Bank of New South Wales v Commonwealth
76 CLR 1[1948] 2 ALR 89
1948 - 0811A - HCA
(Judgment by: Dixon J)
Bank of New South Wales
v Commonwealth
Judges:
Latham CJ
Rich J and Williams J
Starke J
Dixon JMcTiernan 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
Judgment date: 11 August 1948
Sydney
Judgment by:
Dixon J
DIXON J. The purpose of all these five actions is to obtain a decision that the Banking Act 1947 or its more material provisions are unconstitutional and void. "Unconstitutional" means beyond the powers which the Constitution affirmatively grants to the Commonwealth Parliament or contrary to the restrictions or limitations which the Constitution imposes upon them.
The Banking Act 1947 is an enactment of sixty-two sections conferring a variety of powers, sometimes upon the Treasurer, sometimes upon the Governor of the Commonwealth Bank, and sometimes upon the Commonwealth Bank itself, and containing a number of auxiliary and ancillary provisions and provisions dealing with matters consequential upon the exercise of one or other or all of the powers. The Act is evidently the product of much ingenuity and resource upon the part of those who drew it. The result is a measure of anything but a simple description, one that seems rather to exploit the possible uses of Federal power than to try to exclude any constitutional questions except such as arise necessarily from the character of the banking power or from the presence of s. 92 in the Constitution and are therefore inseparable from any pursuit of the end in view.
It is usual in dealing with the constitutional validity of a statute to begin with some account of the manner in which it is constructed and what it provides, in order to show its relation to legislative power and what are the constitutional questions to which its nature and characteristics give rise. But to do this adequately with respect to the Banking Act 1947 would mean a prolonged examination, not simply of its general plan, but of the nature and specific features of a number of powers and of their interaction, both necessary and possible, and, what is worse, of the combinations in which they might conceivably be called into use. I shall therefore do no more than state at this point the chief objects pursued by the main parts of the Act and, when I come to deal with particular questions of validity turning upon the character of specific provisions, I shall then describe them so far as may seem necessary. Otherwise I shall assume that the text of the statute when studied has, or will have, told its own somewhat intricate story. The principal objects to which the provisions of the Act are addressed may be indicated briefly. In the first place, its application is confined to a list of what it calls "private banks," an expression meaning the corporations or companies carrying on banking. The list comprises all the institutions carrying on business in Australia which are commonly called trading banks. These private banks, as the Act calls them, are divided into those incorporated in Australia, those incorporated in the United Kingdom and those incorporated elsewhere. The Commonwealth Bank is authorized to purchase by agreement shares in a bank incorporated in Australia or in the United Kingdom. The Treasurer must approve. Shares in an Australian bank so purchased are, by force of the Act and in spite of anything the articles of association may say, vested in the Commonwealth Bank, which thereupon becomes a member of the company. This is the first operative provision (ss. 12, 14, 10). Next, the Treasurer is enabled to publish a notice in respect of any bank incorporated in Australia that on a named date the shares situated in Australia shall vest in the Commonwealth Bank. The consequences are twofold. On the expiry of the notice shares then on the Australian register, or afterwards coming upon it. vest in the Commonwealth Bank which, as before, becomes a member of the company, notwithstanding the articles of association. At the same time the directors are removed and nominees of the Governor of the Commonwealth Bank, approved by the Treasurer, take the place of the directors and assume all the powers of the company (ss. 13, 14, 10, 17-19). In the third place, provision is made for the purchase by the Commonwealth Bank by agreement or, in default of agreement, compulsorily, of the business in Australia of any private bank. The acquisition is the consequence of a notice by the Treasurer, upon whose discretion the exercise of the power depends. The acquisition of the business in Australia includes assets and liabilities which have or afterwards obtain a situation in Australia. The transfer of non-Australian assets may be required. A private bank is prohibited from carrying on banking business in Australia when its business is thus acquired (ss. 22, 24, 46 (1)-(3)). Fourthly, the Treasurer is armed with a discretionary power to forbid a private bank from carrying on banking business, a power that is independent of any acquisition of assets or shares. Fifthly, a provision is made for compensation for the acquisition of shares or assets (ss. 15, 25, 37-41, 42-45). A Court of Claims is set up with exclusive jurisdiction over claims for compensation (ss. 26-36, 40 (2) and (5), 42). Seventhly, there are elaborate provisions respecting the staff of banks whose business or shares are acquired, the general purport of which is to continue the officers in the employment of the Commonwealth Bank without prejudicing the rights accruing to them in their former service (ss. 47-55).
A governing consideration in an examination of the validity of the provisions by which the purposes indicated by the foregoing summary are worked out must be that the powers are all conferred in terms which insure that each of them is exercisable independently of every other power and that each of them is exercisable against any one bank to the exclusion of other banks. At the same time, each power may be exercised simultaneously against all the Australian banks and, except for the acquisition of shares and concomitant replacement of directors, against all the English banks. Again, the powers of prohibiting the carrying on of banking business, of acquiring shares and displacing directors and of taking over the business may, as I think, be exercised cumulatively in relation to a private bank or one or more of these powers may be exercised and not the others. Further, the Act does not concern itself with any question of time. It contains nothing which would make it impossible to put all the powers into execution against all the banks at once or to defer doing so indefinitely or to allow any interval to elapse between dealing with different banks or using different powers against one bank. It will be seen therefore that for a court that must consider the powers which the Act describes and not any intention as to their use that may be entertained on the part of the Executive it is not enough that a power conferred by the Act, exercisable by itself, would find support in the Constitution. Its validity must also be examined on the footing that it is exercised in combination with others. And converso it would not be enough if the conclusion were that, by a simultaneous use of certain of the powers given by the Act, a government monopoly of banking might be set up and an orderly transition from the present system accomplished, and that such a thing might be within power. It would still be necessary to consider the validity of the provisions on the footing that the powers were exercised separately and the banks were dealt with piecemeal.
The Act cannot be supported simply on the footing that it is one to accomplish the immediate setting up of a governmental monopoly in banking and otherwise to do no more than to provide for matters incidental to that purpose, that is to say, to provide the means by which an object of such a character might be effected and the dislocation and disturbance that might otherwise attend the change avoided. For in point of law the provisions of the Act, if valid, would make other courses possible and authorize the pursuit of other ends.
Of the foregoing considerations the last is more material to the justification of the provisions of the Act under s. 51 (xiii.) of the Constitution; but, for my part, it is not upon that paragraph that my decision depends. Speaking generally, however, they are considerations which must in different ways affect the question of the constitutionality of this or that provision of the Act.
The attack upon the validity of the Act is supported by contentions which are of two descriptions. Some of them are so fundamental, that if sound, they would annihilate the Act independently of its detailed structure. Others depend upon the manner in which the Act is constructed, and some of these involve a question of the operation of s. 6, which declares an intention that the provisions of the Act shall be separable. I have formed the conclusion, for various reasons the greater number of which may be thought to be of the second description, that certain cardinal provisions of the Act cannot be upheld as valid, namely s. 13 (3) and (4), ss. 17-19, s. 24, ss. 39 and 40, ss. 42-44 and s. 46 (4)-(8). The source of their invalidity lies in s. 51 (xxxi.) or s. 92 of the Constitution. I shall set out with some fullness the reasoning by which I have been led to adopt this conclusion, and I shall explain the consequences upon some other provisions. The result of my opinion is the failure of the more essential parts of the Act, as distinguished from incidental or subsidiary provisions. In these circumstances any expression of my opinion on the many contentions raised which do not enter into the grounds of the conclusion I have just stated can form no part of my ratio decidendi. I shall therefore not embark upon any full examination of these contentions; but I think that, before taking up the matters which govern my ultimate decision, I should say something about certain of the more basal grounds upon which the plaintiffs impeached the Act and why I have not accepted them.
Although s. 51 (xx.) of the Constitution was relied upon by the Commonwealth as an alternative source of power in itself sufficient to sustain much of the Act, it is evident that the legislation primarily rests upon par. (xiii.) of s. 51, combined, of course, with par. (xxxi.) to sustain the expropriation of shares or assets, and with ss. 71, 77 (1), 78 and 79 to sustain the erection of a Court of Claims. The sufficiency of s. 51 (xiii.) for this purpose is denied, and if the denial were well founded, the Act could only be supported by the very widest interpretation of par. (xx.). The considerations advanced for a limited construction of par. (xiii.) are of two sorts. There are general considerations found in the nature of the subject matter, banking, and in the place it takes in the social and commercial organization of the community. Then there are particular considerations arising from the context, that is to say, from what the paragraph is expressed to cover besides the form of the exception, and the terms employed. Banking describes a well-understood activity which in one form or another has been found in modern times to be indispensable to the needs of any highly organized western community. It is not a business or operation that calls for suppression or restriction. Support, guidance, regulation, and superintendence might be necessary. But it would be contrary to common sense to suppose that banking would be the subject of total prohibition. Then, beginning thus, the argument goes on to maintain that banking depends on a consensual relation between banker and customer. That is its essence, so it was contended. Such were the general considerations adduced. Upon the terms of the paragraph itself a number of points was made. First, the word is "banking." not "banks"-the activity, not the bodies carrying it on-a word, it was said, descriptive of a continuing activity to be governed, not stopped. "Statebanking" too suggests continuity; "extending" necessarily implies a continuing subject, proper for recurrent regulation. A second point was that the very idea of excepting "State banking" implied an assumption that it would exist as part of a system of banks. A third point was that the addition of "the incorporation of banks" and the use of the word "also" showed clearly that the word "banking" does not describe a legislative subject matter extending to the incorporation of the banks that carry on the activity. Accordingly "banking" is not used as the name of a wide field of legislation extending from the establishment of the bodies to act as bankers to the suppression of all but government banking. Rather it refers to the exercise of a trade or business to be regulated. Then reliance was placed upon the addition to the power of the subject of the "issue of paper money," governed likewise by the word "also." The deduction drawn from this was that banking was conceived as depending on the relation of banker and customer and therefore as not necessarily extending to the issue of bank notes.
From all this the conclusion was drawn that the legislative power over banking is, so to speak, to govern the thing "salva rei substantia," and does not authorize the suppression of banking, either totally or with the exception of government banking. Another conclusion drawn was that banking depends on a consensual relation and, further, that the transactions are between subject and subject as distinguished from government and subject. I shall not go into the applications which were made of these propositions in order to show that the provisions of the Act relating to the acquisition of shares, the replacement of directors, the acquisition of assets, the taking over of liabilities and the prohibition of the carrying on of banking business fell outside the power. It will suffice to say that, according to the contention, nothing but a power to suppress banking completely would authorize the bestowal upon the Treasurer of an unlimited and possibly arbitrary discretion to close any or all trading banks; that the compulsory transfer to the Commonwealth Bank of liabilities to customers and of their accounts is inconsistent with the consensual character ascribed to the relation of banker and customer and so is the provision as to trading banks carrying on business pending acquisition.
It must be acknowledged that the cumulative weight is considerable of the matters upon which reliance is placed as evidence that the banking power is not a wide one. I do not know that the weight is diminished by the history of the paragraph, which seems to have been taken, save for a reference to State banking, from s. 91 (15) of the British North America Act 1867. It may be suspected that not much consideration was given to the material expressions borrowed. The form of the Canadian clause was doubtless in part the result of the experience of the neighbouring Union. Under the American Constitution the power to incorporate banks had been founded upon implication. The issue of paper money was there a contemporaneous question, one which was agitated for some years after 1867. It well may be that the framers of the Australian Constitution instinctively assumed that banking would not form a subject of prohibition, that it would be carried on by trading banks and that the relation of banker and customer would remain consensual. The assumption perhaps accounts for the form and content of par. (xiii.). But the assumptions made in framing a power and the restrictive intentions which it expresses or embodies are two very different things.
To my mind the argument is answered by the principles of constitutional interpretation which this Court adopted early in its history and from which, I believe, it has never intentionally departed.
They are well expressed in a passage from the judgment of O'Connor J. in the Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association [[446]] , at pp. 367, 368 which I shall quote:"Where it becomes a question of construing words used in conferring a power of that kind on the Commonwealth Parliament, it must always be remembered that we are interpreting a Constitution broad and general in its terms, intended to apply to the varying conditions which the development of our community must involve. For that reason, where the question is whether the Constitution has used an expression in the wider or in the narrower sense, the Court should, in my opinion, always lean to the broader interpretation unless there is something in the context or in the rest of the Constitution to indicate that the narrower interpretation will best carry out its object and purpose."
The foundation of these principles is expressed by Higgins J. in Attorney-General for New South Wales v Brewery Employees Union of New South Wales [[447]] , at pp. 611, 612 where he says, "although we are to interpret the words of the Constitution on the same principles of interpretation as we apply to any ordinary law, these very principles of interpretation compel us to take into account the nature and scope of the Act that we are interpreting-to remember that it is a Constitution, a mechanism under which laws are to be made, and not a mere Act which declares what the law is to be." His Honour proceeds to quote from Story, Commentaries. 2nd ed., s. 455: "While, then, we may well resort to the meaning of single words to assist our inquiries, we should never forget, that it is an instrument of government that we are to construe" [[448]] .
The purpose of the enumeration of powers in s. 51 is not to define or delimit the description of law that the Parliament may make upon any of the subjects assigned to it. Speaking generally, the legislative power so given is plenary in its quality. The purpose of the enumeration is to name a subject for the purpose of assigning it to that power. The names or descriptions employed are usually of the briefest kind. It is true that certain powers do involve a description amounting almost to a formal definition; examples are pars. (iii.), (xxiv.) and (xxv.), (xxxv.), (xxxvii.), (xxxviii.) and (xxxix.). But more often they are the most general names of general topics.
To borrow the words of Gray J. delivering the opinion of the Supreme Court in Juilliard v Greenman [[449]] , at p. 211]: "the Constitution ... by apt words of designation or general description, marks the outlines of the powers granted to the National Legislature; but it does not undertake, with the precision and detail of a code of laws, to enumerate the subdivisions of those powers, or to specify all the means by which they may be carried into execution."
The power with respect to banking seems to me a plain example of the designation of a broad subject without any indication of the means by which it is to be dealt with or of the existence of limits upon the description of laws to be made with respect thereto. To say that it is not a question of what limits there may be upon the description of legislation but of the definition of the subject to which they may be addressed, and that continuance is an attribute of the subject, is not, I think, a satisfactory answer. For the question is whether there should be extracted from the word "banking" and its content an intention that, among other things, it should continue, that it should remain consensual, or that it should be a matter between subject and subject. Such an intention narrows the definition of the subject in a way which reduces the area, not of relevance, but rather of legislative discretion or policy. Of course "banking" describes an activity which is carried on and in that sense continues. But no-one would feel that it was anything but an ordinary use of the word to say that a statute declaring that banking should no longer be carried on was a law about banking. It is as easy to explain the addition of the words "also ... the incorporation of banks and the issue of paper money" as made to remove any doubt and to insure that those subjects were included as to infer an actual intention that "banking" should have a restrictive or narrow construction.
For the reasons I have indicated, I am unable to accept the view that the word "banking" should have ascribed to it anything but the wide meaning and flexible application of a general expression designating, as a subject of legislative power, a matter forming part of the commercial economic and social organization of the community. I see no sufficient reason for importing into it any of the three limitations suggested, viz., (1) confining the power to laws for the governance of a continuing activity, to something that does not go beyond regulation, (2) the limitation of the conception of banking to transactions entirely consensual, and (3) to transactions between subject and subject.
While I reject this view, it does not follow that I am prepared to say that all that the Banking Act 1947 contains can be supported under the legislative power with respect to banking conferred by par. (xiii.) of s. 51, that is, of course, aided as to acquisition by par. (xxxi.) and as to the Court of Claims by Chapter III. of the Constitution. To give an example, there are peculiar difficulties with respect to the acquisition of shares, if s. 13 (2), (3) and (4) and s. 14 (1) are severed from the general plan and considered on their own basis. Again, with respect to more than one provision arguments were advanced that depend upon the supposed possibility of its applying to distinct businesses or transactions outside banking or to effect purposes said to be irrelevant to the banking power upon any construction that might be placed upon it. But these contentions I find it unnecessary to examine. Indeed, in the course of the elaborate argument, which covered a wide field and dealt piecemeal with the whole Act, very many points were made and contentions advanced that I am relieved from even mentioning by the conclusion I have reached.
While I reject the limitations it was sought to place upon par. (xiii.), I shall not attempt to state affirmatively what is the extent of the power it confers. To give an inclusive and exclusive definition of such a conception as banking is almost impossible. Dr. Walter Leaf begins his little book on the subject by saying that it is quite impossible; that the theory and practice of banking have varied from age to age and still vary from country to country. He does, however, bring himself to give a definition of English banking and defines a bank in terms of its deposit business, saying that a bank is a person or corporation which holds itself out to receive from the public deposits payable on demand by cheque. It will be noticed that here the emphasis is not upon the economic function fulfilled, but upon the description of business done. or, if it preferred, of the service performed. Whatever may be the indispensable characteristics of banking, it seems probable that, for the purpose of par. (xiii.), they should be sought rather in the relations between banks and those who use them than in a more abstract consideration of the true economic nature of the contribution made by banking to the monetary system and public finance of a country by banks. It is, however, enough for me to say that I do not adopt the reading of par. (xiii.) contended for, and that I find no ground for holding that if the Act must rest upon that power, and upon par. (xxxi.) in its application to par. (xiii.), it would fail in all its substantial provisions because of the insufficiency of par. (xiii.) to support it.
I turn to another contention which, if valid, would annihilate all the substantial parts of the Act. It is that the statute is invalid because its operation will produce an undue interference with the administration of State Governments. This attack was supported by the States who are plaintiffs: South Australia, Western Australia and Victoria. In an able argument counsel for Victoria took as an example the constitutional and statutory provisions of that State governing the course of financial administration. A consolidated public revenue and appropriation therefrom by law are required by the Constitution. The Audit Act provides for the payment of moneys forming part of the public revenue into banking accounts by all officers receiving such moneys. Under a contract between Victoria and the trading banks they provide banking facilities for the State to keep its public accounts and they allow interest on balances. The public account is fed by receivers of revenue and collectors of imposts and their receipts amount to PD55m. per annum. The accounts of receivers number some 300 and of collectors some 400. Further, to enable Victorian State servants to carry on particular departments or operations for which they are responsible, 700 advance accounts exist. These figures were given for the purpose of emphasizing the importance of the part played by the private banks in the State's financial administration. Counsel maintained that the operation of the Banking Act 1947 was calculated to defeat the course of administration pursued by the States with respect to the receipt and disbursement of money and to close to the States all banking facilities except such as might be provided by the Commonwealth Bank. This, it was said, amounted to an undue interference with or substantial curtailment of the performance by a State of its functions of government. Such an interference or curtailment, counsel contended, was invalid, even although it was attempted by a law which in point of subject matter might otherwise be connected with Federal power and even although the law did not discriminate against the States. It constrains the States to submit their funds to a Commonwealth agency, the Commonwealth Bank. Section 11 (a) was treated as illusory and no safeguard. A specific point was made of the operation of s. 24 (5) and of s. 46 (4) respectively. One transfers the States' credits at the trading banks to the Commonwealth Bank without the States' consent; the other would disable the State from operating by cheques upon the States' funds lying at the trading bank. It was said that the Banking Act 1947 was as much an attempt to control the States in reference to the use of banks in the administration of public moneys and public finance as was s. 48 of the Banking Act 1945, held void in Melbourne Corporation v The Commonwealth [[450]] .
No doubt, from the point of view of the States, no distinction can be seen between the effect which s. 48 of the earlier Act was calculated to produce upon the performance of State functions and that which would result from the exercise of the Treasurer's powers under the Banking Act 1947. In some ways, indeed, the position of the States might seem worse under the later Act. For it might be possible to set up and use State banks as part of the banking system that now exists in a way which might not be practicable if there were no trading banks. But a question whether the Commonwealth has gone beyond power by interfering with State functions cannot be determined by reference only to the consequences upon the States which Federal legislation in fact produces. Enactments of quite different descriptions may result in the same embarrassments to the States.
Section 48 of the Act of 1945 dealt specifically with the use by the States of the existing banking system. The Act of 1947 contains powers under which the existing banking system may be terminated and replaced by a government system. To forbid trading banks to bank for the States and to abolish trading banks are two different things, and the validity of a law for the one purpose must depend on different considerations from those governing the validity of a law for the other purpose. It is only by confining attention to the similarity of the consequences to the States, that it may seem that the test of validity ought to be the same.
I do not propose to discuss again the grounds upon which we based the decision that s. 48 of the 1945 Act is invalid. They are stated in the report of Melbourne Corporation v The Commonwealth [[451]] , and further discussion will make them no clearer. Indeed, I should have thought that the root principle was made clear enough in the passages in West v Commissioner of Taxation (N.S.W.) [[452]] , at pp. 681-683, 687, 698, 699, directing attention to it and that for the rest it was but a question of the specific application of the principle. The reason why I am unable to accept the argument advanced for the States under this head appears from a passage, part of which I shall repeat, from my reasons in the Melbourne Corporation Case [[453]] , at p. 84:"At bottom the principle upon which the States become subject to Commonwealth laws is that when a State avails itself of any part of the established organization of the Australian community it must take it as it finds it. Except in so far as under its legislative power it may be able to alter the legal system, a State must accept the general legal system as it is established. If there be a monopoly in banking lawfully established by the Commonwealth, the State must put up with it. But it is the contrary of this principle to attempt to isolate the State from the general system, deny it the choice of the machinery the system provides and so place it under a particular disability."
It is necessary for the purpose of the argument of the States to assume that the validity of the main provisions of the Act could be made out were it not for the effect it would produce upon the States. For otherwise there would be no point in it. That means, however, but for the position of the States, the question how and by what agencies banking may be carried on would be within the province of the Commonwealth Parliament. Once that question is settled for the whole community, the banking system which results is that which must serve the banking needs of the entire country.
It is open to the States, at all events in contemplation of law, under the exception of State banking, to provide for their own needs. But even if that were not so, the States would be bound to take the banking system as any general law, made in the exercise of Federal power, left it. Just as when the Federal Government desires to use or take advantage of anything the nature or character of which is determined by an exercise of the exclusive power of the State, it must take it as it finds it, so the States, when they avail themselves of services or facilities regulated or determined by Federal law, must accept it as part of the system enjoyed by the whole community. Such things are a consequence of the distribution of powers and stand apart altogether from some exercise of legislative power which singles out the States or which operates specially to impede them in their functions. Section 48 of the Act of 1945 discriminated against States and in that way singled out the States in order to curtail their freedom in using the general banking system. No doubt without discrimination laws applying to States may operate against them in such a way that it must be beyond Federal power to enact them. That is perhaps shown by the discussion in New York v United States [[454]] . But it is a question which lies outside such a case as the present where the law relates to the form to be taken by part of the established organization of the community affecting all alike. The variety of ways in which, as the Act is constructed, the powers might be exercised make a reservation necessary. Conceivably it might be possible to employ some of the powers, s. 46 (4)-(8) for example, for the purpose of requiring a bank, which upon compliance would be left untouched, to cease to transact State Government business. If such a use of them were made the principle of the Melbourne Corporation Case [[455]] would be encountered. But such an hypothesis, arising as it does only upon the form of the powers, does not go to the validity of the Act generally.
For the reasons I have stated, I think the attach upon the substance of the enactment as an invasion of State functions fails.
Somewhat analogous considerations appear to me to affect another independent ground taken for impugning the Act, a ground to which I next turn. It is based upon the Financial Agreement of 1927 (reprinted in consolidated form in Commonwealth Statutes 1944. p. 169). Section 105A of the Constitution gives the Financial Agreement paramountcy. By it the States submitted to the control of the Loan Council with respect to public borrowing. But the practice of borrowing upon overdraft for temporary purposes had been followed and had been found necessary in the ordinary course of the administration of government finances. By clause 5 (9) (a clause with which clause 6 (7) corresponds in the case of the Commonwealth) it is provided that a State may, amongst other things, borrow money for a temporary purpose by way of overdraft or fixed or other special deposit. This, it is contended, secures to the States a right as against the Commonwealth to borrow money on overdraft for temporary purposes and imports the existence of banks and a system of banking. Accordingly, it is said, the Commonwealth may not defeat the right by abolishing the system. Reliance is placed upon the judgments of Latham C.J. and Williams J. in Melbourne Corporation v The Commonwealth [[456]] , at pp. 62, 63, 101, as showing that the States obtained by means of the clause a constitutional right to go to a private banker for an overdraft without the consent of anyone. That being established, so counsel contend, it makes no difference whether the impairment or denial of the right takes the form of a prohibition upon a bank doing business for a State without the consent of the Commonwealth Treasurer, as under s. 48 of the Banking Act 1945, or a prohibition upon a trading bank doing business at all, as under s. 46 of the Banking Act 1947, or a total destruction of the private banks.
The argument depends upon the interpretation of the Financial Agreement and the effect to be ascribed to it. I think that the argument imports into the agreement more than was intended by the parties to it. The agreement doubtless assumes a banking system to which the States, and for that matter the Commonwealth might resort to borrow by way of overdraft. But I do not think that it implies, much less expresses, anything as to the form the system is to take. If the clause confers upon the States any constitutional right, as against the Commonwealth, to borrow by way of overdraft, I should put it no higher than a right to seek an overdraft from whatever banking institutions are from time to time provided or permitted by law and are conducting banking business.
Two further grounds of attack were made which, if sound, while they would not affect s. 46 (4)-(8) unless held inseverable, would otherwise bring down all that matters of the Act. They both depend upon the requirement of s. 51 (xxxi.) that compulsory acquisition must be upon just terms. The first of them arises from the failure of the Banking Act 1947 to indicate in any way the source of the compensation moneys, which, it is said, must amount to PD100m, at least if all the banks are to be compensated. The Financial Agreement makes the consent of the Loan Council necessary for it to be done by borrowing and an examination was made by counsel of other resources lawfully open with a view of showing that nothing but an expansion of the note issue or an equivalent expansion of credit would make payment of the compensation possible. This, it was argued, would mean a considerable depreciation of the money in which compensation was paid. The value of the assets would be estimated as at a time before the depreciation and the monetary expression of the compensation would at once be deprived of its value. I do not think that it is an answer to this argument to fall back upon the nominalistic principle, according to which English law disregards all fluctuations in the "value" of money expressing or measuring an obligation. We are concerned with just terms of acquisition and if it were true that the terms of acquisition necessarily involved the valuation of assets in terms of money which would lose its value as a result of the very transaction involved in compensating the owners, I should have thought the constitutional requirement had not been fulfilled. It seems to me that the scope of the nominalistic principle of our law does not go beyond questions concerning the discharge of obligations expressed in money. The money of account measuring an obligation, because it is the money denominated, is conclusively identified by the nominalistic principle with the money which at the time of payment suffices to discharge an obligation of the stated amount, or to ascertain it for the purpose of discharge, without any regard to changes in exchange value or purchasing power. Just terms do not mean that compensation must necessarily stand at one end as an obligation fixed in monetary expression so that all that need be inquired into is what money at the other end will discharge an obligation so expressed. That is to separate the steps by which just terms are afforded; indeed, in strict logic it means that justice is satisfied by the assessment of an amount independently of the question whether the actual payment is commensurate with the deprivation suffered.
Nor do I think that it is correct to say that courts cannot inquire into such matters. There are few, if any, questions of fact that courts cannot undertake to inquire into. In fact it may be said that under the maxim res iudicata pro veritate accipitur courts have an advantage over other seekers after truth. For by their judgment they can reduce to legal certainty questions to which no other conclusive answer can be given. In the Banco de Portugal v Waterlow & Sons Ltd [[457]] an example is to be found of a judicial inquiry into the effect of an increased issue of notes.
But to support the conclusion that a statute providing for compensation does not afford just terms because an assessment of compensation would necessarily be followed by a discharge of the compensation in depreciated money, it surely is not enough to suggest as a matter of argument that, because of the existing condition of statute law, no course is legally open but to increase the note issue, and then to appeal to common knowledge as to the effect upon the "value" of money. It would, I should imagine, be necessary completely to satisfy a court of the legal, factual and economic considerations which made it inevitable that the very transaction involved a substantial depreciation of the money in which, as at an anterior time, compensation was to be expressed, so substantial as to violate any conception of the justice of the terms. In my opinion no sufficient foundation has been established for the support of the argument.
The second ground upon which the statute was impeached for failure to provide just terms of acquisition as required by s. 51 (xxxi.) is that the Court of Claims is unable to award interest upon the compensation, or to give costs. Once an award of compensation has been made the judgment or order of the Court will carry interest calculated from the date when it is pronounced. But it is contended that, as the Act is drawn, the amount assessed as compensation cannot include or carry interest calculated from the date of acquisition upon the value of the assets acquired. Upon this footing it is claimed that, over a very long period, the Commonwealth Bank may be left in possession both of the business of a private bank and of the purchase money. For it need pay nothing on account of compensation before the amount is assessed. Thus the profits of the business would belong to the Commonwealth Bank and yet, so it is said, no liability for interest in the meantime is imposed and none can be imposed by the Court of Claims. Thus, it is asserted, there is a failure to provide just terms and all the provisions for compulsory acquisition must fail. The jurisdiction of the Court of Claims is simply "to hear and determine claims for compensation" (s. 33 (1)). When shares are acquired or businesses taken over, the right given is simply to compensation or fair compensation (ss. 15, 25, 40, 42, 44). In Swift & Co v Board of Trade [[458]] the House of Lords made it clear that compensation and interest upon the value of the property acquired from the date of possession are two different things. A bare right to compensation does not imply interest in the meantime. Where the principles of equity apply to a compulsory acquisition, as they do when a notice to treat is given in respect of land and the acquiring authority enters into possession, these principles may give interest on unpaid "purchase money," that is compensation, even if unascertained. But that is because the relation of vendor and purchaser is established and specific performance might be decreed. A difference exists, however, between compensation for the loss of property and interest as compensation for the time occupied in assessing the loss. That is pointed out by Lord Cave L.C. and by Lord Sumner [[459]] .
But under the Fifth Amendment of the Constitution of the United States, which provides that private property shall not be taken for public use without just compensation "it has consistently been held that the Fifth Amendment's reference to `just compensation' entitles the property-owner to receive interest from the date of the taking to the date of payment as a part of his just compensation": United States v Thayer-West Point Hotel Co [[460]] , at p. 525]. Nevertheless, in the United States the word "compensation" has no prima-facie meaning that covers interest. "The fact that `just compensation' includes interest in the eminent domain setting does not necessarily mean that the term must be given the same scope in other situations ... in the absence of constitutional connotations, `just compensation' is not a term of art so far as interest is concerned" [[461]] . The contention on the part of the plaintiffs is that in our s. 51 (xxxi.) "just terms," like "just compensation" in the United States Constitution, imposes a requirement that cannot be fulfilled unless interest is given upon compensation from the date when possession is taken by the acquiring authority until compensation is actually paid. But, at the same time, it is contended that in conformity with the view taken in the House of Lords and with the natural meaning of the word "compensation," the right to compensation given by the Banking Act 1947 and the jurisdiction conferred to determine claims for compensation does not authorize an allowance of interest. It was suggested for the Commonwealth that the dilemma thus constructed was not complete, because the acquisitions authorized by the Act would fall within the cognizance of a Court of Equity as transactions in respect of which relief by way of specific performance might be given. But the answer made to this suggestion seems to be correct, namely, that first the Court of Claims has no equitable jurisdiction, secondly the instantaneous acquisition of property and immediate vesting of a right to compensation obtainable by prescribed steps leaves no room for the remedy of specific performance and thirdly that the case would not be within the competence of a jurisdiction in equity. In this Court the questions how far interest can be given as or upon "compensation" and what is the bearing of s. 51 (xxxi.) upon statutory provisions for "compensation" and "recompense" in that connection are matters that have been much discussed, and varying opinions have been adopted.
It is enough to refer to the consideration of the subject in The Commonwealth v Huon Transport Pty Ltd [[462]] , at pp. 303-305, 307-311, 315, 323-329, 333-338; Minister of State for the Navy v Rae [[463]] , at pp. 348, 349; Marine Board of Launceston v Minister of State for the Navy [[464]] and Grace Bros. Pty Ltd v The Commonwealth [[465]] at pp. 281-283, 286, 293, 296, 300.
I shall not repeat the views I expressed in those cases. In the United States the answer that would be given to the argument advanced for the plaintiffs is that in the setting in which the word "compensation" occurs in the Banking Act 1947 it has a "constitutional connotation": if, therefore, justice demands interest in the circumstances, the word covers it. There is much to be said for making the same answer here under s. 51 (xxxi.). But on the whole, in view of the less flexible meaning of which in English law, judging from the decision in Swift's Case [[466]] the word seems capable. I prefer the answer which I suggested in the Huon Transport Company's Case [[467]] . The passage is as follows: "Our Constitution, when it refers to `just terms,' is placing a qualification on the legislative power it bestows to acquire property compulsorily. But it is, I think, difficult to say that it makes it necessary for the legislature to give more than the full content of `compensation', as compensation is understood in English law, and we know from the House of Lords that a right to interest on the amount payable for the thing is not always or necessarily included. Section 51 (xxxi.) has not the effect of transferring into our Constitution the Fifth Amendment, nor all the glosses placed upon it."
On either view, however, the argument fails.
The further point is made that the terms are unjust because the Court of Claims cannot award costs. I am not altogether satisfied that an award of costs is beyond the powers of the Court. But in any case I cannot think that such an omission would bring the statute into necessary conflict with s. 51 (xxxi.).
From these more general grounds of attack upon the Banking Act 1947 as a whole, or upon the substantive or operative parts of it, I shall now pass to the consideration in detail of some grave difficulties which three sets of provisions respectively raise. They are contained in (1) Part IV., Divisions 2 and 3; (2) Part VI., Divisions 1 and 2; and (3) Part VII. I shall deal in that order with the provisions in question.
In Divisions 2 and 3 of Part IV. of the Banking Act 1947 elaborate provision is made enabling the Treasurer to set in motion machinery for vesting in the Commonwealth Bank the Australian shares of an Australian Banking company, for displacing the directors in favour of nominees of the Commonwealth Bank, and for entrusting the latter with the entire conduct and management of the company, including the disposal of its business. From these provisions and from the possible uses in relation to them of s. 22, s. 46 (4)-(8) and ss. 43 and 44, a pattern of powers results which may fairly be described as intricate. It is aimed at enabling the Commonwealth Bank by means of nominees to assume control of the business of an Australian bank without necessarily invoking the power for compulsorily acquiring the business, which would mean an assessment of the compensation for the whole undertaking. The exercise of these powers would necessitate dealing directly with the shareholders as such, some, presumptively the greater number, by acquiring their shares and compensating them, others perhaps as contributories in an ultimate liquidation.
I have formed the opinion that the provisions are bad because they would enable the Treasurer and the Commonwealth Bank to defeat the constitutional requirement imposed by s. 51 (xxxi.) that the acquisition of property shall only be upon just terms. This conclusion, the grounds for which I shall now state, would, if it were not for s. 6, affect with invalidity not only Division 3, but also the more important of the provisions of Division 2. For an examination of the provisions of the two Divisions shows that they form an interconnected plan in which the compulsory acquisition of shares is necessarily accompanied by the replacement of the directors with nominees. But s. 6 must be applied, and out of its application some further questions arise with which I must afterwards deal. In stating why I think that these provisions amount to a law for the acquisition of the property comprised in the business of a bank against which the Treasurer may direct them, I shall begin by describing the effect of the provisions.
They relate only to an Australian private bank, an expression which by definition means one of the bodies corporate named in the First Schedule: s.5. A condition of the operation of the provisions upon such a banking company is that the Treasurer is of opinion that a majority of the shares is situated in Australia: s. 13 (1) and s. 5. In fact the very great majority of the shares of each of the Australian private banks is at the present time upon the Australian share register and therefore situated in Australia, a proportion ranging from seventy-five per cent in the case of the Bank of New South Wales to the whole in the case of the Bank of Adelaide, the Ballarat Banking Co Ltd and the Brisbane Permanent Building and Banking Co Ltd But one curious feature of the Banking Act 1947 is that it is so drawn that not only may any of the powers it is expressed to confer be exercised singly and moreover in relation to one bank alone, but they are of indefinite duration, so that the time when any one of them is called into operation may be indefinitely postponed. In point of law, therefore, whatever may be the intention of the Executive as to the time and manner of the exercise of powers, the present state of facts cannot control any question of the operation and validity of the statute. It is not perhaps a matter of much importance because, although the opinion of the Treasurer that a majority of shares is situated in Australia is not examinable, it is hard to suppose that he would form such an opinion erroneously. Being satisfied of the fact, he may publish a notice in the Gazette vesting in the Commonwealth Bank all the Australian shares in the Australian private bank as from a specified date. Any date may be chosen, neither a minimum nor a maximum length of notice is prescribed. In any case the Treasurer may from time to time amend his notice by naming a later date: s. 13 (1) and (2). When the date arrives all the Australian shares are, by force of the Act, to be vested in the Commonwealth Bank: s. 13 (3). Further, the Commonwealth Bank is to become the shareholder for all purposes and is to be a member of the banking company, notwithstanding any provisions in that company's articles or charter: s. 14 (1) and s. 10. It has been pointed out that before the notice takes effect it may have ceased to be true that a majority of shares is situated in Australia and that nevertheless the notice would operate to vest such shares, if any, as continued to be situated here.
But, again, that does not seem to me to be of much importance. On the other hand, a provision is made for the possibility of shares that are situated out of Australia, when the notice takes effect, afterwards obtaining an Australian situation. Upon that happening the shares at once vest in the Commonwealth Bank. Upon the vesting of shares the Commonwealth Bank becomes the shareholder and a member of the company in respect of the shares, notwithstanding any provisions of the articles of association or charter: s. 14 (1) and s. 10. Compensation is, of course, to be paid for the shares that vest in the Commonwealth Bank: s. 15 and ss. 37-40.
The directors and officers of a private bank are required, under heavy penalty, to do and join in doing all acts or things necessary or convenient to do for or in relation to the acquisition under the Act of any shares in a private bank: s. 60 (1) (b). This doubtless would cover the placing of the Commonwealth Bank on the share register. The provision overruling the articles in the foregoing respects would be not unimportant practically because all the private banks have articles restricting or qualifying the right of transfer, either by interposing the discretion of the directors or by limiting the number of shares that one member may hold or, in the case of the Bank of New South Wales, by confining membership to natural persons.
Another provision that would be necessary if the private bank in which the shares are acquired is to carry on business as a separate entity, is s. 21, which purports to exclude the operation of so much of the State Company law as attaches consequences to the number of members falling below a specified figure, e.g. the liability of the continuing members after six months to the debts of the company and the liability of the company to winding up, which under Victorian law arises when the number of members falls below five. Upon the day the gazetted notice has fixed for the vesting of the shares the directors of the company go out of office, receiving compensation: s. 17. Thereupon the Governor of the Commonwealth Bank, with the approval of the Treasurer, appoints directors in their place, including a Chairman: s. 18. They hold office notwithstanding any lack of qualification or any disqualification: s. 18 (2). But they are removable by the Governor of the Commonwealth Bank with the approval of the Treasurer: s. 33 (4) of the Acts Interpretation Act 1901-1941. In the directors so appointed is placed full power to manage, direct and control the business and affairs of the private banking company: s. 19 (1). The exercise of any such power is to be in their sole discretion: it is not to be subject to any qualification, restriction or condition provided by or under any law, charter or other instrument relating to the exercise of the powers of the directors of the private banking company: s. 19 (3). There is some dispute as to the extent of this exclusion, that is to say, whether it excludes the principles or rules of law and equity which control directors in the exercise of their powers or only written enactments and provisions of the company's charter or articles. It is a point of small moment. I should think. For, in any case, a very full statutory discretion is given to the nominee directors in the exercise of statutory powers as wide as, and perhaps even wider than, the company's corporate powers. Short of dishonesty it is difficult to see on what ground they could be controlled. But perhaps the words "or other instrument" make it proper to understand the exclusion as operating only upon what may be called the lex scripta of the company and not upon the lex non scripta, though the distinction must in some respects be difficult to maintain. Theoretically it may remain necessary that they should remember the shareholders and the creditors in making their decisions, but practically they would be a body of administrators appointed by and removable by the Treasurer and the Governor of the Commonwealth Bank in combination and designated for a provisional task which, humanly speaking, they could hardly be expected to consider otherwise than as one to be executed in furtherance of governmental policy. The wide general power with which the nominee directors are invested is followed by a particular statement of three specific powers, viz., (a) to declare dividends; (b) to dispose of the business in Australia of the Australian private bank to the Commonwealth Bank; (c) to dispose of all or any other business of the Australian private bank. As the general power invests the nominee directors with what seems to be the full capacity of the banking company to which they are appointed, the particular powers probably add nothing; but apparently they are, as so often, mentioned specially to avoid any doubt. It will be noticed that a combination of the second and third of the powers would cover the disposal to the Commonwealth Bank of the entire business of the private banking company both within and beyond Australia. Further, if any of the Australian private banking companies should develop an additional and separate business falling outside the conception of banking, as it is suggested they might do in some events arising from the operation of the Act, then, unless the powers were read down artificially, they would cover that business. The nominee directors would, I think, be subject to s. 22 so that, if a notice were given to the private banking company inviting it to make an agreement with the Commonwealth Bank for the taking over by the latter of the business of the former, the nominee directors might comply with it within the specified time or might, by failing so to agree, deprive the shareholders of the taxation benefits which under s. 23 ensue from agreeing. An argument to the contrary was based on the apparent incongruity of s. 22 (8) (c) and (d) and of s. 22 (7) with the words of s. 19 (1) (b) "the business in Australia." But exactly the same words occur in s. 22 (1) and (5) to which s. 22 (8) is epexegetical. Further, sub-par. (c) of s. 19 (1) covers a provision under s. 22 (7), even if the general power is not enough. There seems to me to be no incompatibility between the direction in s. 19 (2) requiring the approval of the Treasurer after a recommendation of the Governor of the Commonwealth Bank and that in s. 22 (5) requiring the approval of the Treasurer. The latter is of general application and includes all banks, English as well as Australian and is concerned with the purchaser's side. Any other view of the relation of s. 19 (1) (b) and (c) would exclude ss. 23 and 49 and following from an agreement made thereunder. The nominee directors might also be encouraged to make an agreement by a notice under s. 46 (4) to cease carrying on banking business. Further, under s. 43 (1) the nominee directors might agree on the compensation for the taking over of the business or under s. 44 (3) they might fail to require the Commonwealth Bank to refer the claim to the Court of Claims and conclude the private banking company by a course of inaction which, assuming the provision to be valid, causes the Commonwealth Bank's offer to be deemed to have been accepted.
From the foregoing account of the material provisions of Divisions 2 and 3 of Part IV. and the relation thereto of ss. 22, 46 (4) and 43 (1) and 44 (3), it will be seen that a notice by the Treasurer under s. 13 (1) operates to set in motion a process which expropriates the shares localized in Australia and at the same time displaces the authority over the affairs of the company, not only of the directors chosen by the shareholders, but of the shareholders themselves. It places all the property and all the activities of the company under the supreme control of the nominees of the Treasurer and the Bank and leaves them in entire control indefinitely with complete powers of disposition and complete power to bind the company as to the recompense it will receive for its assets. The corporate entity of the company remains and in it the legal property in the assets continues to reside. Shareholders are entitled to dividends if the nominees see fit to declare any. In a winding up, if there be one, shareholders remain entitled to participate as contributories. But in all other respects the beneficial enjoyment and control of the undertaking has been placed in the hands of agents of the Commonwealth, or of the Commonwealth Bank if the distinction is insisted on and in this matter can be clearly maintained. The purpose of removing the directors appointed by the shareholders and replacing them with nominees of the Treasurer and of the Governor of the Bank is that agents of the Commonwealth may take command of the undertaking of the banking company and carry it on in the public, as opposed to private, interests pending decisions, in which they will play a part, concerning the acquisition of the assets by or their disposal to the Commonwealth Bank, the settling of the amount of compensation or the purchase price, and the transfer of the staff. The purposes of the whole operation authorized by Division 3 appear to me to be public. No doubt there is no interference with the ultimate right of the shareholders as contributories in a winding up to receive as a component of the distributable surplus so much profit as may have been earned under the regime of the nominees and as they have not chosen to distribute as dividend. But that and the legal conceptions involved in the continuance of the corporate existence of the banking company as the repository of the title to the undertaking is all that is left. In other words the undertaking is taken into the hands of agents of the Commonwealth so that it may be carried on, as it is conceived, in the public interest. The company and its shareholders are in a real sense, although not formally, stripped of the possession and control of the entire undertaking. The profits which may arise from it in the hands of the Commonwealth's agents are still to be accounted for and in some form they will be represented in what the shareholders receive. But the effective deprivation of the company and its shareholders of the reality of proprietorship is the same. It must be remembered that complete dispositive power accompanies the control of the assets which passes to the nominees. It is as if an intending purchaser were enabled to put a receiver in possession of an estate and also to take a power of sale in the receiver's name, remaining however accountable, until he pays the purchase money, for the rents and profits, which nevertheless he may apply towards the upkeep of the property and, subject thereto, accumulate.
Upon consideration I have reached the conclusion that this is but a circuitous device to acquire indirectly the substance of a proprietary interest without at once providing the just terms guaranteed by s. 51 (xxxi.) of the Constitution when that is done.
I take Minister of State for the Army v Dalziel [[468]] to mean that s. 51 (xxxi.) is not to be confined pedantically to the taking of title by the Commonwealth to some specific estate or interest in land recognized at law or in equity and to some specific form of property in a chattel or chose in action similarly recognized, but that it extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property. Section 51 (xxxi.) serves a double purpose. It provides the Commonwealth Parliament with a legislative power of acquiring property: at the same time as a condition upon the exercise of the power it provides the individual or the State, affected with a protection against governmental interferences with his proprietary rights without just recompense. In both aspects consistency with the principles upon which constitutional provisions are interpreted and applied demands that the paragraph should be given as full and flexible an operation as will cover the objects it was designed to effect. Moreover, when a constitution undertakes to forbid or restrain some legislative course, there can be no prohibition to which it is more proper to apply the principle embodied in the maxim quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud. In requiring just terms s. 51 (xxxi.) fetters the legislative power by forbidding laws with respect to acquisition on any terms that are not just.
In my opinion the provisions of s. 13 (1) and ss. 17, 18, 19 amount to an indirect means of doing what the paragraph does not allow.
It may be true that a probability amounting nearly to a certainty exists that if a notice under s. 13 (1) takes effect at least a majority of shares in the banking company against which the provision is employed will vest in the Commonwealth Bank. But unless all the shares so vest, interests will remain outstanding in the other shareholders which are sufficient to exclude the answer that substantially the undertaking passes to the Bank as shareholder under s. 13 (3) and therefore that what is done under ss. 17-19 does not matter. Nor is this point met, as it appears to me, by saying that once the nominee directors are established in office they may close the share registers abroad and place the shares upon the Australian register and so give the shares a situation in Australia, in consequence of which they will vest in the Commonwealth Bank pursuant to s. 13 (4). The nominees are not compelled to do so and they may prefer not to do it. At all events until they do so there will be outstanding interests that make it useless for the Commonwealth to attempt to "lift the veil" which the distinct personality of the private bank as a corporation places between the shareholders and the ownership of the undertaking. The foregoing examination of ss. 13 (1), 17, 18 and 19 is concerned with their operation in placing agents of the Commonwealth or of the Commonwealth Bank in control of the undertaking and arming them with powers. From that point of view I think they amount to an attempt to defeat the operation of s. 51 (xxxi.). But the powers of disposition given by s. 19 are themselves open to independent attack under s. 51 (xxxi.). They are exercisable in favour of the Commonwealth Bank. When they are so exercised the Commonwealth Bank will acquire the Australian business of the private banking company in respect of which s. 13 (1) has been invoked or perhaps the whole undertaking of that company. It will do so on terms agreed between the nominees whom the Governor of the Commonwealth Bank has appointed with the approval of the Treasurer. Further, if the Treasurer gives a notice under s. 22 (1) and, whether before or after that notice, the nominees are appointed in consequence of a notice given under s. 13 (1), the nominees may make an agreement under s. 22 (5), or they may suffer an acquisition under s. 24 (4) and agree on the compensation under s. 43 (2), or fail to request a reference to the Court of Claims under s. 44 (3) and so accept the offer of the Commonwealth Bank. I cannot see how the powers of the nominees under s. 19 can be reduced by any process of interpretation based on s. 6 so as to avoid all or any of those positions.
In my opinion each of them involves a conflict with s. 51 (xxxi.).
In each case the amount payable by the Commonwealth Bank for the assets of the private bank is left to the judgment of the nominees of the Commonwealth Bank. However high may be the level to which their legal duty may be raised, even if they be treated as full fiduciaries for the creditors and shareholders, it is all left to their judgment. In every case the acquisition by the Commonwealth Bank should, in my opinion, be regarded as on the side of the company an involuntary disposition. For it would, I think, be quite wrong for the purposes of s. 51 (xxxi.) to separate out the steps by which it is accomplished and exclude from consideration the compulsory superseding of the company's directors chosen by the shareholders and the substitution of nominees of the Treasurer and the Governor. The fact that these officers may be free to act according to their own discretion in disposing of the company's assets or in binding it to an amount of purchase money as compensation, appears to me to be nothing to the point. They are not agents appointed by the company. Any relation of agency on behalf of the company is compulsory and the work of statute. Their appointment would have been against the authentic will of the company. In substance they are agents of the Commonwealth armed by statute with power to bind the company. I think that the powers conferred by s. 19 involve a conflict with s. 51 (xxxi.).
An argument was advanced to the effect that s. 19 (1) (b) and (c) might be held bad and severed from the rest of the section and from Division 3. This contention must encounter the difficulty that the general words of s. 19 necessarily enable the nominees to dispose of the assets of the private bank and the further difficulty that it is under them that the nominees would bind the private bank to an amount of compensation. No doubt sub-s. (2) of s. 19 provides a cogent argument against the doing under the general words of the very thing mentioned in paragraphs (b) and (c) of sub-s. (1). But those paragraphs relate to disposing of the business in Australia and the business elsewhere as going concerns.
I cannot see how by any manipulation the general power in s. 19 (1) can be so reduced as to include no power of disposing of any assets to the Commonwealth Bank or any other organ of the Commonwealth and no power of agreeing upon purchase money pursuant to s. 22 or binding the private bank in respect of compensation under ss. 43 and 44.
Further, if s. 19 were eliminated by some application of s. 6, the nominees would still be directors and enjoy whatever powers the constating instruments of the particular company gave its directors. These, in the case of most of the Australian banks, are of the widest description.
It appears to me to follow that s. 18 must also be treated as bad and as it is quite impossible to treat the removal of the directors under s. 17 as independent of their replacement by nominees under s. 18, s. 17 must fall also. The fate of s. 20 is doubtless immaterial but obviously it cannot survive the invalidity of ss. 17-19.
A curious and difficult question then arises concerning the operation of s. 6 in respect of s. 13. It is a question which turns in some measure upon the source of the positive power which, independently of the limitation expressed by the requirement of just terms, would support Divisions 2 and 3.
So far I have discussed the validity of Division 3 upon the assumption that, but for a conflict with that requirement, it would or might amount to an exercise of the legislative power of the Commonwealth. Division 2 contains in s. 13 an acquisition of property, namely shares, which of course must be supported under s. 51 (xxxi.) or not at all. But s. 51 (xxxi.) is itself dependent upon other legislative powers, in the sense that the acquisition upon just terms "with respect to" which it authorizes the making of laws must be for a purpose "in respect of which the Parliament has power to make laws." Now, if the provisions of s. 13 and ss. 17-19 had not been in conflict with the requirement of just terms or any other similar general limitation or check upon legislative power and their validity had depended only upon their falling under some head of affirmative power, I think that I should have felt no great difficulty. For, if it were possible to take them together and consider them as forming an entire plan, coherent and connected, then I think that, having regard to the interpretation of s. 51 (xiii.) I have adopted, I would hold that together s. 13 and ss. 17-19 were enacted for the purpose of that power and were therefore justified by s. 51 (xiii.) and (xxxi.) in combination. The reason for such a conclusion is that the provisions appear to be directed to establish a control of a banking business or businesses by, in effect, government nominees and as a concomitant of that control to acquire the Australian shares in the bank affected. The same notice on its gazettal under s. 13 (1) accomplishes at one blow a double purpose. It displaces the directors and thus removes all control by the agents of the shareholders, and for that matter all control by the shareholders themselves; at the same time it vests the Australian shares in the Commonwealth Bank. The purpose of so vesting the shares cannot be to give control through the voting strength they confer. For under ss. 17-19 all control by the shareholders and their chosen directors ceases. The nominees take charge and shareholding ceases to carry with it any means of affecting the management of the business or the choice of those whose responsibility it is. A shareholder from then on has no more significant place than a debenture-holder, if a place as significant. The Australian Banks are, as the heading of Part I of the First Schedule indicates, all incorporated in Australia, some under the law of one State, some under the law of another. It is not clear to me why s. 13 (1) was framed so as to require that the Treasurer should be satisfied that a majority of the shares are situated in Australia before he exercised the power it gives him. But I suppose it was felt that the acquisition of a majority of shares gave moral support for the steps prescribed by ss. 17-19. Perhaps also it facilitated the transition and led to less disturbance among investors. Constitutionally it does not seem to matter whether the Australian shares taken were a minority or whether no shares at all were taken. The reason could not have been in order that through a majority of shares control of the business of the company might be obtained. For in the first place a majority would not give control or even influence over the conduct of the business having regard to the articles or charter of most of the Australian Banks and, what is decisive, control was given by ss. 17-19 and in a manner inconsistent with the possession of shares or membership continuing to have a bearing upon any such question. But the acquisition of the Australian shares in a bank to which ss. 17-19 is applied would be a natural corollary and would form a relevant part of the plan, the whole of which would form a purpose for which laws could be made under par. (xiii.) of s. 51, and so under par. (xxxi.). What is material is that the basis of the plan is the control effected by ss. 17-19. That gives not only the foundation upon which the plan is based in point of purpose, but also that upon which it is justified as an exercise of affirmative constitutional power, by which I mean legislative power considered for the moment independently of just terms. Conclude, however, that ss. 17-19 are void as conflicting with just terms, as in my opinion they do. Then what becomes of the plan as an integral part of which s. 13 derived its constitutional support? Plainly it disappears. Section 13 stands as a mere acquisition of shares. It loses its place and its purpose as a concomitant of a change of control over the undertaking and must assume a new character. If it can be supported now as directed to an end within s. 51 (xiii.) and therefore one for which the legislative power of acquisition may be exercised, it must be in virtue of this new character. The relevance of a bare acquisition of shares to a power to make laws with respect to banking and for the acquisition of property for that purpose was sought in more than one possible relation. Influence upon policy: information as to policy: investment: these were some of them. I am not disposed to deny that in some circumstances these purposes may suffice to bring an acquisition of bank shares under this power. But in all cases where it is sought to connect with a legislative power a measure which lies at the circumference of the subject or can at best be only incidental to it, the end or purpose of the provision, if discernable, will give the key. Here it is only by shutting out Division 3 from view that it could be supposed that any of the suggested purposes was contemplated by Division 2. In its full setting to ascribe to s. 13 the purpose of providing the Commonwealth Bank with a suitable investment for its funds would be absurd. No less absurd would it be to attribute a purpose of placing it in the position of a shareholder in order to acquire information, to vote at meetings, or to influence the directors. The truth is that in its context there was only one real ground upon which s. 13 was relevant to the power and that ground has failed with the context. Can s. 6 not only require that provisions, although prima facie interdependent, should be construed as divisible and be separated accordingly, but also supply a new scope and object to the separated provision, a new purpose or relevance or, in other words, place it upon a fresh constitutional basis? It is to this question that I referred when I said that there arose concerning the operation of s. 6 in respect of s. 13 a curious and difficult question. My answer to it is that if s. 13 is to be segregated from ss. 17-19 in obedience to s. 6, it still remains necessary to refer it to the same constitutional basis of power. It is not open to ascribe fresh purposes to it, find another possible relevance to the subject. To do so would mean giving the provision a new operation for the purpose of saving it. It will be necessary to discuss a similar question more fully at a later point in this judgment where it is more convenient to deal with it. In the meantime, it is enough to say that s. 6 makes the fact that it would receive a different operation not inconsistent with severance: but that is altogether another thing. In my opinion s. 13 (3) was not enacted either to enable the Commonwealth Bank to vote at meetings, or to receive or obtain the information to which a shareholder is entitled about the business of the company or otherwise to influence the conduct of the business by the directorate chosen by the shareholders. Nor was it enacted to provide an investment for the Commonwealth Bank. It was enacted as part of a plan aimed at the immediate control and ultimate absorption of the business and has no other constitutional purpose relevant to power. It must therefore fail with the plan. To place s. 13 (3) on any other basis would amount to "transforming it into one to which the Legislature has not given its assent," to use the words of Duff J. in delivering the reasons of the Privy Council in Attorney-General for Ontario v Reciprocal Insurers [[469]] , at p. 346.
I am of opinion that s. 13 is void and, of course, s. 14 (except so far as it relates to shares purchased), s. 15 and s. 16 have no basis but s. 13. It follows that Part IV., Division 2, except s. 12 and so much of s. 14 as relates to it, is invalid. I shall not stop to consider what remains of s. 14, for it hardly arises for separate consideration.
I shall proceed to deal with the validity of Part VI., Divisions 1 and 2, as they are affected by s. 75 (iii.) of the Constitution and, as part of the same matter, I shall go on to consider what consequences ensue from a conflict between those Divisions and s. 75 (iii.).
The Court of Claims is erected by Part V. as a superior court of record in which is vested part of the judicial power of the Commonwealth. The Parliament has created it pursuant to s. 71 of the Constitution and has defined its jurisdiction pursuant to s. 77. The jurisdiction of the court is to hear and determine claims for compensation under the Act (s. 33 (1) of the Banking Act 1947), a jurisdiction which covers, not only the ascertainment of the amount of compensation in respect to the shares or assets acquired, but the determination of the question who are entitled to be paid as interested parties (cf. s. 40 (4)-(8) and s. 38 (1) of the Banking Act 1947).
Both the ascertainment of the amount of, and the decision of the title to, compensation are thus treated as matters to be dealt with under the judicial power; and, whatever views may be held about the necessity of so treating the former of these two questions, there can be no doubt that the latter forms a claim of right which constitutionally cannot be determined conclusively without recourse to the judicial power.
The power to define the jurisdiction of a Federal Court which is given by s. 77 (1) of the Constitution is confined to the nine matters of original jurisdiction enumerated in ss. 75 and 76. There can be no doubt, however, that claims for compensation are covered by the enumerated matters. The nine matters are not mutually exclusive categories and any given claim of right may fall within more than one of them. If a claim for compensation is not within s. 75 (iii.) as a matter in which the Commonwealth or a person being sued on behalf of the Commonwealth is a party, and that in the view I take is one of the cardinal questions in this part of the case, it would at least be a matter arising under a law made by the Parliament, namely under the acquisition provisions of the Banking Act 1947. But it is an aim of Part VI. to confine to the Court of Claims the entire jurisdiction to determine claims for compensation under the Act and much care and, indeed, ingenuity have been expended to secure that object. Section 77 (ii.) contemplates laws defining the extent to which the jurisdiction of a Federal Court shall be exclusive, but it is careful to limit the power to make such a law so that the Parliament may exclude only the jurisdiction of State Courts and not the jurisdiction of other Federal Courts. In the absence of any power positively to exclude the jurisdiction of other Federal Courts, which in effect means the High Court, for there is no other relevant Federal Court, the Act has been drafted with a view first to give claims for compensation a character placing them outside the descriptions of matters mentioned in s. 75, which confers original jurisdiction on the High Court, and second to provide a procedure for making and settling claims which will ensure that they do not get into the High Court. What is relied upon as placing claims for compensation outside the jurisdiction conferred by s. 75 (iii.) upon the High Court is that the liability to pay compensation is imposed upon the Commonwealth Bank in the first instance and not upon the Commonwealth itself, which is made liable only as a guarantor (ss. 15, 25, 40 (7), 45 of the Banking Act 1947 in combination and s. 61).
The procedure which, if valid, would, in the case of claims for compensation for the acquisition of assets, operate to ensure that the claims could not be put forward in the High Court, is prescribed by ss. 43 and 44. These provisions are governed by s. 42, which says that compensation in respect of the acquisition of assets shall be ascertained in no other manner. The effect of ss. 43 and 44 is, in default of agreement, to require the private bank to make a claim in writing to the Commonwealth Bank in response to which the latter must serve a notice specifying the amount of compensation which it is prepared to pay. Then, unless within two months the private bank requires the Commonwealth Bank to refer the claim to the Court of Claims, the private bank is deemed to have accepted the offer and compensation will be payable to the private bank by the Commonwealth Bank according to the tenor of the notice. When the Commonwealth Bank is required to refer the claim to the Court of Claims it is to forward the claim to that court which must determine the compensation it thinks fair and reasonable. When the acquisition is of shares another procedure is provided, but the curial part of it is less specific. A compensation register is to be made up by the Commonwealth Bank from the share register of the private bank. Persons claiming interests not shown for the time being by the compensation register may, within two months of acquisition, give a notice and then the persons entitled to payment of compensation in respect of the acquisition of the shares affected must be determined by the court and not in any other manner. If a person claiming an interest who is not on the compensation register has failed to give a notice he is not to be entitled to compensation except in pursuance of an order of the Court of Claims. If no notice is given in respect of any shares the person on the compensation register is to receive the compensation. But in every case the amount of compensation must, unless agreed upon, be determined by the Court of Claims and not in any other manner (ss. 38, 39 and 40). It is in this way that an expropriated bank or shareholders must proceed for the recovery of the compensation for which it is constitutionally necessary to provide, if the power to make laws with respect to the acquisition of property on just terms is to be validly exercised. The acquisition is accomplished not by the Commonwealth Bank, but by the Treasurer as the responsible Minister. His notice under s. 13 (1) or s. 22 (1) divests the shares or assets and vests them in the Commonwealth Bank as a separate juristic person (s. 13 (3) and (4) and s. 24 (2), (4) and (6)).
The principal liability for compensation is imposed upon the Commonwealth Bank. That liability in default of agreement can be quantified and enforced in the Court of Claims and not otherwise. The liability of the Commonwealth considered as another legal entity may be ultimate, but it is to be secondary only. The question is whether this arrangement of the constitutionally indispensable responsibility for compensation can place the claim of the expropriated bank or shareholder outside the jurisdiction conferred by the Constitution upon the High Court in all matters in which the Commonwealth or a person sued on behalf of the Commonwealth is a party. As it is beyond the power of the Parliament to withdraw any matter from the jurisdiction conferred by s. 75 an enactment in so far as it attempts to do so must be invalid. The question stated depends primarily upon the interpretation of s. 75 (iii.). What is covered by the expression "the Commonwealth"? What is contemplated by the words "a person suing or being sued on behalf of the Commonwealth"? By the use of these expressions does the third paragraph of s. 75 intend to give a jurisdiction confined to matters in which the Crown exercising (through the Governor-General) the Executive power of the Commonwealth is itself a party, whether suing or sued in the name of the King or by the Attorney-General or some other officer or nominal party authorized for the purpose as a matter of procedure? Or, on the other hand, does the paragraph intend to place within the jurisdiction of the High Court all matters in which a claim of right is made by or against any part of the central government of the country in its executive department including the corporate and other agencies by which it is administered? Are the words "person suing or being sued on behalf of the Commonwealth" meant to cover not merely procedural representative but also officers and agencies (whether corporate or not) of the Commonwealth suing or sued as such in respect of causes of action enforceable by or against them in their official or governmental capacity?
It appears to me to be much more a question of what the jurisdiction was intended to embrace than a matter depending upon the characterization of the Commonwealth Bank as an agency of the Crown enjoying, as such, the Crown's privileges and immunities. It is true, of course, as a matter of logic that whatever meaning may be attached to s. 75 (iii.) its application to a claim against the Commonwealth Bank must depend on the relation found to exist between that corporation and the Executive Government of the Commonwealth. But that is not the same thing as inquiring whether the corporate entity is established for the use and service of the Crown, so that, for example, its occupation of property, if not that of the Crown itself, is for the behoof of the Crown, or so that those whom it employs are the servants of the Crown for whose torts the corporation is not responsible as the master, or so that debts due to the corporation are to be preferred in an administration of assets to which the common law rules of priority apply. Our familiarity with questions of this kind will naturally lead us to find an analogy in them and to seek for assistance in the formulas applied and in the considerations relied upon in the ever lengthening line of cases dealing with such questions. But beyond mentioning Metropolitan Meat Industry Board v Sheedy [[470]] ; City of Halifax v Halifax Harbour Commissioners [[471]] ; Skinner v Commissioner for Railways [[472]] , at pp. 269, 270 for the discussions and citations they contain, I shall not pursue the analogy. Such questions depend in the end upon the intention ascribed to the legislature establishing the corporate agency. It is within the province of the legislature to say whether the body it forms shall or shall not be suable for the torts of the persons employed in its work: to say whether it is or is not to enjoy this or that immunity or privilege of the Crown. It is true that the text of an enactment seldom contains any statement of intention, express or implied, upon the matter and that the solution is, more often than not, found in what the legislature has done in erecting the body, furnishing it with powers and subjecting it to control. But the question here depends upon the meaning and operation of an unalterable constitutional provision which the intention of the legislature cannot affect. Once the meaning and scope of the constitutional provision is ascertained its application depends on the legal situation, as it exists, of the corporate entity said to form part of, or an agency of, the central government. But, perhaps, before discussing the meaning of s. 75 (iii.), it is better to state shortly what is the position of the Commonwealth Bank. It took its existence from ss. 5 and 6 of the Commonwealth Bank Act 1911, which stated simply that a Commonwealth Bank to be called the Commonwealth Bank of Australia was thereby established, and that the Bank should be a body corporate with perpetual succession and a common seal and might hold land and might sue and be sued in its corporate name. Now it is governed by the Commonwealth Bank Act 1945 (No. 13), but that Act preserves the Bank and continues it in existence so that its corporate identity shall not be affected (s. 7). There is a Governor of the Bank and a Deputy Governor, who are appointed by the Governor-General in Council. The Bank is managed by the Governor and he directs what duties the Deputy Governor shall perform (ss. 23, 25 and 26). An Advisory Council is set up to advise the Governor with respect to the monetary and banking policy of the Bank and with respect to such other matters as the Governor may refer to it. The Advisory Council consists of the Secretary to the Treasury, the Deputy Governor, two other respresentatives of the Treasury appointed by the Governor-General in Council, and two officers of the Bank appointed by the Treasurer on the recommendation of the Governor (s. 29). The Bank's officers are organized as a Commonwealth Bank Service to which appointments are made by "the Bank" (Part XIII.). By s. 8 it is declared that it shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and a banking policy directed to the greatest advantage of the people of Australia and to exercise its powers under the Commonwealth Bank Act 1945 (No. 13) and the Banking Act 1945 (No. 14) in such 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. By s. 9 the Bank is required from time to time to inform the Treasurer of its monetary and banking policy. If there is difference of opinion between the Bank and the Government as to whether that policy is directed to the greatest advantage of the people of Australia the Treasurer and the Bank must endeavour to reach agreement; but if they do not, then 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, whereupon the Bank must give effect to that policy. The functions of the Bank cover a wide field. It is the Central Bank and financial agent of the Government (Part III.). It prints, issues and controls the notes which form the currency of the country for any denomination above two shillings and are of course expressed in the name of the Commonwealth and made legal tender throughout Australia (Part VII.). It carries on general banking business. Distinct divisions of the Bank are established and treated almost as separate entities with their own capital funds and accounts. Thus there is a Rural Credits Department to make advances in connection with the production and marketing of primary produce (Part VIII.); a Mortgage Bank Department to make loans upon the security of land used for agricultural or pastoral pursuits to those engaged in primary production (Part IX.); and an Industrial Finance Department to lend money and give assistance and advice for the establishment and development of industrial undertakings, particularly small undertakings (Part X). The General Banking Division is, moreover, charged with the function of lending money at the lowest practicable rates of interest to individuals and building societies for the erection and purchase of homes and for the discharge of mortgages on homes.
There is an express declaration that the Commonwealth Bank shall not be liable to Federal land or income tax or to any State taxation to which the Commonwealth is not subject (s. 183). Under the bankruptcy law there is no preference to Crown debts in virtue of the prerogative and, except for land and income tax, the Crown has no statutory rank above ordinary creditors; but s. 187 of the Commonwealth Bank Act 1945 gives a preference to the Commonwealth Bank in the winding up of other Banks.
The powers of regulation and control of monetary policy and affairs taken by the Banking Act 1945 (No. 14) are for the most part vested in the Commonwealth Bank. It exercises the function of stepping in to protect depositors if there is reason to fear the failure of a trading bank (Part II., Division 2): of directing the amount of the increase in assets of a trading bank that must be lodged with the Commonwealth Bank as a special account (Part II., Division 3): of acquiring compulsorily from trading banks excess balances of foreign currency (Part II., Division 4): of acquiring gold and of licensing the sale or export of gold (Part IV.): of regulating interest rates charged by banks (Part V.): and of making recommendations to the Treasurer as to the exercise of his power to allow or disallow an amalgamation of banks or a reconstruction (s. 51).
Although the Commonwealth Bank is declared to be a body corporate there are no corporators. I see no reason to doubt the constitutional power of the Federal parliament, for a purpose within its competence, to create a juristic person without identifying an individual or a group of natural persons with it, as the living constituent or constituents of the corporation. In other legal systems an abstraction or even an inanimate physical thing has been made an artificial person as the object of rights and duties. The legislative powers of the Commonwealth, while limited in point of subject matter, do not confine the legislature to the use of existing or customary legal concepts or devices, that is, except in so far as a given subject matter may be defined in terms of existing legal conceptions, as perhaps in some respects may be the case in, for example, pars. (ii.), (xii.), (xiv.), (xvii.), (xviii.), (xxiv.) and (xxv.) of s. 51. The matter was considered to some extent in Heiner v Scott [[473]] , at p. 393 where Griffith C.J. said: "I pass by the question whether in the nature of things it is competent for the Commonwealth Parliament to declare that such an abstraction dissociated from any material persons shall be regarded as a corporation, and will assume that it is, and that the Bank is a real entity cognizable by law. Probably the true effect of the Act is a declaration that the Commonwealth may itself carry on the business of banking under the name of the `Commonwealth Bank of Australia' ". Isaacs J., speaking for himself and Gavan Duffy and Rich JJ., said [[474]] : "We do not think the Act 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. In respect of sub-s. (c) of s. 7 (cf. s. 17 (2) and s. 13 (b) of the present Act), its personality is kept distinct from that of the Commonwealth. In respect of some of its functions and obligations, it may or may not be identified with the Commonwealth-a matter for possible future consideration."
Both in respect of its powers or its purposes and its executive control the Commonwealth Bank was then differently constituted. But the difficult conception of an organ sometimes acting as part of the Commonwealth and sometimes not is to be explained less by the manner in which the Commonwealth Bank was constituted than by the conditions the learned judge had in mind as necessary or sufficient to give immunity to the operations of a Federal governmental agency. It is indeed an illustration of the difference in the legal purposes for which an examination of the relation between a governmental agency and the executive government may be necessary and of the fallacy of supposing that the question lies in the characterization of the agency rather than in determining the scope and operation of the principle, or the meaning and extent of the category, the application of which is in controversy.
Here the attributes of the Commonwealth Bank as an agency of the Federal Government, though unusual, are clear enough. If it is to be compendiously described, it is an organized service of government given a separate legal personality, in virtue of which it owns property, incurs duties and obligations and enjoys rights, set up as the banking and monetary authority of the country and charged with the functions of currency control, central banking, exchange control and ordinary general banking, together with some superadded responsibilities of providing financial aid to production and industry, and placed under the administrative direction and authority of its chief officer, to whom is given a greater degree of independence than the permanent head of a department, but who is bound ultimately to carry out the policy prescribed by his responsible Minister.
The matter comes back to the question whether such an organ is within the scope of the expression "the Commonwealth or a person sued on behalf of the Commonwealth." The "Commonwealth" means the central Government of the country. It is perhaps strictly correct to say that it means the Crown in right of the Commonwealth. But it must be borne in mind that the dual system of government, which is of the essence of federation, involves a legal recognition of the distinct existence of the component polities. It would be difficult otherwise to accomplish a distribution among them of defined powers and authorities by means of a supreme law enforceable by the courts.
The Constitution sweeps aside the difficulties which might be thought to arise in a federation from the traditional distinction between, on the one hand the position of the Sovereign as the representative of the State in a monarchy, and the other hand the State as a legal person in other forms of government (see per Cairns L.J. in U.S.A. v Wagner [[475]] , at pp. 593, 594 and goes directly to the conceptions of ordinary life. From beginning to end it treats the Commonwealth and the States as organizations or institutions of government possessing distinct individualities. Formally they may not be juristic persons, but they are conceived as politically organized bodies having mutual legal relations and amenable to the jurisdiction of courts upon which the responsibility of enforcing the Constitution rests. It is from this point of view that the interpretation of s. 75 must be approached. Moreover, the nature of the instrument in which the provision is found is not to be ignored. It is devoted, even in the judiciary chapter, to broad propositions in the field of government and it is hardly likely to concern itself with peculiarities of procedure. The purpose of s. 75 (iii.) obviously was to ensure that the political organization called into existence under the name of the Commonwealth and armed with enumerated powers and authorities, limited by definition, fell in every way within a jurisdiction in which it could be impleaded and which it could invoke.
Section 75 (iii.) cannot be read without s. 75 (v ) which, it is apparent, was written into the instrument to make it constitutionally certain that there would be a jurisdiction capable of restraining officers of the Commonwealth from exceeding Federal power. There is the strongest presumption that in using the expression "or person suing or being sued on behalf of the Commonwealth" the framers of the Constitution were not concerned with the Attorney-General or any other officer by or through whom the Crown might come or be brought into court. In s. 75 (iv.), referring to the States as parties, there is no concern on this procedural topic. But what they were concerned with was amenability to the jurisdiction of persons in whom causes of action were vested, or against whom causes of action lay, but in their official capacity only and as agencies or emanations of the Commonwealth. This view is completely confirmed by the history of the provision, which explains, if indeed it does not illuminate, the whole matter. The source of s. 75 lies in Article III., s. 2, of the Constitution of the United States. So much of Article III. as supplied the basis of par. (iii.) of s. 75 runs: "The judicial power shall extend to ... controversies to which the United States shall be a party." The doctrine that a sovereign government cannot be impleaded without its own consent had a firm hold in America and was applied at once to the United States itself. Moreover, by what to us may seem a paradox, the procedure by way of petition of right was rejected as belonging only to a monarchical, and not to the republican, form of government. It was necessary that the consent to suit should be granted by an enactment of the legislative organ of government. As Congress made no general law conferring rights of suit against the United States outside the Court of Claims, the question whether a cause of action put in suit amounted to a controversy to which the United States was a party usually presented itself as a claim that no action lay, made by the defendant or party impleaded, or perhaps made on the intervention of the United States Attorney-General. In consequence of the Eleventh Amendment corresponding questions arose as to what amounts to a suit against a State. It is perhaps a somewhat striking illustration of the difference in the British outlook upon government immunity from suit, that this Court treated s. 75 as involving liability on the part of the States to suit and for reasons which would apply equally to the Commonwealth: Commonwealth v New South Wales [[476]] , at pp. 213-216; cf. Werrin v The Commonwealth [[477]] , at pp. 165-168. In the United States the general doctrine that the servant or agent of the executive government is personally liable and may be sued in respect of any act or omission on his part not justified by law and that the directions or authorization of the Government afford him no protection was treated as a correlative of the immunity of the United States from suit, sufficiently mitigating the harshness of the operation of the doctrine of immunity. But naturally this gave rise to a readiness to admit proceedings against officers and agencies of the United States in respect of claims in which they had little or no personal interest but in which the United States was deeply interested as the party really affected. A celebrated case was that in which the Arlington estate was recovered in ejectment by General Robert E. Lee's son claiming as devisee of his grandfather, G. W. P. Custis. The United States claimed the land, which formed the national cemetery, under a title consisting of a tax sale certificate, held in the event to be void. Notwithstanding a suggestion filed by the Attorney-General alleging that the land was held, occupied and possessed by the United States, ejectment was successfully maintained against the officers controlling the land, the United States not being a party upon the record. Four of the justices took the view that once it was made to appear, by the interposition of the Attorney-General, that possession and occupation was that of the United States and the defendants named on the record held only as officers of the United States, it was not competent for the Court to proceed to judgment in what was in truth a proceeding against the United States. Five took the view that as the United States could not be joined and as its title was void, the defendants in actual occupation could not resist the action on the ground of the official capacity in which they held: United States v Lee [[478]] . In Osborn v Bank of the United States [[479]] , at p. 232] Marshall C.J. had said, after referring to "controversies to which the United States is a party": "It may, we think, be laid down as a rule which admits of no exception, that, in all cases where jurisdiction depends upon the party, it is the party named in the record." But to this proposition experience showed that it was hardly possible to adhere: see Minnesota v Hitchcock [[480]] , at p. 962]. Thus suits to restrain the Secretary of the Interior from acting in a particular way in the execution of his office have been held to be suits against the United States: Oregon v Hitchcock [[481]] ; Naganab v Hitchcock [[482]] . And so have suits against officers of the United States to restrain the use by them in the course of their duties of articles belonging to the United States alleged to be infringements of patents: Belknap v Schild [[483]] ; International Supply Co of New York v Bruce [[484]] . But it is clear that great difficulty has been experienced by the courts in America in maintaining a distinction between cases in which the suit is against the official in respect of acts for which he is himself responsible to the plaintiff and those in which it is sought to affect the interests of the United States by suing him in his official capacity. The distinction must rest upon the conception that, although in both cases the cause of action is necessarily against the officer or agent who is the defendant on the record and therefore depends upon actual or threatened wrongful acts or omissions on his part, in the one case the complaint is against him personally while in the other he "represents" the government. Where the defendant on the record denying jurisdiction was not an individual but an incorporated agency of the United States, or of a State, the question of its amenability to suit wore a double aspect. Is the agency of such a character as to share in the immunity of the United States or of the State? Had the legislature made it suable and waived the immunity?
It is not to be expected that in the practical decision of cases these two questions would be kept clearly separate. But now it is definitely laid down that it is not enough that a corporate agency has been created by Congress for the execution of some governmental purpose or power, even if the usual authority to sue and be sued in the corporate name is omitted: congressional intention must be interpreted in the light of congressional policy, seen in a course of legislation which is uniformly against denying to the citizens a remedy against such an agency, and also in the light of contemporary opinion: Keifer v Reconstruction Finance Corporation [[485]] , at p. 790]. But the courts seem to have assumed that a corporate agency set up by statute may be so much a department of government that, unless a positive indication of a contrary intention is found, it shares in the immunity: see Annotation, 83 Law. Ed., at pp. 796, 797.
From all this it is apparent that when the framers of the Commonwealth Constitution took up the study of the Constitution of the United States with a view to modelling upon it the new Australian instrument of Government, and reached the clause in question, the first difficulty they must have encountered was to say how stood suits against officers and agents of the United States. We may be permitted to know as a matter of history that what is now s. 75 (iii.) appeared in its present form in the draft Constitution presented at the Convention of 1891 and that before it so emerged it had gone through the hands of Sir Samuel Griffith who had before him the report of the Judicial Committee over which Inglis Clark J. presided.
Anyone who takes Article III. of the American Constitution and acquaints himself with the difficulties that arose under it and the manner in which they were dealt with by the Supreme Court and Congress and then compares it with Chapter III. of our Constitution will at once see that the text of the latter is the outcome of much knowledge of the judicial exegesis by which judicial power of the United States has been defined. The addition of the words "or a person suing or being sued on behalf of the Commonwealth" appear appropriate to ensure that the jurisdiction over matters in which the Commonwealth is a party should not be limited to cases in which the Commonwealth is a party on the record and to ensure that on the contrary it covered officers and agencies of the Government sued or suing in their official or governmental capacity such as those whose position had been the cause of so much trouble in the United States. The idea of the immunity of the Commonwealth was probably rejected altogether (cf. Commonwealth v New South Wales [[486]] ) but, in any event, s. 78 was introduced enabling the Parliament to confer rights of suit; and there could be little doubt that the Commonwealth would have no such privilege. The framers of the Constitution, concerned as they would be with giving a sufficiently wide jurisdiction, could not but perceive the possible limiting effect of the American case law. At all events, the purpose of providing a jurisdiction which might be invoked by or against the Commonwealth could not, in modern times, be adequately attained and secured against colourable evasion, unless it was expressed so as to cover the enforcement of actionable rights and liabilities of officers and agencies in their official and governmental capacity, when in substance they formed part of or represented the Commonwealth.
It may be true that the restrictive interpretation or application of the conception of the "United States" arose in America from the fact that to widen it would be to enlarge an unjust immunity or privilege. Indeed, Frankfurter J. for the Court in Keifer's Case [[487]] , at p. 788], speaking of the principle that the United States could not be sued without the consent of Congress, said: "But because the doctrine gives the Government a privileged position, it has been appropriately confined. Therefore, the Government does not become the conduit of its immunity in suit against its agents or instrumentalities merely because they do its work." But however it may be explained, the result held a lesson for the Australian Constitution makers.
There is no reason to treat the words in question as anything but an endeavour to ensure that, for the purposes of the jurisdiction, the conception of the Commonwealth included the agents and instrumentalities of the Commonwealth suing or being sued in their official or governmental capacity and so "on behalf of the Commonwealth." In my opinion so understood the provision covers the Commonwealth Bank as a corporate agency of the Commonwealth, appointed, as it has been, to take over the assets of the private banks and correspondingly to meet the claim for compensation for the acquisition. That it is so appears to me inevitably to follow from the description of its nature and functions that I have already given. Much support for this conclusion is contained in one well-known opinion in the Supreme Court of the United States to which I shall give a reference. It is the judgment of Story J. in Briscoe v Bank of Kentucky [[488]] , at pp. 742-744]. The persuasive authority of that great lawyer's view may be lessened by the fact that he was a dissentient, but this part of his opinion appears to me to be convincing and is much in point. It is to be remembered that the majority decision has been held to mark the beginning of a period of deviation from the broad interpretation established by Marshall C.J.: see Willoughby, Constitutional Law of the United States, 2nd ed. (1929), vol. 1, p. 134; Wright, Growth of American Constitutional Law, pp. 51 and 61.
For these reasons I think that the jurisdiction which the Constitution gives to the High Court embraces claims for compensation for the acquisition of shares pursuant to s. 13 or of assets pursuant to s. 24, notwithstanding that the primary liability to pay compensation is imposed on the Commonwealth Bank and only the secondary liability on the Commonwealth by name.
I have dealt with the effect of s. 75 (iii.) somewhat fully because the consequences upon the Act of the conclusion I have adopted that a claim for compensation falls within the jurisdiction bestowed on this Court by that provision are in my opinion far-reaching. This arises from the fact that under the Constitution any provisions for the acquisition of property must be void unless they are accompanied by a valid provision affording just terms and from the further fact that for some reason the Act is most explicit in making the ascertainment of compensation dependent exclusively either upon agreement or upon proceedings in the Court of Claims. A provision making compensation, in default of agreement, exclusively dependent upon the judgment of the Court of Claims cannot be valid when the Constitution places a claim for such compensation within the jurisdiction of the High Court and, unless the chain of consequences which is thus set up is interrupted at some point by severance, it must mean that the acquisition provisions are destroyed by the invalidation of the compensation provisions constituting the just terms constitutionally indispensable to valid acquisition.
Whether there can be a severance and at what point of the relevant provisions of the Act depends upon the legal operation of s. 6 of the Act and its application to the structure of the portions of the Act that are in question. Whether one provision of an enactment may survive the invalidation of another is a matter sometimes controlled by the Constitution, as for example, if an attempt were made to authorize the acquisition of property without validly providing just terms, or, in a law imposing taxation, to deal with some other matter or to create a Federal court consisting of judges appointed for a term of years or otherwise than by the Governor-General in Council. But if the possibility of severance is not negatived or controlled by the Constitution, it becomes a question of interpretation how far the invalidity extends beyond what in itself is obnoxious to the Constitution, that is to say, how far the invalidity extends into apparently connected provisions which would not of themselves necessarily be invalid. For this reason, no doubt, s. 6 is framed as a statement of intention and not as a command addressed to the Court. The question of interpretation is whether, after the extent to which the intended operation of the enactment is invalid has been ascertained, it is nevertheless the expressed will of the legislature that the whole or any part of the rest of the intended operation of the enactment should take effect by itself as a law of the Commonwealth. In so stating the question I have preferred to speak of the two parts of the intended operation of the statute rather than of portions of its provisions capable and incapable of valid enactment. The latter way of stating the matter suggests that the problem is one of separating clauses or expressions. But more often than not, when a statute or statutory instrument goes beyond the Constitution the question for the Court is whether a provision too widely or generally expressed should be confined in its operation to so much of the subject it is capable of covering as is constitutionally competent to the legislature, or, as it is sometimes said, whether the general words are to be read and applied distributively: see Jenkins v The Commonwealth [[489]] , at p. 403; Dawson v The Commonwealth [[490]] , at pp. 178, 181, 186; Australian National Airways Pty Ltd v The Commonwealth [[491]] ; Fraser Henleins Pty Ltd v Cody [[492]] ; Shrimpton v The Commonwealth [[493]] , at pp. 628-630; R. v Poole; Ex parte Henry [[494]] , at pp. 650-652 and the authorities cited in these cases.
In many jurisdictions where legislation is subject to the doctrine of ultra vires, statutory provisions are found governing the principle to be applied in deciding the extent to which the invalidity of part of an enactment or of its intended operation affects the remainder. In the absence of such a provision the rule is that legislation which by a general collective expression covers objects some of which are and some of which are not within the scope of the power of the legislature, the whole must be considered bad. For although the test is one of intention, it cannot be presumed that Parliament gave its assent to a partial operation of its enactment. Thus unless Parliament has said otherwise, a uniform general rule including persons or matters some of which are outside the competence of the legislature must fall as a whole because there is no warrant for the introduction of unexpressed exceptions and limitations and only thus could the provision be given the more restricted operation. Further, if the invalid portion consists in or contains provisoes, qualifications, exceptions or conditions affecting the operation of the other provisions severance is impossible. In the same way the invalidity of a clause which would operate by way of relief, compensation or alleviation brings down the provisions to which it has this relation. All these matters were considered to be incompatible with the supposition that the provisions were meant to receive an independent or distributive operation or, at all events, they were thought to tend too strongly against such an assumption. It was not to be assumed that connected or associated provisions were enacted as separate expressions of the will of the legislature. No severance could be effected unless an inference that the provisions are not to be interdependent can be positively drawn from the nature of the provisions, from the manner in which they are expressed or from the fact that they independently affect the persons or things within power in the same way and with the same results as if the full intended operation of the legislation had been valid. See per Isaacs J. in R. v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co [[495]] , at pp. 53-55 and in Roughley v New South Wales [[496]] , at pp. 186, 187; and per curiam in Newcastle & Hunter River S.S. Co Ltd v The Commonwealth [[497]] , at pp. 369, 370: see too Vacuum Oil Co Pty Ltd v Queensland [[No. 2]] [[498]] .
The practice of introducing what are called "severability clauses" into legislation became common in the United States, where much consideration has been given to their operation and effect. See particularly Williams v Standard Oil Co of Louisiana [[499]] ; Utah Power & Light Co v Pfost [[500]] , at p. 1048]; Addison v Holly Hill Fruits Products [[501]] , at p. 1497]; Railroad Retirement Board v Alton Railroad Co [[502]] , at p. 1482]; Carter v Carter Coal Co [[503]] , at p. 1189] and the Annotation to Williams Case [[504]] and an article by Robert L. Stern, (1937) 51 Harvard Law Review, p. 76.
The effect of such clauses is to reverse the presumption that a statute is to operate as a whole, so that the intention of the legislature is to be taken prima facie to be that the enactment should be divisible and that any parts found constitutionally unobjectionable should be carried into effect independently of those which fail. To displace the application of this new presumption to any given situation arising under the statute by reason of the invalidation of part, it must sufficiently appear that the invalid provision forms part of an inseparable context. The general provision contained in s. 15A of the Acts Interpretation Act 1901-1941 produces this effect, as does s. 46 (b), which similarly deals with severance in subordinate legislation.
But in applying s. 15A and s. 46 (b) the courts have insisted that a provision, though in itself unobjectionable constitutionally, must share the fate of so much of the statute, regulation or order as is found to be invalid, once it appears that the rejection of the invalid part would mean that the otherwise unobjectionable provision would operate differently upon the persons, matters or things falling under it or in some other way would produce a different result. This consideration supplies a strong logical ground for holding provisions to be inseverable, whether the prima-facie presumption be in favour or against severability. It is important where there is no statutory clause like s. 15A and it is important in using s. 15A. For the inference in such a case is strong that provisions so associated form an entire law and that no legislative intention existed that anything less should operate as a law.
Further, where severance would produce a result upon the persons and matters affected different from that which the entire enactment would have produced upon them, had it been valid, it might be said with justice that unless the legislature had specifically assented to that result, contingently on the failure of its primary intent, it could not amount to a law. The purpose of s. 6 is to carry further in the case of the Banking Act 1947 the rule that provisions are to be considered severable and general words distributable. After some study of par. (a) of s. 6, I remain unable to perceive clearly how it extends the rule established by the decisions under s. 15A. The fact that it is not a general law governing all statutes but is a particular provision of the Banking Act itself doubtless strengthens its effect. The Court has gone very far as a result of s. 15A and in spite of the difference in form of par. (a) of s. 6, I doubt whether the paragraph in any way extends the operation of the rule of construction as we have applied it. Paragraph (c) of s. 6, however, is a very distinct extension of the doctrine of the Court. At first sight it may seem to express the somewhat disconcerting intention that the Court, having ascertained at what points the Act as passed offends against the Constitution, should then undertake the task of reframing it from the fragments that might remain. But a closer examination of the paragraph shows that it does not attempt an inadmissible delegation to the Court of the legislative task of making a new law from the constitutionally unobjectionable parts of the old. The point at which the paragraph applies is in effect when it is found how much of the Act is necessarily inconsistent with the Constitution. Then, if it appears that the Act, with those parts excised, would have a different effect in substance, the paragraph declares that that consideration shall not be enough in itself to displace the application of the directions or statement of intention contained in s. 15A. or in par. (a) of s. 6. It does not assume to require the Court to give to any provision a different meaning or even operation from that which it possesses as it stands in the statute read as a whole. What it is concerned with is the consequences which the same immediate operation resulting from the fixed meaning of the Act will produce upon acts, matters and things it covers. Section 6 (c) may be said to express an intention that, however much amputation and excision may be necessary, what is left of the Act shall be law, but it does not say that it shall be submitted to plastic surgery. In any case s. 6 is a declaration of intention that provides a guide in ascertaining whether any given provision is, according to the true meaning of the enactment, conditional upon the valid operation of another. But in the nature of things it cannot be more than a guide. In the end the extent to which any part of the enactment held to be bad is inoperative must depend upon the real intention of the legislature in relation to the particular situation resulting from the invalidity found to exist.
The manner in which the Act is constructed creates peculiar difficulties in relation to the place of the intended exclusive authority of the Court of Claims over claims for compensation. It is convenient first to take compensation in respect of the acquisition of assets which is governed by Division 2 of Part VI.
The very definite and emphatic statement in s. 42 that the compensation payable in respect of the acquisition under s. 24 of the assets of a private bank shall be ascertained in accordance with that Division and in no other manner expresses a positive intention of excluding all other procedures. Section 45 is then expressed so as to impose a duty upon the Commonwealth Bank to pay the compensation assessed by the Court of Claims at the same time giving a discharge to all concerned upon payment. Section 43 (1) and (2) deal with the possibility of an agreement being made as to compensation. Then s. 43 (3) and (4) and s. 44 provide for the course to be taken in the absence of agreement. As will be seen from sub-s. (3) of s. 44, that course is devised so as to make it impossible for the private bank to escape the Court of Claims, except at the expense of having imputed to it an agreement in the terms proposed by the Commonwealth Bank and approved by the Treasurer. It was suggested on the part of the Commonwealth that if s. 42 were held invalid as in conflict with s. 75 (iii.) a notional severance of Division 2 might be effected after sub-s. (2) of s. 43. The suggestion was that at that point the claimant should be treated as entitled to invoke the jurisdiction of the High Court instead of proceeding under sub-s. (3) to make a claim in writing to the Commonwealth. The difference between such a mode of severance and simply excising Division 2 altogether is not appreciable. For all it does is to leave the sub-sections authorizing agreement and their only effect is to place a condition upon the freedom to agree which would otherwise exist, a condition that the Treasurer must approve. The objection to the suggestion is that it is plainly inconsistent with s. 42 and with the real meaning s. 43. It is not a removal of an invalid provision but a reshaping of the provision in the hope of validating it. Section 42 not only provides that compensation shall not be ascertained in any other manner, but it also provides imperatively that it shall be ascertained in accordance with the Division. No excision will reconcile such a provision with s. 75 (iii.). To introduce the alternative of proceeding under s. 75 (iii.), it would be necessary completely to rewrite s. 42 with a consequent change of the policy and operation of the Division. The truth is that the draftsman determined that he would state exhaustively how claims were to be dealt with so that no alternative choice should be left open. He therefore expressed his intention in a form and with a completeness and definitiveness that give neither place nor means for the application of the general intention in favour of severance. For the Commonwealth it was also contended that all s. 75 (iii.) could require is that an exception, so to speak, from Division 2 be made in favour of the jurisdiction of the High Court. In that I cannot agree. To write such an exception into the Division is impossible. That would be to amend, not sever, the provision. I think that Division 2 is void with the exception of s. 43 (1) and (2). But the chief argument of the Commonwealth upon this matter was that Division 2 might be notionally deleted from the Act, because, if that were done, s. 25 would then confer a sufficient general right to compensation recoverable by suit in the ordinary courts.
To my mind this argument gives a new meaning and a new immediate operation to s. 25. That section as it stands in the Act must be read with Division 2 and, so read, does not mean to invest the private banks with a cause of action by which they may recover compensation. It is a general declaration of the obligation of the Commonwealth Bank to pay compensation in the manner thereinafter provided. It is the subsequent provisions which give the right, and the only right the private bank is to have is that of obtaining compensation by agreement (whether actual or imputed under s. 44 (3)), or by a reference to the Court of Claims under s. 44 (5). To find in s. 25 the creation of an actionable right is to ignore the fact that Division 2 clearly shows that it has no such meaning. To change the meaning of s. 25 by reinterpreting its language is just as inadmissible as a rewriting of its text. Some suggestion was made that once a provision was pronounced ultra vires you ignored its existence and its terms for the purpose of interpreting the rest of the Act. In this way you were to proceed to attach a meaning to s. 25 only after you had eliminated Division 2, not only from the Act, but from judicial consideration. But it is quite wrong to suppose that you construe the valid portions of an Act as if the invalid portions do not exist. The latter are as much an expression of the intention of the legislature as the former. You should first obtain the meaning of every part of the instrument containing the complete expression of the will of the legislature by reading and construing the whole. Only then do you proceed to decide whether the legislature has gone beyond its powers. Construed as an integral part of the whole Act, s. 25 amounts to no more than a general statement for the purpose of making it clear that the acquisition of the assets by the Commonwealth Bank is in the character of a purchaser liable to pay compensation. In this way it is introductory to the provisions of Division 2. We are not here dealing with a gift in a will of property to a legatee definitively made over to him and then subjected to a superadded direction controlling the extent of his enjoyment and the devolution of the interest. Doctrines such as govern the consequences upon such a gift of the invalidity of the superadded directions have no place whatever in the construction of an Act of Parliament. Nor could they have any application to a connected series of provisions dealing with a liability to compensation and the exclusive method of ascertaining and enforcing it. If any analogy is to be sought elsewhere in the law it might well be in the many authorities which say that when an enactment creates an obligation and specifies the remedy or the procedure to be pursued, it means that ordinary proceedings are not open.
But again, the truth is that the emphatic proposition in s. 42 that compensation is to be ascertained in no other manner than according to Division 2 governs the meaning and effect of s. 25 and makes it impossible to substitute a new and alternative meaning for s. 25. In short to do so would produce a different law from that to which the legislature gave its assent.
Section 6 (c) authorizes a severance notwithstanding that what remains may then have a different effect. But it does not, and, indeed, without an unconstitutional delegation of legislative power to the judiciary it could not, say that when a new meaning producing a new operation is indispensable to the validity of a provision that meaning shall be assigned with a view to saving it. By "effect" as used in s. 6 I do not understand the paragraph to mean a change in the immediate operation of a provision. There is, I think, a wide difference between giving a provision a new meaning resulting in the creation of rights, duties, powers, capacities or immunities of a kind uncontemplated by the legislature and the removal of other provisions, which if valid, would or might have produced indirect or consequential effects upon the enjoyment of rights, duties, powers, capacities or immunities independently created by the clause to be severed from the invalid provision. Paragraph (c) of s. 6, in speaking of a different effect doubtless refers to the latter case. The terms of the paragraph do not support the idea that a different effect may be given by attaching a new meaning to the clause it is sought to sever in order that it should survive.
I am therefore of opinion that the provisions of the Act relating to compensation for the acquisition of assets are ineffectual. It follows that s. 24 of the Act is void.
It is unnecessary after the foregoing discussion to say very much about the provisions governing the compensation for the compulsory acquisition of shares. I have already discussed them in relation to s. 51 (xxxi.) of the Constitution. They are not precisely the same but they contain the same vice as the provisions relating to compensation for assets. Indeed, in some respects it is exhibited even more strikingly. For s. 40 deals in separate sub-sections; (a) with the compensation payable to persons whose names the Commonwealth Bank has placed on the compensation register when no other claim has been notified with respect to the same shares; (b) with the claims of persons whose names have not been placed upon the compensation register but who have given notice of a claim to an interest in the shares acquired; (c) with the amount of compensation payable in respect of shares where such claims have been notified and the amount payable to each person. As to each of these matters s. 40 states emphatically that it shall be determined by the Court of Claims and in no other manner. Section 40 (7) excludes all claims by persons not on the compensation register who have not notified them under s. 39, unless under an order made by the Court of Claims. It is apparent that unless a claimant is upon the compensation register he must establish his claim in the Court of Claims and by no other procedure may he do so. It is impossible to desert the whole of Division 1 of Part VI. and attribute to shareholders and persons interested in shares a statutory cause of action for the recovery of compensation independently of the compensation register and of notice. Yet it is only on such a footing that s. 40 can be treated as a divisible provision the invalidity of which does not affect the acquisition provisions. Section 15 corresponds in the case of shares to s. 25. It does not mean to give an actionable right to compensation. Read as part of the Act its meaning is that the Commonwealth Bank shall pay compensation in respect of the acquisition of shares in the manner afterwards prescribed. A different meaning cannot be placed upon it because s. 40 is invalid.
I am therefore of opinion that s. 40 is invalid and that provisions for the compulsory acquisition of shares must fall with it. That means that at all events s. 13 (3), (4) and (5) must be ineffectual.
An examination of Division 2 of Part IV. will show that the invalidity of s. 13 (3) and (4) involves the validity of the consequential provisions contained in s. 14 (1) (except perhaps in its application to acquisition by agreement), s. 15 and s. 16 (with the like exception). Section 14 (2) cannot be supported for many reasons. A similar examination of s. 24 will show that no case can be made for saving any of its sub-sections from the fate of sub-ss. (2), (4) and (6).
At this point it is desirable to combine the conclusions I have just expressed with those I stated with respect to the conflict of provisions contained in Part IV., Divisions 2 and 3, with the requirement of just terms of acquisition imposed by s. 51 (xxxi.) of the Constitution. The result of the combination is that, except for s. 12 and the possibility of s. 14 (1) and s. 16 being valid in their application to a voluntary acquisition under s. 12, the whole of Division 2 of Part IV. is invalid and Division 3 is invalid. Section 24 is invalid. Part VI. of course fails. It also follows that s. 46 (3) fails. I should perhaps say that the reference in sub-s. (3) of s. 46 to a private bank taking over another private bank is for the purpose of a particular absorption, one that has been effected, and it can be neglected.
Section 46 (4)-(8) contain a power of prohibiting banking which, on the face of the sub-sections, shows no apparent dependance upon the acquisition provisions of the Act.
I shall therefore now pass to a consideration of the validity of s. 46.
Part VII. of the Banking Act 1947, which consists only of s. 46, is entitled: "Prohibition of the carrying on of banking business by private banks." The part applies to all private banks whether incorporated in Australia, in the United Kingdom or elsewhere. The section is constructed upon a curious plan. It begins by a general prohibition laid on all private banks against carrying on banking business in Australia; but the prohibition is followed by the words "except as required by this section" (sub-s. (1)). Next, there immediately follows a command laid on every private bank, "subject to this section," to carry on banking business in Australia (sub-s. (2)). Then follow two alternative provisions directed to prescribing how the obligation to carry on banking business shall terminate. One alternative consists in sub-s. (3) which provides in effect that the obligation to carry on shall not apply to a private bank after its business has been taken over by the Commonwealth Bank. That refers to a taking over by agreement pursuant to s. 22 (5) or compulsorily under s. 24 (2). The other alternative is contained in sub-ss. (4)-(8). These provisions empower the Treasurer, by a notice, to require a private bank to cease upon a date he specifies to carry on banking business in Australia. The period of the notice must not in the first instance be more than two months, but the Treasurer may by an amendment of his notice extend the time. Sub-section (8) then expressly forbids the private bank after the date or amended date specified to carry on banking business in Australia. It will be noticed that sub-s. (8) expresses a particular prohibition which might have been thought to be contained in the general prohibition of sub-s. (1). The first of the two alternatives to which sub-s. (2) is subject and which therefore, so to speak, take up the general prohibition, is almost nullified by the invalidation of s. 24. But of course the nullification is not complete because the alternative covers the contingency of a voluntary agreement under s. 22 (5) as well as compulsory acquisition under s. 24. Upon the view I have already expressed, that s. 24 is invalid as one of the consequences of the conflict of Division 2 of Part VI. with s. 75 (iii.) of the Constitution, sub-s. (2) of s. 46 will prevent sub-s. (1) from taking effect unless either an agreement is made under s. 22 (5) or a notice is given under sub-s. (4) of s. 46. In the latter event, however, on the expiry of the notice or amended notice, as the case may be, sub-s. (8) will operate specifically upon the private bank concerned. The expiry of the notice results under sub-s. (4) in a prohibition which may be included in the expression in sub-s. (2) "subject to this section." If so it is a contingency which, as a matter of words, might release the operation of sub-s. (2) and so bring into operation sub-s. (1). But apparently it is intended in such a case that sub-s. (8) shall be the source of the prohibition, and not sub-s. (1). It is not, I think, a matter of any importance because it is exactly the same "law" whether a notice under sub-s. (4) brings into play sub-s. (1) or sub-s. (8) or both. It is a law which enables the Treasurer by a notice or notices to make it a penal offence for any or all private banks to carry on the business of banking in Australia after a given date or dates. The grounds upon which the Treasurer is to proceed in deciding whether and when he will give any and what notices are not defined or in any way limited.
As in my opinion the provisions for the acquisition of shares in and of the assets of a private bank are ineffective, a question at once arises whether this conclusion does not also involve the validity of s. 46 (4)-(8) (and of s. 46 (1) if and so far as it takes effect by the use of s. 46 (4)). This question depends upon the declaration contained in s. 6 of a legislative intention that all provisions of the Act other than those found to be inconsistent with the Constitution shall operate to the full extent they may under the Constitution and that such intention shall have effect notwithstanding it may result in the Act having a different effect in substance from that it would otherwise have produced. To isolate s. 46 (4)-(8) and give them an operation quite independent of the compulsory acquisition provisions would, indeed, give the enactment a different effect in substance from that which, it may be supposed, was contemplated. For it would enable the Treasurer to close any or all of the private banks, but not to take over the businesses. Extraordinary confusion and disturbance, if not worse, would no doubt be caused by the use by itself of such a power to close up even one large bank, to say nothing of the result if it were applied at the same time to all.
But it must be remembered that, as s. 46 is drawn, even although the whole Act were upheld as valid, it would nevertheless be open to the Treasurer to invoke the power which sub-ss. (4)-(8) purport to give him.
It may be assumed that it was outside the contemplation of anybody that the private banks should be closed, not only without compensation, but without any arrangement in respect of the bank officers and staff and without any provision for continuance of the customers' accounts and without any other transitional arrangements. Yet it is a thing that s. 46 on its terms unmistakably permits. In these circumstances I am of opinion that s. 6 should be put into effect and that s. 46 (4)-(8) (and sub-s. (1) if and so far as dependent on sub-s. (4)) if otherwise valid should accordingly be considered severable.
But so considered these provisions must be regarded as standing alone and that means as bare authorities to the Treasurer by a notice or notices given whenever and for whatever reason he thinks fit to stop any private bank or all private banks from carrying on banking business within the Commonwealth. So regarded the provisions at once provoke the question whether they are consistent with the constitutional guarantee of the freedom of inter-State trade, commerce and intercourse.
In considering this question it may not be unimportant to notice the widely varying applications of which the power conferred by s. 46 (4)-(8) is capable. It may be used to close one bank, which may be large or small. That may or may not be followed by the closing of another or others. If it is, the intervals of time may be short or, on the contrary, may be spread over years. The purpose for closing one bank may be entirely different from that for which another is closed. On the other hand, by notices given about the same time, the Treasurer may close all the private banks upon one day. This, coupled with the operation of s. 7 of the Banking Act 1945, would mean that all banking would be forbidden except by the Commonwealth Bank and the State Banks. the existing system of private banking maintains an Australia-wide business upon which its whole structure rests. It sustains with respect to the transfer of money or bank credit the greater part of the commerce of the country. Branches and agencies of the various private banks are distributed over the Commonwealth and there are few towns or centres in which one or more of them is not represented. The volume of the banking transactions which cross State lines is, of course, widely different with different banks, and that is said to be true also of the proportion which in number or value inter-State transactions over a period bear to the whole business done. But the total quantity for all banks is very large, although the proportion in money is said to be but ten per cent of the amount involved in all transactions. If it matters it appears that there are constant changes in the funds made available in the various States, the excess of advances over deposits in one State being supplied or supported by resources in other States. In the daily course of business the private banks (with two minor exceptions) regularly transfer funds among the States, establish credits across State boundaries, and collect cheques, bills of exchange and promissory notes drawn and lodged in one State and payable in another, and of course they negotiate such instruments. There have been placed before the Court elaborate descriptions of the many different kinds of inter-State transactions the private banks carry out, considered both from the banks' side and from the customers' side, that is an essential part of his commercial dealings. But it is enough to say that, as common knowledge might suggest, this material confirms in detail what seem to be the essential conclusions. These are that the business of the private banks necessarily includes:(a) the constant inter-State transmission of funds and transfer of credit; (b) constant business communication and intercourse among the States; (c) the regular use for the purposes of inter-State transactions of instruments of credit and of title to goods and their inter-State transmission; (d) the integration of inter-State banking transactions with the entire business of the bank to form a system spreading over the Commonwealth without regard to State lines; (e) the furtherance of commercial dealings by inter-State traders in goods by performing an indispensable part in such transactions.
The first question for decision is whether the trade, commerce and intercourse to which s. 92 gives freedom covers matters of the foregoing description. It is said that the protection s. 92 provides extends to the transfer from one State to another of nothing but commodities and persons. Intangibles are said not to be covered. In my opinion this is an unwarranted limitation upon a constitutional provision that was intended to guarantee freedom from restriction to a broad category of interchange, converse and dealings between States in the affairs of life.
It was part of the purpose of s. 92 to remove from the possibility of legislative and governmental restriction activities conducted across State boundaries and to do so rather because of their inter-State character than of any special claim to immunity from interference that particular activities might have except their inter-State character. To say figuratively that the purpose was to enable Australians to disregard State boundaries and not simply to give an immunity from interference to buying, selling and journeying makes clear the point, even if the statement may be inadequate and open to objection otherwise. Those who introduced s. 92 into the Australian Constitution did so in the full light of American experience. In s. 51 (i.) they coupled the word "trade" with the word "commerce," which stood alone in the United States Constitution to define the subject matter of the power of Congress to regulate commerce with foreign nations and among the several States. Not content with the expression "trade and commerce" for the purposes of s. 92, they there added the word "intercourse."
It has been said that "trade" strictly means the buying and selling of goods. That, however, is a specialized meaning of the word. The present primary meaning is much wider, covering as it does the pursuit of a calling or handicraft, and its history emphasizes rather use, regularity and course of conduct, than concern with commodities. "Intercourse" was doubtless added because of the view, now no longer open in the United States, that commerce might not extend to intercourse that was not concerned with business profit or pecuniary gain and because of the degree to which the right of the citizen to access to every constitutent part of the Union had been rested on implication. I cannot think that the essential content of the expression "trade commerce and intercourse" in s. 92 is any less than is included in the conception of commerce in the modern American view of the commerce power. I am not speaking of the spread of that power over an immense field of activities that are incident to commerce. It is the central conception expressed in the word to which I refer. It covers intangibles as well as the movement of goods and persons. The supply of gas and the transmission of electric current may be considered only an obvious extension of the movement of physical goods. But it covers communication. The telegraph, the telephone, the wireless may be the means employed. It includes broadcasting and, no doubt, it will take in television. In principle there is no reason to exclude visual signals. The conception covers, in the United States, the business of press agencies and the transmission of all intelligence, whether for gain or not. Transportation, traffic, movement, transfer, interchange, communication, are words which perhaps together embrace an idea which is dominant in the conception of what the commerce clause requires. But to confine the subject matter to physical things and persons would be quite out of keeping with all modern developments. The essential attributes which belong to the conception should determine the field of human activities to which it applies. To place among the essential attributes the requirement that there should be goods for sale or delivery or a man upon a journey, is to mistake the particular for the general, the concrete example for the abstract definition, and to yield to habits of thought inherited from a more primitive organization of society.
The words "trade, commerce and intercourse" are not naturally susceptible of such a reactionary interpretation. The very manner in which they are combined would carry, even to a mind unfamiliar with their background, an intention to include all forms and variety of inter-State transaction whether by way of commercial dealing or of personal converse or passage. An understanding of what lies behind the choice of expression confirms the natural impression produced by the language itself. In the long history of the interpretation of the commerce clause in the United States tendencies have been disclosed from time to time to deny the inclusion within it of transactions which relate only to the payment of moneys, such as insurance (Paul v Virginia [[505]] ) or as inter-State bills of exchange considered as subjects of intra-State sale (Nathan v Louisiana [[506]] ). But these tendencies have been considered anomalous: cf. Willoughby, Constitutional Law of the United States, 2nd ed. (1929), par. 441 pp. 744-746 and par. 435, p. 741: Willis, Constitutional Law, pp. 284, 285, and now the basis of such a distinction has been swept away: United States v South-Eastern Underwriters' Association [[507]] ; Polish National Alliance of United States of America v National Labor Relations Board [[508]] ; Prudential Insurance Co v Benjamin [[509]] ; Robertson v California [[510]] ; Freeman v Hewit [[511]] , at p. 275]. So far from Engel v O'Malley [[512]] containing anything to the contrary I think that a close reading of the judgment of Holmes J. (particularly at [[513]] ) will show that he clearly implies an opinion that the transmission of money by a bank from one State to another is inter-State commerce.
In my opinion a large part of the business of banking, if transacted across State lines, involves trade, commerce and intercourse among the States. The presence in the Constitution of s. 51 (xiii.) affords no reason for treating the trade and commerce power conferred by s. 51 (i.) as inappropriate to banking transactions if they are carried out with other countries or among the States. Section 51 (xiii.) was placed in the Constitution because it was desired that the subject of banking as a whole should fall under Federal legislative authority: not because it was considered that so much of banking as involved transactions with other countries or among the States could not fall under s. 51 (i).
Again, I am unable to see that the parenthesis in s. 92 of the words "whether by means of internal carriage or ocean navigation" militates against the conclusion that transactions in intangibles are covered by the provision. These are words of extension, not of restriction. Their purpose would be expressed if they were written "although by ocean navigation and not by internal transport" or "by land or sea."
The contention made that what is commonly called a transmission of money or credit by a bank involves no movement, no interchange, nothing occurring across State lines, but merely the reduction of credit in one place and an increase in another, seems to substitute an analysis-and one of doubtful adequacy-belonging to monetary theory for the common understanding of the course business takes and the complexion which the law places upon it. But for myself I should think that if these interdependent and significant phenomena occurred in different States, involving, as they must, communication between the States, it would be enough. Nor do I see that it is anything to the point to consider the function of banking in providing and regulating the medium of exchange chiefly employed in the Anglo-American world, bank money or credit. That is a consequence of the relation of banker and customer. But whether, from the standpoint of the fulfilment of that vital economic function, the banking transactions that are important as inter-State trade, commerce and intercourse are regarded as falling under the category of cause, of result or of accompanying circumstance, nevertheless, as between the parties to them, they continue to possess the characteristics which give them the complexion of trade, commerce and intercourse among the States.
For the reasons I have stated, the subject matter of the prohibition authorized by s. 46 (4)-(8) of the Banking Act 1947 appears to me to be comprised within s. 92 so far as the business consists of inter-State transactions.
The operation of s. 46 (8) (or s. 46 (1)), when the power given by s. 46 (4) is exercised in relation to all private banks, is to suppress all banking except that carried on by the Commonwealth Bank or by State banks. There is, of course, no discrimination between inter-State business and intra-State business. The whole business, intra-State, inter-State and foreign, is prohibited. But the prohibition directly imposed upon the conduct of any banking business, except under Government, is direct and the direct prohibition includes in its operation all inter-State banking business.
In James v The Commonwealth [[514]] , at pp. 58-61 to which we have all given close and repeated study, the test laid down for the application of the constitutional guarantee of freedom contained in s. 92 amounts to freedom of what constitutes trade, commerce and intercourse to pass from one State to another. It is described as freedom as at the frontier or border, the crucial point in inter-State trade. But that freedom may be impaired by a prohibition, restriction or burden, the application of which is not at the border but at some prior or subsequent stage in the course of inter-State trade, commerce and intercourse. This is explained by reference to cases arising in this Court which include the following examples:(1) a legislative declaration by a State that stock and meat in a State are to be held for the purposes of and kept for disposal of the Crown in aid of supplies for the armed forces (Foggitt, Jones & Co Ltd v New South Wales [[515]] ; Duncan v Queensland [[516]] ; cf. James v The Commonwealth [[517]] ; (2) a State statute and an order thereunder the combined effect of which was to fix a proportion or quota of a product and forbid the marketing in Australia of any greater quantity: James v South Australia [[518]] ; James v Cowan [[519]] ; James v Cowan [[520]] ; cf. James v The Commonwealth [[521]] ; (3) the expropriation under the same statute of parcels of the product in the hands of a producer so as to prevent him selling them in defiance of the quota fixed [[522]] ; (4) a State scheme for the compulsory marketing of a product, acquiring the product, restricting freedom of action on the part of producers and involving the compulsory regulation and control of all trade, domestic, inter-State and foreign [[523]] ; (5) the imposition by a State on an importer of petrol of an obligation to buy locally a proportion of power alcohol, petrol which is not produced in Australia, being imported into the State sometimes directly from abroad and sometimes immediately from another State [[524]] ; (6) a State law requiring payment of a higher licence fee for a licence to sell wine from another State than for a licence to sell wine produced in the State concerned [[525]] .
Thus freedom as at State boundaries has no narrower meaning than that there shall not be imposed prohibitions, restrictions and burdens preventing, impeding or prejudicing the passing from State to State of what amounts to trade, commerce and intercourse. Lord Wright evidently regarded this as an application of the word "free" that was limited by context and subject matter. Yet I think that a ready assent to the limitation would have been given by all the judges who have sat in this Court, notwithstanding that from the beginning they have given such diverse effects to s. 92. Indeed, I believe that each would have claimed that the proposition was the point from which he began. Perhaps Isaacs C.J. would have amended it by adding the word "control"; an unfortunate word of such wide and ambiguous import that it has been taken to mean something weaker than "restraint," something equivalent to "regulation." So to understand it amid the copia verborum and vigor of expression Isaacs C.J. was accustomed to employ where his opinion was strong is natural enough. But it is perhaps worth remark that no actual decision or order given or made applying s. 92 to the facts of a case seems to be based on any very extended meaning of the notion of restraint or burden or, for that matter, on a wide or distributive interpretation of "trade, commerce or inter-course." This, I imagine, is the explanation of Lord Wright's apparent hesitation to express any greater disagreement with the actual decision in W. & A. McArthur Ltd v Queensland [[526]] than is involved in describing it as a doubtful exception to the statement that their Lordships' construction of s. 92 is not inconsistent with any decided case [[527]] . What, as it seems to me, the judgment in James v The Commonwealth [[528]] has corrected is the error of applying the conception of freedom where there was no real burden upon and no real obstruction to passing from one State to another or dealing across State lines and in addition the failure to recognize that regulation of trade, commerce and intercourse is compatible with freedom of inter-State passage or converse.
The view that what is preserved by s. 92 is freedom as at the frontier might suggest that the protection is against obstructions, burdens or disadvantages which operate against inter-State transactions in a special manner because, whether in form or in substance, there is a differential treatment of domestic and inter-State transactions, or because what is done has a greater significance or importance for inter-State commerce. To limit s. 92 to freedom from laws discriminating against inter-State commerce was an interpretation which at one time proved attractive and it had strong support. But that cause was lost at an early stage of the struggle which expediency has so long sustained with such varying fortune against the apparently inflexible terms in which the framers of the Constitution chose to express a policy regarded, it is said, as basal to the federation. It seems now to be rejected of all men. Barton J. said as early as Duncan Case [[529]] , at p. 585 that if the restriction of inter-State trade is included in the direct operation of an Act the fact that intra-State trade is also more or less affected does not diminish the restriction and that if the State legislature could make a burden apply alike to all the people of Australia as well as the people of the State, still the considerations affecting the case would not differ. The decision of the Privy Council in James v Cowan [[530]] , at pp. 393-394 is quite inconsistent with the doctrine, and in James v The Commonwealth [[531]] , Lord Wright rejected it. He said: "An Act may contravene s. 92 though it operates in restriction both of intra-State and of inter-State trade." In the United States another step has recently been taken which brings the American doctrine whereby the commerce clause operates to confer a freedom against State restriction even closer to the operation given to s. 92. The opinion in which the step is taken deals also with discrimination. It is that of Frankfurter J. for the Court in Freeman v Hewit [[532]] , at pp. 271, 272]. His Honour said:"In two recent cases we applied the principle that the Commerce Clause was not merely an authorization to Congress to enact laws for the protection and encouragement of commerce among the States, but by its own force created an area of trade free from interference by the States. In short, the Commerce Clause even without implementing legislation by Congress is a limitation upon the power of the States. ... In so deciding we reaffirmed, upon fullest consideration, the course of adjudication unbroken through the Nation's history. This limitation on State power ... does not merely forbid a State to single out inter-State commerce for hostile action. A State is also precluded from taking any action which may fairly be deemed to have the effect of impeding the free flow of trade between States. It is immaterial that local commerce is subjected to a similar encumbrance. It may commend itself to a State to encourage a pastoral instead of an industrial society. That is its concern and its privilege. But to compare a State's treatment of its local trade with the exertion of its authority against commerce in the national domain is to compare incomparables."
It would be surprising if the Australian express enactment were less effective and narrower than the American implication which it was intended, as a positive provision, to replace. No doubt a law that applied only to inter-State trade might be seen to impose a burden upon it, while if it had applied uniformly over the whole field of trade it might have worn the appearance of a mere regulation. But that is another matter.
To describe the characteristics necessary to render a law obnoxious to s. 92 there has been much use of figurative expressions. It has been said that the law must be "pointed at" inter-State commerce, "directed against it," "inimical to it," "hostile to it" or "antagonistic to it," or that it must "hit at" inter-State commerce. I have never been certain what these expressions connote when so used. Indeed, sometimes the question whether a law does or does not impair the freedom of inter-State commerce seems to be brought down to a choice between a dyslogistic and a eulogistic epithet to describe the same legislative provision.
The expressions that I have mentioned, however, appear capable of three meanings. They may mean that the law must discriminate against inter-State commerce. If so, they lay down an erroneous test. They may mean that the application of the law to inter-State commerce must be direct and its operation prejudicial, whether or not the law also includes intra-State commerce. If so, the expressions add nothing in explanation or elucidation of s. 92; indeed, their use but tends to confuse the question. Thirdly, they may mean that there must appear an actuating purpose on the part of the legislature to injure inter-State commerce. If so, it is the doctrine of which Isaacs C.J. said that it imported the necessity of a legislative mens rea. With that description it may be dismissed from consideration. But once it appears that trade, commerce and intercourse among the States is a concept within which fall inter-State transactions in the common course of banking, then the intention of the legislation to prohibit a portion of inter-State commerce, unless carried on by government agency, becomes undeniable, and surely such an intention is hostile to inter-State commerce, that is unless the fact that it may still be carried on by or under government saves its freedom.
I cannot see how to close up every bank but a government bank leaves inter-State banking free.
It has appeared to me that to say that a given branch of inter-State commerce can be carried on only by government, so that it may be under governmental control, is inconsistent with the proposition, which I understand to be established, that inter-State trade shall be free of governmental prohibitions, restrictions and burdens whether they be legislative or executive in character.
To take the volume or flow of inter-State banking business independently of the freedom of private banks to transact it, and make the inquiry whether the law closing them has a purpose or a necessary tendency to reduce the volume of flow is, I think, to raise an irrelevant consideration. It is, moreover, a consideration of an economic and not a legal character. But it is one that has no basis of fact. For, so far as it is possible to speak confidently of hypothetical events, to close the private banks, not taking over their businesses as going concerns, but abruptly terminating them, must interrupt the flow of inter-State business and cause its total suspension. Not only that, but it would cause a dislocation the recovery from which would not be likely to be rapid. It would be impossible to say whether and when the volume had been restored and to assess its quantitative relation to the volume of the business that otherwise would have been done. It is an irrelevant consideration, because s. 92 treats inter-State traffic and intercourse, not as a mere economic phenomenon, but as an activity, and as such sets it free for people to engage in. Juristically it is doubtless true that s. 92 does not confer private rights upon individuals: at all events so I decided in James v The Commonwealth [[533]] . It may perhaps also be true that its purpose is not the protection of the individual trader. But it assumes that without governmental interference trade, commerce and intercourse would be carried on by the people of Australia across State lines, and its purpose is to disable the governments from preventing or hampering that activity.
It appears plainly, as I think, from the passage in James v The Commonwealth [[534]] that in the opinion of their Lordships a compulsory marketing scheme under a Government board restricting the freedom of action of producers and compulsorily regulating and controlling all trade in a commodity, whether intra-State, inter-State or overseas, involved an impairment of the freedom of inter-State trade. From this conclusion more than one consequence follows. In the first place, it means that the transfer of the marketing of the commodity, that is to say, of the whole trade in the commodity, from the ordinary channels used by individuals to a Government board is an interference with freedom of inter-State trade. Next, it necessarily follows that a consideration of the question whether this will or will not influence the volume of traffic across the border in the commodity is beside the point. Again, it is inconsistent with the view that a measure may be good because its purpose or object is to increase the volume or value of a trade, including trade with other States, considered apart from the freedom of people to engage in the trade. For the object of the marketing scheme in question was to increase the sales of the commodity and the returns to the producer. Lastly, their Lordships view of such a marketing scheme does not appear to give room for the contention that s. 92 leaves it always open to the legislatures to determine by whom operations of inter-State trade may lawfully be conducted.
No doubt s. 92 leaves open the regulation of trade and commerce, at all events until regulation is pressed to the point of impairing true freedom of inter-State commerce. And there can be even less doubt that a regulation of some other subject will not collide with s. 92 simply because inter-State trade or commerce may be affected consequentially and indirectly. The freedom of inter-State trade, commerce and intercourse which s. 92 assures supposes an ordered society where the mutual relations of man and man and man and government are regulated by law.
But there has not been worked out a logical distinction between the restrictions and burdens which may not be imposed upon inter-State commerce and the directions which may be given for the orderly and proper conduct of commerce. It is this which I think accounts more than any other consideration arising from s. 92 for the widely divergent conclusions that have been reached as to the application of the provision in specific cases. I am aware that it has been said that in s. 92 "trade, commerce and intercourse" have now been interpreted as meaning something less than "trade and commerce" mean in s. 51 (i.) and "free" as meaning "subject to reasonable restrictions" and "absolutely" as meaning "subject to qualifications." But be that as it may, it nevertheless remains undeniable that all trade and commerce must be conducted subject to law and this means compliance with a multitude of regulatory directions. I do not, for example, desire to cast any doubt upon the validity of laws directly regulating banking in the interests of security, reliability, efficiency, uniformity of practice and so on.
But my decision upon s. 92 is confined to its effect upon s. 46 (4)-(8), which authorize a direct and absolute prohibition. No such questions, therefore, arise. Nor am I concerned with the effect of s. 92 in relation to expropriation. That, I think, turns on another and different set of considerations. As a test of the validity of prohibition of carrying on a trade it was said that surely consistently with s. 92 a law might be made providing that no bankrupt, no soldier, no person under twenty-five, no barrister, should engage in commerce. The examples seem to me to throw no light upon a complete prohibition of a branch of commerce, excluding everyone from it except a government undertaking. Some of the examples relate to capacity, others to the incidents of a profession. The personal incompetence, under the law, of classes of people by reason of status or the like to trade stands apart altogether from restraints or restrictions upon inter-State commerce. They are but examples of special positions in which, in an ordered community, the law of persons may place individuals. The law of persons and of status, like the law of property, of contract and of tort, is assumed by a guarantee of freedom of inter-State trade. Section 46 (4)-(8) stand, in the view I have formed of the validity of ss. 13. 17-19, and 24, as bare prohibitions of so much of banking as forms part of trade, commerce and intercourse, excepting only government banks. These sub-sections are, therefore, in my opinion, in conflict with s. 92.
It was contended that this did not spell total invalidity for the sub-sections in question but that, by construction of law, inter-State banking might simply be withdrawn from their operation. This, it was claimed, is a proper effect of s. 6.
Speaking generally, the operation of s. 92 is to give immunity from an enactment applying generally to commerce rather than to destroy the enactment. But that is on the ground that the enactment, as more often than not is the case, has a distributive application to all transactions falling within its terms. In this case, however, s. 46 (4)-(8) deal with a business as an entirety. There is one notice in the case of each bank. It must be expressed to apply to a business considered as a unit or entirety. Sub-section (8), and if it is in point sub-s. (1), then forbid the carrying on of any such business. I cannot see how, even with the aid of s. 6, any intention can be discovered to deal piecemeal with component parts of the business or, to state it more accurately, with descriptions of transactions by which the business is made up.
The notice required by sub-s. (4) could not be moulded to that end consistently with the sub-section. The purpose is to close up a bank's business, not to dismember it.
I am therefore of opinion that s. 46 (4)-(8) are void and that, if and so far as s. 46 (1) would otherwise take effect in consequence of a notice under s. 46 (4), it also is void.
I have said nothing about s. 59 and, having regard to the conclusions I have reached, there is little to be said about it. It expresses its own purpose in its opening words: "So far as is necessary for the purpose of facilitating or assisting the operation of any of the provisions of the Act". This purpose ceases to have any significance when it is decided that s. 46 (4)-(8) and substantially the whole of Part IV., Divisions 2 and 3, and s. 24 are invalid. Section 60 is a fortiori . Part V., dealing with the Court of Claims, becomes otiose. Part VI., dealing with compensation, is substantially bad, and Part VIII, ceases to have an effective existence, even if theoretically s. 6 may save the validity of some sub-sections contained in it. Section 46 ceases to have any effect because sub-s. (1) is dependent on sub-s. (3) or upon sub-s. (8). Counsel for the plaintiffs at the end of his reply asked that the court should not pronounce an order finally without allowing the parties to speak to the form of relief after delivering the reasons of the members of the Court for judgment and to this course the Commonwealth had no objection. I shall not therefore now formulate definitely the relief which I should be in favour of granting.
I think that it is neither necessary nor desirable to examine every provision of the Act without regard to its real bearing upon the validity of provisions that really matter or upon the interest which entitles the plaintiffs to sue and to say whether each such provision is independently valid, if s. 6 makes it severable, or whether in spite of s. 6 it is inseverable or on its own terms its operation fails.
I am disposed to think that it would be enough if the declaration of right were confined to what I would regard as the pivotal sections of those which I consider bad together with some of the more important of those obviously sharing the same fate.
I would continue the interlocutory injunction contained in the orders of 15th December 1947 and make it permanent. It would, I think, be enough to declare invalid s. 13: Part IV., Division 2 (except in relation to voluntary purchase): Division 3: s. 24: Part VI.: ss. 46: 59 and 60 and for the rest to reserve liberty to apply. The plaintiffs should have the costs of the suits.