in relation to the regulation of trade and commerce and in relation to banking are each powers over the whole subject matter. The first power is not, like the corresponding power in s. 51 (1) of the Australian Constitution, confined to trade and commerce with other countries and among the provinces. There is therefore a reason why particular aspects of trade and commerce over which it was intended that the Commonwealth Parliament should have power irrespective of their overseas or inter-State character should be specifically enumerated. This may explain the presence of the specific powers with respect to insurance and trade marks, in addition to the power with respect to banking, in s. 51 of the Australian Constitution. These powers do not appear in s. 91 of the Canadian Constitution, but they have been held in certain aspects to be within the trade and commerce power (Attorney-General for Canada v Attorney-General for Alberta ^[[282]] ; Attorney-General for Ontario v Attorney-General for Canada ^[[283]] ). There is no reason therefore why laws with respect to banking, insurance and trade marks should not be trade, commerce and intercourse within the meaning of s. 92 simply because they are specifically enumerated in s. 51 and may not fall, so far as they are trade and commerce with other countries and among the States, within s. 51 (1). But it was contended that inter-State banking was not trade, commerce and intercourse within the meaning of s. 92 because that section contains the words "whether by means of internal carriage or ocean navigation." It was submitted that these words indicated that the section was confined to trade and commerce in the sense of traffic in goods because only goods could be carried by land or sea. This construction of the section really seeks to read the word "whether" as "if" or "provided." The submission was discussed and disposed of in the joint judgment of Knox C.J., Isaacs J. and Starke J. in McArthur's Case ^[[284]] and there is nothing in the subsequent cases to throw any doubt on the correctness of the views there expressed. In R. v Smithers ^[[285]] Higgins J. said: "It is curious that the section seems to overlook the possibility that a man may walk across the border into another State, as well as be carried `by internal carriage or ocean navigation'; but these words must be merely meant to exhaust all kinds of carriage, if there be carriage. If not, they qualif y th e words `trade' and `commerce' as well; and a State might, then, impose a duty on, or obstruct the passage of, cattle driven over the border: a result which would be absurd."

All the plaintiff banks except the Ballarat Banking Co Ltd and the Brisbane Permanent Building & Banking Co Ltd are engaged in transactions of inter-State banking. These transactions consist principally of (a) the collection and negotiation of inter-State bills of exchange, cheques and promissory notes; (b) the transfer of funds inter-State; (c) the establishment of inter-State credits; (d) the issue and negotiation of travellers' cheques. These transactions seldom involve any movement of money between States in the sense of the physical transfer of bank notes or coin from one State to another. The transactions are usually financed through accounts which the banks keep in each State with the Commonwealth Bank known as exchange settlement accounts. The effect of the payment of a cheque drawn by A on his bank in Sydney in favour of B in Melbourne is that A's deposit account is reduced or his loan account increased, B's deposit account is increased or his loan account reduced, the exchange settlement account of A's bank is reduced and the exchange settlement account of B's bank is increased. But the same legal results flow from the transaction as though the amount debited to the payer and credited to the payee had been sent from Sydney to Melbourne in the form of notes or coin. This appears clearly from the recent decision by the Privy Council in Trinidad Lake Asphalt Operating Co Ltd v Commissioners of Income Tax for Trinidad ^[[286]] . In that case a resident in the United States owed money to a company in Trinidad in which he was a shareholder. The company became indebted to him for a dividend of the like amount. It was agreed that the one debt should be set off against the other, and the transaction was effected by each party making corresponding entries. It was held that there was an actual payment and receipt of the indebtedness on either side, and therefore a transmission of revenue from Trinidad to the United States. Lord Wright said ^[[287]] :"Was there, then, such a transmission? No actual money passed. If the dividend had been transmitted by a banker's draft sent by the appellant to Barber it could not have been questioned that the dividend had been transmitted, but the two companies might do their own banking transactions between themselves and dispense with the intervention of banking facilities. The transaction involved the sending to Barber by the appellant, and receipt by Barber from the appellant, of the dividend. This was effected by the agreement that payment should be made by cancellation of the debt for goods supplied. This method had been mutually agreed before the dividend was declared. The agreement was carried out by each party making corresponding entries in its books. These were not merely book-keeping entries. They represented the actual receipt of the dividend by Barber, and the actual payment of it by the appellant to Barber, and concurrently, the actual receipt by the appellant from Barber of payment of his debt for goods supplied. ... There is actual, not merely notional or constructive payment of the indebtedness on either side. ... Since 1902, the transmission of funds has become still more divorced in the minds of business men, and even of lawyers, from the idea of any material embodiment. No document is necessary. Two companies separated by the ocean may orally agree over the wireless telephone that the debt of one may be set against a debt of the other and both cancelled. The only evidence or material embodiment of the transaction may consist of entries in the books on each side made in pursuance of their agreement, but what has happened is, if so intended, equivalent to a receipt of money, in Lord Lindley's words, and a receipt of anything by a person who is at a distance from the sender involves a transmission."

In James v The Commonwealth ^[[288]] , at p. 58 Lord Wright said that the freedom guaranteed by s. 92 is "freedom as at the frontier or, to use the words of s. 112, in respect of `goods passing into or out of the State." His Lordship then proceeded to explain what that meant and said ^[[289]] : "As a matter of actual language, freedom in s. 92 must be somehow limited, and the only limitation which emerges from the context, and which can logically and realistically be applied, is freedom at what is the crucial point in inter-State trade, that is at the State barrier." His Lordship was discussing an Act which prohibited the plaintiff entirely without a licence or if a licence was granted partially from delivering dried fruits for carriage into or through another State to a place in Australia beyond the State in which the delivery was made, and his remarks, like the remarks in any other judgment, must be read in the light of the particular facts. We do not understand his Lordship to mean that s. 92 only protects the actual passage of goods or persons from one State into another. Section 92 refers to trade commerce and intercourse among the States. A contract for the sale of goods by A to B to be delivered in Melbourne is just as much a transaction of trade and commerce among the States whether A's goods are sent from Sydney to Melbourne subsequently to the contract or A has a supply of the goods available in Melbourne and makes the delivery out of these goods. A contract between A in Sydney and B in Melbourne by which A agrees to deliver goods to B in Sydney in exchange for goods to be delivered by B to A in Melbourne is a transaction of trade and commerce among the States. Where a bank has a fund in the form of an exchange settlement account in Melbourne available to make a payment to B in Victoria on behalf of A in Sydney the transfer of credit from A to B is just as much an inter-State transaction as it would be if actual money was sent from Sydney to Melbourne to make the payment. To carry out such transactions something tangible for instance documents, or intangible for instance telegraphic messages, must cross State boundaries and such documents or messages are essential elements of the transaction and make it one of trade and commerce among the States. It is true that in a modern community, as the evidence in the present cases proves and as Lord Wright pointed out in the Trinidad Case ^[[290]] , the principal means of payment and exchange is not legal tender in the shape of notes and coin but bank credit or bank money as it has been called, and that payment by bank money is a matter of book entries involving a debit in one bank to the account of the debtor and a credit in the same or another bank to the account of the payer. But as Duff C.J. said in Reference re Alberta Statutes ^[[291]] , at p. 116 money as commonly understood is not necessarily legal tender. Any medium which by practice fulfills the function of money and which everybody will accept in payment of a debt is money in the ordinary sense of the word even although it may not be legal tender. The banks are engaged in moving money or its equivalent bank credit about intra-State and inter-State for reward whether the movement is effected by the transfer of actual money in the shape of notes or coin from one place to another or by means of cheques or other documents or telegraphic transfers and subsequent debits and credits in customers' accounts. In Huddart Parker & Co Pty Ltd v Moorchead ^[[292]] Isaacs J. said: "the increase in the formation of corporations for all kinds of business enterprises, commercial, industrial and financial, is one of the most notable characteristics of modern life. They are incorporated in one State, and can take the capacity to trade in all, and the freedom of inter-State trade introduced by the Constitution increased the likelihood of their doing so." (The words italicized must refer to s. 92). It is evident that his Honour thought that all the corporations he mentioned, commercial, industrial and financial, would, if they were carrying on business in more States than one, be engaged in trade, commerce and intercourse among the States within the meaning of s. 92. In our opinion the plaintiff banks other than the two mentioned are in their inter-State business engaged in such trade, commerce and intercourse.

Section 46 (4) authorizes the Treasurer to give a notice which will have the effect of prohibiting a private bank carrying on any further banking business after the period fixed in the notice has expired. It will then be unlawful for the bank to carry on the business of banking either intra or inter-State. Divisions 2 and 3 of Part IV. and s. 24 have the same effect. They operate after an interval or immediately to strip the banks of their undertakings and thereby deprive them of their power to carry on the business of banking either intra or inter-State. From our reading of the cases, and particularly the two decisions of the Privy Council, we understand that legislation Commonwealth or State infringes s. 92 where it operates directly and not merely incidentally to burden, hinder or prevent persons or corporations engaging wholly or partially in trade or commerce across State boundaries.

We also understand that discrimination is not the test and that such legislation may infringe the section although it operates in restraint both of intra and inter-State trade. In the Peanut Case ^[[293]] Rich J. pointed out that the reasons given by the Privy Council in James v Cowan ^[[294]] "make it quite plain that compulsory acquisition may directly operate to interfere with the freedom of inter-State commerce." The question is in each case one of fact. Section 92 invalidates the infringing legislation and gives to the person or corporation aggrieved the right to treat the legislation as null and void and to sue for a declaration to this effect. It also gives such person or corporation the right to treat any other person or corporation as a wrongdoer whose conduct would only be justified if the legislation were valid. If the legislation operates directly to hinder burden or prevent all trade both intra-State and inter-State, the question arises whether the legislation can be read down so that it can operate with respect to intra-State trade although it is invalid with respect to inter-State trade. Section 46 (4) to (8) of the Banking Act 1947 is legislation which in fact operates directly to prevent the private banks continuing to carry on either intra-State or inter-State trade. It is therefore legislation which infringes s. 92. But it is not legislation which is capable of being severed in its operation. The notice authorized by the section is an inseverable notice which can have one effect only, namely to make it unlawful for a private bank to carry on banking business in Australia at all. It is impossible without resort to legislation to convert such a notice into a notice which will only make it unlawful for a private bank to carry on intra-State business. The acquisition of the undertaking of a private bank is in a similar position. The assets and liabilities and staff of the bank are completely taken over by the Commonwealth Bank, and no means are provided by which the private bank could be left with those assets and liabilities employed in the inter-State business and sufficient staff to carry on this business and the balance of the assets and liabilities and staff could be taken over by the Commonwealth Bank. Two of the private banks are doing no inter-State business and the inter-State business of the other private banks only amounts to about ten per cent of their banking business in Australia. It was therefore contended that the amount of inter-State business included in a total prohibition of the banking business in Australia of a private bank would be relatively insignificant so that the prohibition of inter-State business would be a mere incidental and indirect and remote consequence of the total prohibition. But with these two exceptions the inter-State business of each of the private banks is substantial, the Act operates directly on this business, and the operation of the Act cannot be converted from a direct to an incidental operation by a mere calculation of percentages. The present percentage of ten per cent is higher than the corresponding percentage in Vacuum Oil Co Pty Ltd v Queensland ^[[295]] .

It seems to us that the prohibition of the inter-State business would only be an incidental consequence of the total prohibition if, as the defendants contended, s. 92 does not confer a personal right on individuals to engage in trade and commerce among the States. The defendants contended that s. 92 is not concerned with the right of an owner of goods to sell them out of the State, and therefore is not concerned with the ownership of such goods prior to, at the time of, or subsequent to the passage of the goods across State boundaries. Accordingly the Commonwealth and State Parliaments legislating within their constitutional powers can select the individuals who are to engage in inter-State trade. But they must not place any hindrance, burden or restriction on the free passage of the goods of such individuals across State boundaries. It was claimed that this contention is supported by the decision of this Court in New South Wales v The Commonwealth (The Wheat Case) ^[[296]] . In that case the Wheat Acquisition Act 1914 (N.S.W.) authorized the Governor by notification published in the Gazette to declare that any wheat therein described or referred to was acquired by His Majesty and that upon such publication the wheat acquired should become the absolute property of His Majesty and the rights and interests of every person in the wheat at the date of such publication should be converted into a claim for compensation. The Act constituted a Board which was authorized on behalf of the Government to sell or dispose of any wheat acquired under the Act at such times, at such prices and on such terms of payment as might be thought fit. Some of the wheat acquired under the Act had been sold to purchasers in Victoria and it was contended that to acquire this wheat would contravene s. 92, but the contention failed. Griffith C.J. said that s. 92, so far as it relates to commerce, might be paraphrased thus ^[[297]] : "Every owner of goods shall be at liberty to make such contracts for the transportation of goods from one State to another as he thinks fit without interference by law. It follows that as soon as he ceases to be the owner of goods the section ceases to have any operation so far as those goods are concerned. When the wheat in New South Wales became the property of His Majesty, the Sovereign, as the new owner, had the exclusive right of disposing of it. If the Government desired to export it to another State they were free to do so. Whether they did or did not, their power of disposition was not interfered with."

The comment on this case by Lord Wright in James v The Commonwealth ^[[298]] was that it had never been expressly overruled which can hardly be said to be an approval of the case. If it was rightly decided it must be on the ground stated by Lord Atkin in James v Cowan ^[[299]] that legislation which has for its primary object such matters as defence against an enemy, prevention of famine, disease and the like, is directed primarily to such matters and does not infringe s. 92 because incidentally inter-State trade is affected. The acquisition by the Commonwealth Bank of the business of one bank or the businesses of a number of banks or even of all the banks carrying on the business of banking in Australia would not come within the instances given by Lord Atkin. There is no suggestion that the private banks are carrying on business in a way that is a menace to the common welfare. On the contrary s. 11 of the Act imposes on the Commonwealth Bank a duty to carry on in the future the business of banking in the same manner as it is at present being carried on by the private banks. The defendants' contention appears to us to be substantially in line with the view of s. 92 expressed by Griffith C.J. in the passage cited. But in James v Cowan ^[[300]] Lord Atkin said that their Lordships would not be prepared to assent to it stated in the simple form which commended itself to Griffith C.J. It is plain from James v Cowan ^[[301]] that the cases in which the Commonwealth or the States can exercise their powers of acquisition so as to deprive an owner of his right to sell his goods inter-State are limited. It would seem that Lord Wright found some difficulty in justifying the instances given by Lord Atkin. Such legislation would seem to be based on the principle that in cases of grave emergency the maxim salus populi est suprema lex can override s. 92, a point which the Privy Council in James v The Commonwealth ^[[302]] treated as reserved until it arose, and which was not upheld by this Court in Gratwick v Johnson ^[[303]] .

It is clear to us that Lord Wright thought that the Peanut Case ^[[304]] was rightly decided. He said ^[[305]] : "James v Cowan ^[[306]] was followed and applied by the High Court (Evatt J. dissenting) in Peanut Board v Rockhampton Harbour Board ^[[307]] in which the Wheat Case ^[[308]] was distinguished. The producers of the peanuts, it was held, were prevented by the Act from engaging in inter-State and other trade in the commodity. The Act embodied, so the majority of the Court held, a compulsory marketing scheme, entirely restrictive of any freedom of action on the part of the producers; it involved a compulsory regulation and control of all trade, domestic, inter-State and foreign; on the basis of that view, the principles laid down by this Board were applied by the Court." He said at ^[[309]] : "But it has become clear from the various decisions already cited that such burdens and hindrances may take diverse forms, and indeed appear under various disguises. One form may be a compulsory acquisition of goods, as in James v Cowan ^[[310]] or the Peanut Case ^[[311]] if in truth the expropriation is directed wholly or partially against inter-State trade in the goods, that is, against selling them out of the State." In James v Cowan ^[[312]] the plaintiff's goods were acquired to prevent him exercising his personal right to sell them inter-State. In the Peanut Case ^[[313]] the peanuts were acquired to deprive each individual grower of his personal right to sell his peanuts intra-State or inter-State. The Peanut Board was selected by the Queensland parliament as the sole body entitled to engage in inter-State trade in peanuts just as the Banking Act 1947 authorizes the Treasurer to select the Commonwealth Bank as the sole body entitled to engage in inter-State trade in banking. In James v The Commonwealth ^[[314]] the individual owners of dried fruits including the plaintiff in South Australia were entirely prohibited without a licence or if a licence was granted partially prohibited from selling their goods out of the State. In the case of James v Cowan ^[[315]] the executive act of the Minister and in the two later cases the legislation infringed s. 92 because individuals were deprived of their personal rights guaranteed to them by s. 92. The plaintiffs would not have had any locus standi to maintain the actions if their personal rights had not been infringed. Admittedly freedom of intercourse among the States means that individuals are to be free to pass from State to State, and it would be strange if freedom of trade and commerce does not mean that individuals are to be free to engage in inter-State trade when freedom of intercourse means that individuals are to be free to pass from State to State.

The contention under discussion is in our opinion opposed to the recent decision of this Court in Australian National Airways Pty Ltd v The Commonwealth ^[[316]] . The legislation there in question operated directly to prohibit any persons engaging in the business of carrying passengers and goods by air for reward across State lines and to grant a monopoly of this business to the Australian National Airlines Commission. Such carriage was held to be trade and commerce among the States within the meaning of s. 92. Some members of the Court, including Williams J., expressed the opinion that the Commonwealth Parliament could, in the exercise of the legislative power conferred by s. 51 (i.) to make laws with respect to trade and commerce among the States, select the persons or corporations to engage in any activity of trade and commerce among the States, and could therefore grant a monopoly of the inter-State carriage of persons and goods to the Commission. It seemed to Williams J. that this necessarily followed from the decision of this Court in Huddart Parker Ltd v The Commonwealth ^[[317]] . In that case it was held that legislation which required shipowners and stevedores in certain ports to give preference in employment in loading and unloading ships engaged in inter-State and overseas trade to members of the Waterside Workers Federation of Australia was a valid exercise of the trade and commerce power. No question of s. 92 arose in that case. In the first place it was then assumed that the section did not bind the Commonwealth. In the second place the transport workers legislation there in question did not infringe the section. The section does not invalidate legislation regulating the operations of inter-State trade. There is no suggestion that sections such as ss. 27 and 39 of the Banking Act 1945 which regulate the trade of banking infringe s. 92. The section invalidates legislation which deprives individuals of their freedom to trade in more States than one. There was nothing in the transport workers legislation to prevent wharf labourers passing from one State to another and seeking work in as many States as they liked. There was also nothing in the legislation to prevent shipowners sailing their ships from any ports in one State to any ports in another State. But in the Australian National Airways Case ^[[318]] in spite of the opinion that s. 51 (i.) standing alone would authorize the Commonwealth Parliament to create a monopoly in inter-State carriage by air, the Court was unanimously of opinion that legislation for that purpose infringed s. 92. The only difference between the legislation in the Australian National Airways Case ^[[319]] and the material provisions of the Banking Act 1947 is that the earlier legislation was directed wholly against persons other than the Commission engaging in inter-State trade, whereas the present legislation is directed only partially against the private banks engaging in inter-State trade. But the intention in each case is to create a monopoly, in the earlier case in inter-State trade, and in the present cases in both intra-State and inter-State trade, and s. 92 is, for the reasons already given, infringed in each case. The difference between the two Acts is explained by the difference in the ambit of the trade and commerce power and that of the banking power, the former being limited to trade and commerce among the States and the latter extending to all banking either intra or inter-State. It would be quite impossible for any bank engaged in inter-State business not to be also engaged in intra-State business, so that if legislation which operates directly but indiscriminately to prevent a bank doing any business in Australia does not infringe s. 92 in its operation upon inter-State trade, it would seem to follow that legislation based on pl. (xiii.) and other placita of similar ambit, for instance (xiv.) and (xx.), would not be subject to s. 92. But we agree with respect with the opinion of Isaacs J. in Huddort Parker & Co Pty Ltd v Moorchead ^[[320]] already cited that legislation under pl. (xx.) is subject to s. 92, and it necessarily follows that legislation under pl. (xiii.), if banking be trade and commerce, as in our opinion it is, must also be subject to the section. As we have already said, two of the plaintiff banks are not at present engaged in inter-State banking, but an Act which operates directly to prevent an individual ever engaging in inter-State trade must be void whether he is at the moment engaged in such trade or not. It may be that he would not have a sufficient interest to challenge the Act until he desired to engage in such trade. But it is unnecessary to pursue this point because the two banks in question are entitled to succeed on other grounds.

We have not yet referred to ss. 59 and 60 of the Act. These sections state that their purpose is to assist the operation of the provisions of the Act. The only provisions of the Act which could require the assistance of these highly punitive sections are those relating to the compulsory acquisition of the shares and the businesses of the private banks. They could not form part of any scheme of voluntary bargaining. They are therefore incidental to and inseverably bound up with the operation of provisions which we have already held to be invalid and as such are in our opinion also invalid.

For these reasons we would give judgment for the plaintiffs in all five actions. In the actions by the eight private banks incorporated in Australia and by the States of Victoria, South Australia and Western Australia we would declare that ss. 13, 14, 17 to 21 inclusive, 22 (8) (b) and (d), 24, 56, 59 and 60 and Parts VI. and VII. of the Banking Act 1947 are invalid with consequential relief. In the action by the three private banks incorporated in the United Kingdom we would declare that ss. 22 (8) (b) and (d), 24, 56, 59 and 60 and Parts VI. and VII. of the Act are invalid with consequential relief.

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